40 Android Business Models, Part Two
This blog post series illustrates business models for Android that go beyond simply dumping an app out on the Android Market and praying for sales. Yesterday, we looked at markets beyond individuals that you could sell to. Today, let us look at some “freemium” models, where you give away the app to lots of people, and sell something else to some of them.
In the classic “publish and pray” model of the Android Market, as described yesterday, you are counting on X% of the users visiting the catalog, Y% of those finding your app, and Z% of those buying your app (and not requesting a refund within 24 hours). However, there is little question that on Android, Z% is much higher for free apps, since there is less barrier for users to get your app. Given the structure of some of these markets, even X% and Y% may be higher for free apps, since they get their own area (e.g., tab in the upcoming Android Market revamp) to help distinguish them from the paid apps. Certainly, the statistics suggest that free apps get many more downloads than do paid ones.
This is why the “freemium” approach, of giving one thing away and selling something else, is something to consider. This is nothing new — giving something for free has been a marketing staple for decades, from the “free prize inside” breakfast cereals to giving away toasters for opening up bank accounts. Chris Anderson’s FREE has an appendix outlining many “freemium” strategies. Today’s and tomorrow’s lists of business models leverage some from Mr. Anderson and add some others more unique to mobile devices and Android in particular.
Complicating the “freemium” approach, though, is the Android Market’s terms and conditions, which contain sentences like “You may not collect future charges from users for copies of the Products that those users were initially allowed to download for free” and “You may not use customer information obtained from the Market to sell or distribute Products outside of the Market”. It is up to you and qualified legal counsel to determine which “freemium” strategies will align with the Android Market’s terms. Of course, the Android Market is not the only distribution mechanism, so it may be you employ some business models with the Android Market and other business models when distributing in other ways.
With that in mind, here are some ways you can make money while still “giving away the store”:
Model #7: Give Away the App, Sell the Customizations
Write a campaign-style combat game, sell the map editor to enthusiasts. Write an alternative home screen, sell the tools to let you theme the home screen. The basic app is free, but for those who are really into it, give them things to buy that make their experience that much better. This is along the lines of the Radiohead model — give away the music, but sell the box sets.
The key to remember is just because the app is on Android, the add-ons you sell do not have to be on Android. Give away the mobile app, and sell the desktop (or Web-based) customization tools.
Model #8: Give Away the App, Sell the Analytics
Here, “analytics” refers to aggregated, anonymized information about users and their interests. Write a music player, sell reports on who likes what and the relationships between artists and genres. Write a personal finance manager, sell reports on popularity of banks, types of investments, etc.
Getting a big enough audience to make the reports worthwhile may mean this is not an Android-only strategy for now (e.g., offer a Web site, an iPhone app). As with anything, you can try to sell direct to people who may care, or you might try to pitch your wares to analysts (e.g., Gartner).
Model #9: Give Away the App, Sell the Remix
Android is complex enough that some firms who might be interested in distributing tailored Android devices lack the skills and/or time. For example, those writing EPUB book reading software for Android might make perfect partners for major bookstore chains looking to distribute their own book reader devices. The catch is that a bookstore chain knows nothing about how to create such devices, so even if your software is excellent, there are many more steps a bookstore would have to go through.
So, you make and sell an Android “remix” that combines Android, your application, perhaps a custom home application designed around the target device use (e.g., reading digital books), and such. You would partner with pure-play Android OEMs, such as Creative Labs with their Zii Egg device. You, the bookstore chain, and the OEM would load your remix onto the bookstore-branded devices, which the bookstore would sell. For this, you receive a per-device royalty and/or consulting fees.
You could create similar “remixes” for all sorts of targeted devices, from music players to TV set-top boxes. You are leveraging your Android expertise to help bridge the gap between what OEMs want to do (make good hardware) and what retailers wish to sell (interesting targeted devices under their own brand).
Model #10: Give Away the App, Sell the Bundle
You may be able to aggregate a number of applications from multiple authors and sell an easy-to-use digital library of these apps, perhaps on an SD card. Or, you may be able to find complementary items outside of Android (e.g., digital books and an EPUB reader) that you license and sell as a bundle. Here, the app itself is not what the user values, but the bundle as a whole. If you are simplifying the purchase, or giving them a better deal than they could get on their own without the bundle, you can
Model #11: Give Away the App, Sell the Plugins
While Android does not have a formal “plugin” architecture, some people have had success doing it the “old-fashioned” Java way, leveraging custom class loaders to access local JAR files. If you get such a framework to work with your code, you could sell plug-ins for a free app, where the plug-ins are downloaded by your app to your app’s private file area and are loaded as needed. Give away the music player, sell the visualization plug-in. Give away the camera app, sell the image processing plug-ins. Give away the game, sell plug-ins that add new character classes, or types of units, or whatever.
This is closely related to…
Model #12: Give Away the App, Sell the Feature Unlock Codes
Here, the “plug-ins” are baked into the application itself, rather than being separate downloads. However, they are initially disabled, and are only usable if you enter an “unlock code” for the feature. Just as you sell the plug-ins in the previous model, in this case, you sell the unlock codes to unlock features from the free app.
Both of these latter two models are classic “shareware” strategies, of course.
Tomorrow, we will continue looking at “freemium” approaches, since there are so many possibilities.
Mark Murphy is the founder of CommonsWare and is the author of The Busy Coder’s Guide to Android Development, The Busy Coder’s Guide to Advanced Android Development, and Android Programming Tutorials.