Just Because Apps are Free, Doesn’t Mean There’s No Money to Be Made

Today’s article in The New York Times (see: “App Makers Take Interest in Android“) focused on the growing Android app ecosystem, and the unfortunate side effect of being a Google-led project: people aren’t used to paying for Google services and that mentality extends to Android.

But developers, take heart: making your app a free download doesn’t mean you don’t get paid, a point the NYT article practically glossed over, preferring to focus on Android’s other issues, like its fragmentation, use of Google Checkout for buying apps, lack of in-app purchases and more.

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Despite the positive-sounding headline, the NYT article was actually negative in tone, starting off with a joke about how an Android developer making $1-$2 per day on his app was laughed at by his peers, while insisting “that’s pretty good money!”

The blows against Android then continue with a quote from Matt Hall, co-founder of Larva Labs, who talked about the problems with Google Checkout. Then Rovio’s (maker of Angry Birds) Peter Vesterbacka complained about the challenges of developing for such a fragmented environment. And then it was Hall again, with a quote that’s already getting repeated on Apple-watching blogs like John Gruber’s Daring Fireball:

“Google is not associated with things you pay for, and Android is an extension of that,” said Mr. Hall of Larva Labs. “You don’t pay for Google apps, so it bleeds into the expectations for the third-party apps, too.”

There Are Ways to Get Paid

If you want to debate the merit of the above statements, feel free to head to the comments section, but we feel the need to point out the obvious miss from the NYT article: there are alternative revenue streams for developers besides direct app sales. (After all, even Google’s “free” services aren’t actually free – they’re monetized through advertising.)

We recently highlighted some findings related to this matter earlier this month. For example, research from mobile ad company Millennial Media found that Android ad revenue has, for the first time ever, beaten iPhone ad revenue on the company’s ad network.

At the time, we wondered why, given the lower ad impression numbers (as compared with iPhone/iOS). As it turns out, Millennial’s Michael Avon had some thoughts on the matter. Besides the fact that there is simply less ad inventory amid soaring demand on Android, he also shared that Android is currently a “hot” platform for advertisers as it allows them to reach first-time smartphone buyers and a more diverse set of consumers.

“We believe some advertisers are paying a premium to reach those users early in their smartphone experience,” he said. “Our advertisers have also shared that Android allows them to reach a diverse set of consumers across all major carriers, making the platform highly desirable and increasing demand for the platform…With more advertiser demand per each available impression on Android, it resulted in more revenue per impression.“

The NYT article also makes brief mention of the lack of an in-app purchases model for Android, another disappointment for developers, especially since we recently learned that in-app purchases generate more revenue than ads, in some app categories.

However, as we also noted last week, developers don’t have to wait on Google to implement an official in-app purchase mechanism, because there are several third-party solutions already available, including Boku and Zong for virtual goods and PayPal’s in-app purchases technology for physical goods.

NYT had one good thing to say about Android development: because of the store sizes (100K vs 300K apps/Android vs iPhone) it’s easier to get noticed in the Android Market today than it is in the iTunes App Store. Well, at least there’s that.

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