This story from an iPhone game developer is getting a lot of interest. Their company is called Neptune Interactive, and they released a game called Tap-Fu in the iPhone App Store, along with an online high-score board and some code to determine whether the app has actually been legally purchased or not.
The results are very interesting. About 80% of the people who posted their high scores had pirated the app. They also looked at how many pirates then went on to actually purchase a legitimate copy. How many conversions from pirated copies? Zero.
This is not a widespread study across a variety of games over a long time span, so it should be taken with a small grain of salt. But it is highly suggestive and very interesting.
Now, for the paid version of my apps, I could install Flurry analytics and track the number of users versus the number of sales. That would involve adding internet permissions to an app that doesn't obviously need access to the internet, which might deter some people who would otherwise buy the app. Still, it would be an interesting experiment. I struggled with how to monetize my latest app, Dominoes. Eventually, I decided to go with a paid version over ad-based.
In the first few days it's selling very well. Maybe somewhere down the road if sales flatline I'll release and ad-supported version, but for now I'll stick with the paid version. And there's really no way to tell if and/or to what extent the app is being pirated.
As I mentioned in an earlier post, I've seen my Spades app in bundles of pirated Android apps on at least one torrent site. I would imagine that as the platform becomes more popular, pirating will become even worse. It's a problem that all developers have to deal with at some level. I've been happy with the performance of AdSense, so most likely I'll try to use that model when I can.