Half of all app store revenue goes to just 25 developers

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.

What's the big deal if the consumer knows? The practice of companies outsourcing work to consultants is not a new thing.

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).

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.

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?

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.

http://en.wikipedia.org/wiki/California_Gold_Rush#Profits

>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.

I hope apple does this. One more reason I will be glad I'm an Android developer.

"700,000 apps isn't consistent with the way Apple's other stores operate."

I thought Apple quite liked touting their 25+ million tracks in their iTunes music store catalog.

A small library of apps does no platform good.

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 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.

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.

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.

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.

The same can be said of Google Search results... Being #1 drives more traffic than #11.

But I agree, the app stores are worse. They make it harder to discover interesting apps not on the top downloads list.

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.

The Playstation really used to be associated with nightclubbing? Jeez, how'd they pull that one off..

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.

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.

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.

Hmm. That's not how my math works out.

$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).

I think your math is missing a 0. Correct me if I'm wrong...

60/25 = 2.4 mil / 20 days 365/20 = 18.25 18.25*2.4 = 43.8 mil/year

Developers are a commodity (700k+ apps) so the prices go down. Unsurprising and good for the consumer.

Are you proposing devs stop competing and fix prices in order to keep our jobs? (I am a developer)