Wednesday Feb 23, 2011 by Nathan Burke - Director of Marketing, Aprigo
Unless you’re a recording artist or a member of the MPAA, it’s likely that piracy isn’t top of mind. And if you’re a developer creating iPhone, Android, and Windows phone apps, piracy isn’t a big problem. But Cambridge-based mtiks (short for Mobile Analytics) wants mobile app developers to know that their apps are being pirated right now. And mtiks can help turn users of pirated apps into paid customers.
Ah, piracy. The idea that anything digital can be copied, hacked, and distributed for free. In the old days (say, around 2000), there was Napster, Limewire, and simple web searches that could point you to applications, music, and movies for free. But fast forward to 2011, and pirated mobile apps are the rage. And I’m proving myself to be culturally irrelevant, as I had no idea piracy of mobile apps was even an issue.
Last week I spoke with Muthu Arumugam, CEO and Founder of Cambridge-based mtiks, who brought me up to speed. Back in November of 2009, Muthu was running a mobile apps development company, and there was a problem. Apple gives developers a report showing how many people have downloaded their app in a given period. After looking at his own built-in analytics, Muthu saw a big discrepancy in the number of downloads Apple was reporting and his own figures. The difference turned out to be piracy.
“Mtiks has developed a tool to try to convert pirated app users into legitimate app users. We provide a platform for developers, and they implement 2 lines of code into their app. Then, whenever someone hacks their app and distributes it on different channels, mtiks knows about that and reports back to the developer that there is a significant number of people using the app for free,” said Arumugam.
But just knowing that people are ripping off a developer’s app isn’t really useful. And this is where mtiks gets really interesting.
“We then let the developer use different techniques to convert free users into paid users. For example, a developer can choose to show a popup saying ‘Hey, I know you pirated this app, and feel free to use it for 10 days. Then please go to the app store and buy it.’ That’s just one way of doing it, and we have many more techniques to get those users to convert. The good thing about it is that it’s server-based technology, so if the developer wants to change the wording or the technique, they can do that any time they want.”
I asked Arumugam about the kinds of conversion rates his customers were seeing. “We see numbers between 10% and 40%. The problem is that the 10-40% really varies based on both the quality and price of the app. For instance, a 99 cent app converts much better than one that costs, say, $5.00,” he answered.
Mtiks pricing is based on a credit model. Customers purchase mtiks credits (6,000 for each year), and are charged one credit per impression, which is when mtiks shows a popup, crashes the app, or converts the pirated app to a time-based trial. Using the credit system gives customers an incentive to buy other add-ons that will be available in future releases.
Mtiks started with $12,000 in seed funding, but converted that into a loan and paid back the investor. The company is now completely self-funded. When asked about potential fundraising, Muthu said “We’re still not worried about funding at this point. But we are staying aggressive about growth, so in the upcoming months we may decide to do a round of funding.”
Looking at trends in technology, Arumugam has a theory about monetization. “We always talk to developers about the waves of monetization. Whenever there’s a new technology or trend coming into an industry, the first set of people focus on the technology, and they make the most money. Analytics jump into the picture, giving information on how people are using the technology, letting the developer build a better product. Then there’s a mass group of people that come in, and they include the marketers that try to make more money. The final wave is based on piracy, and that’s where we are now with mobile apps.”
Nathan Burke is the Director of Marketing at Waltham, MA startup Aprigo. He is an infrequent writer at
MarketingStartups.com and is uncomfortable
describing himself in the third person in italics at the end of an article. You
can find him on twitter at @nathanwburke.