I've said this before. Almost all iOS developers (who are not full-time employees) I know make their money by building free apps for Fortune 500 Corporations, smaller companies, and other organizations. The consumer never knows, the developers handle everything from walking the company through the App Store initial registration to initial submission to updates.
It is all about ego. There is immense peer pressure on executives to have an app on iOS (and sometimes Android).
I ended up on a project like that. My first foray into "professional" software development, about 18 months ago:
I was an intern in college getting a CS degree, just finished my senior year. I had an summer internship lined up with a small company but they folded at the last minute so I had to scramble for something to fill my summer. I wound up as an intern at a financial firm. Fairly large but not one you've probably heard of.
I was told that I'd be on the mobile development team. They knew I didn't have experience but I said I was eager to learn.
Turns out, there was no team. I was the team. The CIO had decided that they needed an iPhone app, despite being an entirely B2B company with virtually no consumer brand awareness, and he'd already sold the corner office crowd on the idea.
Problem is, no one in IT wanted to build it. The CIO had no clue what he actually wanted, they were understaffed as it was and no one had the time.
Enter me.
In my first meeting with the CIO, he pulled out his iPhone, went to m.msn.com and said "I want this but for $COMPANY." I went back and laughed in my cube for a while. I think he just liked the news article carousel MSN had.
My boss had talked him down to a mobile website which I began throwing together in jQuery Mobile. A few loan calculators and some contact info. I had a few ideas for something more aggressive but I got shot down as they needed me on other projects anyways. They had me spending a few hours a week on mobile dev just to keep the CIO happy.
My internship ended right as the CIO was bringing in a big consulting firm to replace everyone. And that's the story of how I decided not to work at a megacorp.
As someone pretty close to the Fortune 500, I'd like to refute the ego point. Having a quality app - especially with iPads, and especially with higher-spending consumers - is a business necessity. You lose out on a lot of engagement and most of all brand credibility by not having an app.
I think it's hard to put actual numbers to it because it's not a $$$ per app kind of metric - it's a signaling mechanism that a company is still 'with it', and not losing touch. Sort of a 'cool/current' factor, but also a consumer trust that they will be able to operate at the cutting edge if they desire.
I run an iOS development company that does exactly what you describe. Our clients range from large corporations to scrappy startups. But I can attest to one thing, the only people who are making STEADY PROFITS are developers like myself. It's too much of a crap shoot for any single app to be noticed and profitable in the App Store.
It's kind of like the story of the California Gold Rush isn't it? Here's an excerpt -
"Recent scholarship confirms that merchants made far more money than miners during the Gold Rush. The wealthiest man in California during the early years of the Gold Rush was Samuel Brannan, the tireless self-promoter, shopkeeper and newspaper publisher. Brannan opened the first supply stores in Sacramento, Coloma, and other spots in the gold fields. Just as the Gold Rush began, he purchased all the prospecting supplies available in San Francisco and re-sold them at a substantial profit. However, substantial money was made by some gold-seekers as well."
Tell me you can't see the similarities with the modern day digital mobile gold rush.
This. If you want to make money fast on the app store, don't make apps for the app store. Make apps for other people. That being said, you have to be selective with your clients otherwise it's miserable.
If you are patient, and ok with making money slowly over time, then there is still a long tail on the store you can make money with. It's a much more pleasant way to make money, but unless you get lucky you'll make less of it this way (most likely).
So, essentially the iOS / Android ecosystem is the same as the website ecosystem in early 2000s, and FaceBook app ecosystem in late 2000s. Digital agencies building apps for big companies' marketing purposes.
I wonder how sustainable that is. How many of these apps actually generate any kind of customer interest?
How much non app store shrinkwrap software revenue goes to the top developers? I would imagine a far bigger proportion than 50%. Just consider Microsoft, Adobe, EA, Activision, and how much is left for everyone else? (B2B is probably the same but it's harder to figure out.)
For example, Adobe (usually considered number 2 in shrink wrap desktop software) has roughly $10B in annual revenue, Autodesk is barely a fifth of that. Microsoft is $70B, a good deal of that is just MS Office. Activision is maybe $5B, EA less than $4B. Pixelmator — one of the standout success stories of indie Mac development — probably has under $5M. If there are 100 indie devs as successful as Pixelmator I'd be surprised — MS Office alone is 7000x bigger.
If anything the iOS App Store sounds far more democratic
An article like this is worthless without context and it offers nothing new.
Soon app innovation will stifle because only a very few companies are making money. Indie/mid size developers will stop working on innovative apps and start working for bigger risk aversing boring companies.
Biggest reason imho is that these top 25 are one big self fulfilling prophecy: A top 25 position guaranties big download numbers. And to get there you need either a collection of apps already out there for cross promotion or buy lots of ads and installs.
Switching to a metric that indicates quality much like engagement measured by # sessions or # minutes use/month will make quality apps stand out much more.
>Soon app innovation will stifle because only a very few companies are making money. Indie/mid size developers will stop working on innovative apps and start working for bigger risk aversing boring companies.
I doubt it. The real problem with the app store is 99% of what's there is either crap nobody could want or a me-too version of one of the big sellers. People developing that kind of stuff don't deserve sales, and if they drop out of the business, well, no harm done.
Over the long run, Apple may not want small developers playing a prominent role in the App store.
There's more risk to the brand compared to Electronic Arts, and Apple could probably charge for Fortune 500 companies to place their apps in the store.
Stripping out the small developers would remove a lot of scams and address discovery issues.
700,000 apps isn't consistent with the way Apple's other stores operate. Nor is it consistent with their brand strategy of high quality via curation.
Without small developers, there would never have been Angry Birds, Tiny Wings, Temple Run, and countless other (when released) indie games. Ditto for apps.
I think what you mean to suggest is that Apple should raise the bar for app approva. Given the accumulation of thousands of crufty, poorly-designed apps, I would totally agree with this.
I know the point you're making because we struggle with something similar in a different industry. I think we've already seen the "phase out" of small developers in the App Store; rarely if ever does an indie company make it into the top 25 charts or, more importantly, the Spotlight app section. I don't really anticipate it becoming much worse than this because the submission process is mostly effective at weeding out the fart apps and broken software that often makes it into something like the Android store, and apps at the bottom are naturally hidden from the end user anyway.
I think the reason Apple can continue to allow mediocrity into the store is because those apps don't actually reach many end users and they pad those 700k apps and 25 mil songs vanity metrics. This is opposite someone like Groupon or a high end designer brand, where exclusivity is a major factor and driver. The only parts of the App store where exclusivity is a factor are the top lists and the spotlight section, which as I mentioned above have largely excluded small developers for a long time.
I think they like to tout the big numbers, but you're right. They want you to get something they know is good and already popular. That's why we have the recent changes to the app store. It's meant to limit search to things that are already popular, and also put a heavier importance to things like their curated favorites.
It's interesting, even in their favorites recently I seem to be seeing more of the big companies and more of the same apps that have already been featured popping up.
Remember that, at least according what they said at the time, Apple didn't want apps. They wanted websites that were designed for iOS and mobile devices using HTML5 to perform all the tasks.
Now, this could have been a smokescreen to cover the fact that they didn't have their native app infrastructure finished yet, but going at face value, Apple didn't want native apps.
"Of the $120m in total revenue generated from paid app downloads and in-app purchases in the US during the first 20 days of November 2012, fully half was split between just 25 developers."
That's actually pretty diverse when you compare it to other markets: there are 6 big publishers [1], 6 big media conglomerates [2], and only 3 big record labels [3].
I also wonder how the pie was divided when software was only sold in boxes. I believe that Electronic Arts and Disney have been doing well far before the App Store came along.
Those aren't fair comparisons though, the stores themselves are more akin to your examples than the developers selling through them.
But it's actually worse, if you're a musician you can sell your music through a label or you can sell it on your own. If you are a mobile developer you can sell through one of the app stores or you can pound sand.
Yea, the big six publishers are now going to be five as Penguin and Random House are merging. Also the #7 publisher, Thomas Nelson a Christian focus publisher became part of Harper Collins one of the big six. And Simon and Schuster has several players looking to buy them, likely because their digital marketing execs have never used facebook, twitter etc.
This is really just a result of app store architecture. Being on a top grossing or top download list simply perpetuates an increase in your download numbers and consequently your placement on the ranking.
I can't speak for Android, but I don't think the top 25 lists are too prominent on iOS. The Top Grossing List shows very few apps from Top Paid and Top Free, so the three top lists don't seem to promote each other a lot.
I usually shop on Apple's curated landing page precisely because it is full of indie(-ish) content. Not sure what Apple could do better there, short of killing the Top lists altogether.
I wonder if Steve Jobs came to regret the famously ambivalent attitude Apple had to gaming on the Mac?
There's a great scene in the (generally great) BBC dramatization of Sinclair vs Acorn in the 80s, where Acorn are disappointed that all the games are being made for the Spectrum, meanwhile Sinclair is annoyed that his amazing machine is being reduced to a games console.
The greatest achievement of the iPhone (despite it's many amazing feats) appears to have been producing a socially acceptable Gameboy, just as Sony managed to associate the Playstation brand with nightclubbing and other grown-up pursuits in the early 90s to great success.
Well, this might not be that accurate. There are several app/companies that generate revenue outside of iTunes run transactions. Apple's in-app purchase rules only apply to digital content and services; they do not apply to physical goods and servicse. So, Kayak, Expedia, Hotels tonight, Viator, Amazon's store app, etc are all quite popular and earn money from their iOS apps that wouldn't be recorded or "taxed" by apple.
Yes, the Register headline does not match the content
Headline: "Half of all app store revenue goes to just 25 developers"
In article: "total revenue generated from paid app downloads and in-app purchases in the US"
Looking at my Google Play developer console, at daily device installs across categories for all apps in the store, non-US downloads account for 75%-82% of all downloads, depending on the category. So just watching the US gives one a false picture (especially for the Japanese-Korean market, which are quite large and have their own big players).
Also, only paid apps and in-app purchases are counted. Pay apps are not as popular a monetization scheme with Android as it is (was?) with iOS. In-app and freemium apps are a little more popular. Tapjoy has an increasingly popular monetization scheme for some of the top games on Android ( http://www.appbrain.com/stats/libraries/details/tapjoy/tapjo... ) which wouldn't even be counted by this survey.
This 2012 Cambridge study ( http://techcrunch.com/2012/03/06/in-mobile-apps-free-aint-fr... ) says 58% of Android apps support themselves with ads. So this survey doesn't account for that. All of my current Android revenue comes from ads, for what that's worth.
this is just for renting content. While there is the possibility for games, I'd find it unsettling that an app is installed on my phone one day and they uninstall a bunch of apps if I cancel my subscription.
I'm not a mobile app dev, but I could have sworn that I'd heard until recently that no one made money from this stuff. Obviously this article implies that many people are like that, but it also seems to imply that there is a transition area -- a middle tail if you will -- in which independent devs can make money without becoming Zynga or Rovio.
There certainly is. I know from how well our iOS apps chart based on their sales numbers that there must be a huge long tail making nearly zero. 10 paid downloads a day is enough to break the top 1000 in many categories, so that leaves 20-70,000 apps in those categories that sell less than that.
There's a lot of doom and gloom about the big guys pushing out the indie developers, but I believe that there will always be a middle to the market where a small studio or single indie developer can grind out a living on niche apps that aren't big enough for the big guys but are big enough to be worth pursuing. The hard part is finding the right size niches.
yeah, there is definitely a middle tail. The recent app changes have unfortunately moved even more revenue to the top, but there is room for people to make a salary type living on the app store.
Well, isn't it the same with desktop software? I bet the big desktop-software developers (Apple, Microsoft, Adobe etc) get about half the revenue of that market as well.
That doesn't mean there isn't room for smaller companies/products, as is clearly evident looking at my own applications folder (Flux, Transmission, Switch, Appcleaner etc).
I think the assumption is "there's no one making hundreds of thousands but these people", but I'm willing to be there's plenty of people making a living from apps on the app store. Maybe not as good as they could make taking a corporate wage, but probably more satisfying.
Dig into these details a bit deeper, and you'll see the average revenue of these 25 developers (by my math) is $4.38m/year. But of course, the developers don't get the full $4.38m, apple get's a 30% cut, leaving the developers with $3 million in revenue.
How many of these top 25 developers can operate on $3 million per year?
Of course, their is likely another significant difference between the #1 developer and #25, so I wouldn't be surprised to see #25 developer making < $1m while #1 makes $15m+.
All of this is of course assuming that the first 20 days of November are consistent with sales for the rest of the year.
Seems like a misleading title to me. "Disney, Electronic Arts, Gameloft, Glu, Kabam, Rovio, Storm8, and Zynga," employ many developers; certainly more than 25.
[+] [-] wallflower|13 years ago|reply
It is all about ego. There is immense peer pressure on executives to have an app on iOS (and sometimes Android).
[+] [-] saryant|13 years ago|reply
I was an intern in college getting a CS degree, just finished my senior year. I had an summer internship lined up with a small company but they folded at the last minute so I had to scramble for something to fill my summer. I wound up as an intern at a financial firm. Fairly large but not one you've probably heard of.
I was told that I'd be on the mobile development team. They knew I didn't have experience but I said I was eager to learn.
Turns out, there was no team. I was the team. The CIO had decided that they needed an iPhone app, despite being an entirely B2B company with virtually no consumer brand awareness, and he'd already sold the corner office crowd on the idea.
Problem is, no one in IT wanted to build it. The CIO had no clue what he actually wanted, they were understaffed as it was and no one had the time.
Enter me.
In my first meeting with the CIO, he pulled out his iPhone, went to m.msn.com and said "I want this but for $COMPANY." I went back and laughed in my cube for a while. I think he just liked the news article carousel MSN had.
My boss had talked him down to a mobile website which I began throwing together in jQuery Mobile. A few loan calculators and some contact info. I had a few ideas for something more aggressive but I got shot down as they needed me on other projects anyways. They had me spending a few hours a week on mobile dev just to keep the CIO happy.
My internship ended right as the CIO was bringing in a big consulting firm to replace everyone. And that's the story of how I decided not to work at a megacorp.
[+] [-] aptimpropriety|13 years ago|reply
I think it's hard to put actual numbers to it because it's not a $$$ per app kind of metric - it's a signaling mechanism that a company is still 'with it', and not losing touch. Sort of a 'cool/current' factor, but also a consumer trust that they will be able to operate at the cutting edge if they desire.
[+] [-] penguin_gab|13 years ago|reply
It's kind of like the story of the California Gold Rush isn't it? Here's an excerpt -
"Recent scholarship confirms that merchants made far more money than miners during the Gold Rush. The wealthiest man in California during the early years of the Gold Rush was Samuel Brannan, the tireless self-promoter, shopkeeper and newspaper publisher. Brannan opened the first supply stores in Sacramento, Coloma, and other spots in the gold fields. Just as the Gold Rush began, he purchased all the prospecting supplies available in San Francisco and re-sold them at a substantial profit. However, substantial money was made by some gold-seekers as well."
Tell me you can't see the similarities with the modern day digital mobile gold rush.
http://en.wikipedia.org/wiki/California_Gold_Rush#Profits
[+] [-] clarky07|13 years ago|reply
If you are patient, and ok with making money slowly over time, then there is still a long tail on the store you can make money with. It's a much more pleasant way to make money, but unless you get lucky you'll make less of it this way (most likely).
[+] [-] readme|13 years ago|reply
[+] [-] bergie|13 years ago|reply
I wonder how sustainable that is. How many of these apps actually generate any kind of customer interest?
[+] [-] Tloewald|13 years ago|reply
For example, Adobe (usually considered number 2 in shrink wrap desktop software) has roughly $10B in annual revenue, Autodesk is barely a fifth of that. Microsoft is $70B, a good deal of that is just MS Office. Activision is maybe $5B, EA less than $4B. Pixelmator — one of the standout success stories of indie Mac development — probably has under $5M. If there are 100 indie devs as successful as Pixelmator I'd be surprised — MS Office alone is 7000x bigger.
If anything the iOS App Store sounds far more democratic
An article like this is worthless without context and it offers nothing new.
[+] [-] dirkdk|13 years ago|reply
Soon app innovation will stifle because only a very few companies are making money. Indie/mid size developers will stop working on innovative apps and start working for bigger risk aversing boring companies.
Biggest reason imho is that these top 25 are one big self fulfilling prophecy: A top 25 position guaranties big download numbers. And to get there you need either a collection of apps already out there for cross promotion or buy lots of ads and installs.
Switching to a metric that indicates quality much like engagement measured by # sessions or # minutes use/month will make quality apps stand out much more.
[+] [-] tsotha|13 years ago|reply
I doubt it. The real problem with the app store is 99% of what's there is either crap nobody could want or a me-too version of one of the big sellers. People developing that kind of stuff don't deserve sales, and if they drop out of the business, well, no harm done.
[+] [-] brudgers|13 years ago|reply
There's more risk to the brand compared to Electronic Arts, and Apple could probably charge for Fortune 500 companies to place their apps in the store.
Stripping out the small developers would remove a lot of scams and address discovery issues.
700,000 apps isn't consistent with the way Apple's other stores operate. Nor is it consistent with their brand strategy of high quality via curation.
[+] [-] brianchu|13 years ago|reply
I think what you mean to suggest is that Apple should raise the bar for app approva. Given the accumulation of thousands of crufty, poorly-designed apps, I would totally agree with this.
[+] [-] bicknergseng|13 years ago|reply
I think the reason Apple can continue to allow mediocrity into the store is because those apps don't actually reach many end users and they pad those 700k apps and 25 mil songs vanity metrics. This is opposite someone like Groupon or a high end designer brand, where exclusivity is a major factor and driver. The only parts of the App store where exclusivity is a factor are the top lists and the spotlight section, which as I mentioned above have largely excluded small developers for a long time.
[+] [-] clarky07|13 years ago|reply
It's interesting, even in their favorites recently I seem to be seeing more of the big companies and more of the same apps that have already been featured popping up.
[+] [-] muhfuhkuh|13 years ago|reply
I thought Apple quite liked touting their 25+ million tracks in their iTunes music store catalog.
[+] [-] readme|13 years ago|reply
[+] [-] freehunter|13 years ago|reply
Now, this could have been a smokescreen to cover the fact that they didn't have their native app infrastructure finished yet, but going at face value, Apple didn't want native apps.
[+] [-] ctdonath|13 years ago|reply
[+] [-] Samuel_Michon|13 years ago|reply
That's actually pretty diverse when you compare it to other markets: there are 6 big publishers [1], 6 big media conglomerates [2], and only 3 big record labels [3].
I also wonder how the pie was divided when software was only sold in boxes. I believe that Electronic Arts and Disney have been doing well far before the App Store came along.
[1] http://www.criticalpages.com/2012/the-big-six/#more-1252
[2] http://en.wikipedia.org/wiki/Media_conglomerate#Notable_exam...
[3] http://en.wikipedia.org/wiki/Record_label#Major_labels
[+] [-] jonknee|13 years ago|reply
But it's actually worse, if you're a musician you can sell your music through a label or you can sell it on your own. If you are a mobile developer you can sell through one of the app stores or you can pound sand.
[+] [-] johnrgrace|13 years ago|reply
[+] [-] sumukh1|13 years ago|reply
Among iOS games the bottom 80% of apps make around 3% of the revenue. [1]
This blog post has more information from game developers: http://www.streamingcolour.com/blog/2011/09/28/results-ios-g...
Here's a graph of self-reported revenue among iOS Game Devs: http://www.streamingcolour.com/blog/wp-content/uploads/2011/...
[1] : http://www.streamingcolour.com/blog/wp-content/uploads/2011/...
[+] [-] coryl|13 years ago|reply
[+] [-] gurkendoktor|13 years ago|reply
I usually shop on Apple's curated landing page precisely because it is full of indie(-ish) content. Not sure what Apple could do better there, short of killing the Top lists altogether.
[+] [-] unreal37|13 years ago|reply
But I agree, the app stores are worse. They make it harder to discover interesting apps not on the top downloads list.
[+] [-] ZeroGravitas|13 years ago|reply
There's a great scene in the (generally great) BBC dramatization of Sinclair vs Acorn in the 80s, where Acorn are disappointed that all the games are being made for the Spectrum, meanwhile Sinclair is annoyed that his amazing machine is being reduced to a games console.
The greatest achievement of the iPhone (despite it's many amazing feats) appears to have been producing a socially acceptable Gameboy, just as Sony managed to associate the Playstation brand with nightclubbing and other grown-up pursuits in the early 90s to great success.
[+] [-] lyaunzbe|13 years ago|reply
[+] [-] gdilla|13 years ago|reply
[+] [-] Ologn|13 years ago|reply
Headline: "Half of all app store revenue goes to just 25 developers"
In article: "total revenue generated from paid app downloads and in-app purchases in the US"
Looking at my Google Play developer console, at daily device installs across categories for all apps in the store, non-US downloads account for 75%-82% of all downloads, depending on the category. So just watching the US gives one a false picture (especially for the Japanese-Korean market, which are quite large and have their own big players).
Also, only paid apps and in-app purchases are counted. Pay apps are not as popular a monetization scheme with Android as it is (was?) with iOS. In-app and freemium apps are a little more popular. Tapjoy has an increasingly popular monetization scheme for some of the top games on Android ( http://www.appbrain.com/stats/libraries/details/tapjoy/tapjo... ) which wouldn't even be counted by this survey.
This 2012 Cambridge study ( http://techcrunch.com/2012/03/06/in-mobile-apps-free-aint-fr... ) says 58% of Android apps support themselves with ads. So this survey doesn't account for that. All of my current Android revenue comes from ads, for what that's worth.
[+] [-] vijayboyapati|13 years ago|reply
[+] [-] shimfish|13 years ago|reply
If everyone moves to this subscription model, the indies won't even be invited to the party.
[+] [-] angryasian|13 years ago|reply
[+] [-] polemic|13 years ago|reply
[+] [-] jessaustin|13 years ago|reply
[+] [-] ja27|13 years ago|reply
There's a lot of doom and gloom about the big guys pushing out the indie developers, but I believe that there will always be a middle to the market where a small studio or single indie developer can grind out a living on niche apps that aren't big enough for the big guys but are big enough to be worth pursuing. The hard part is finding the right size niches.
[+] [-] clarky07|13 years ago|reply
[+] [-] MrJagil|13 years ago|reply
That doesn't mean there isn't room for smaller companies/products, as is clearly evident looking at my own applications folder (Flux, Transmission, Switch, Appcleaner etc).
[+] [-] nicholassmith|13 years ago|reply
[+] [-] pedalpete|13 years ago|reply
How many of these top 25 developers can operate on $3 million per year?
Of course, their is likely another significant difference between the #1 developer and #25, so I wouldn't be surprised to see #25 developer making < $1m while #1 makes $15m+.
All of this is of course assuming that the first 20 days of November are consistent with sales for the rest of the year.
[+] [-] Samuel_Michon|13 years ago|reply
$60 million divided by 20, times 365, divided by 25 equals $43.8 million.
Times 0.7, that results in $30.66 million in revenue per one of the 25 developers (average).
[+] [-] clarky07|13 years ago|reply
60/25 = 2.4 mil / 20 days 365/20 = 18.25 18.25*2.4 = 43.8 mil/year
[+] [-] CesareBorgia|13 years ago|reply
[+] [-] wildranter|13 years ago|reply
In this process we also programmed people to relate software to free content. Good luck trying to revert this damage.
We should all quit coding and go to business school. Rule or be ruled.
[+] [-] teh|13 years ago|reply
Are you proposing devs stop competing and fix prices in order to keep our jobs? (I am a developer)
[+] [-] paulhauggis|13 years ago|reply
The only way to make a living is to get tons of purchases, which isn't easy.