Up to now, I've only distributed a few apps by sending .apk files around. I was wondering how Android Market prevents users from distributing a paid application to other people.
Currently, the DRM on the Android Market is quite weak. On non - rooted phones if you check copy protection while listing the application then no one can get the apk of your application out.
The problem lies with the rooted phones with the Market app on it. All that someone needs to do is install the apk on their rooted phone and then extract it out, which can then be distributed freely (albeit illegally).
Personally, I would say to not worry about piracy that much. 98-99% of the people that would pirate and use your application would not be willing to pay the $$$ for it anyways.
There is an option if you wish to distribute your 'paid' applications via SlideME to the world users (due to Android Market country restrictions), and that is to use SlideME's SlideLock v2. This is the most robust forward protection mechanism out there for Android apps.
Expect to see a sample app soon with SlideLock, to make life easier for developers to implement.