October 22, 2014

40 Android Business Models, Part Three

moneyThis blog post series illustrates business models for Android that go beyond simply dumping an app out on the Android Market and praying for sales. Monday, we looked at markets beyond individuals that you could sell to. Yesterday, we looked at some “freemium” models, where you give away the app to lots of people, and sell something else to some of them. Today, let’s continue considering “freemium” options.

One thing to bear in mind with all of these app strategies is that you are not necessarily limited to only one strategy, let alone only one app. Some firms may do best by focusing on a single app, but “go broad” in terms of where the app gets used (Android, other mobile devices, Web, desktop, etc.) and in terms of business models (give away the app and sell several things to discrete audiences). Some firms, particulary small ones, may do best through a “mutual fund” strategy, developing several apps and having several revenue models, but perhaps focusing solely on Android to develop technical and marketing expertise.

Also, those of you enjoying this series may be interested in a related post (perhaps a series, given the title) from the NitroDesk folk.

And, with that, on to more “freemium” models:

Model #13: Give Away the App, Sell In-App Ads

One popular alternative to selling the app is to sell ads in the freely-distributed app, such as via AdMob. Some people have had greater results from ad sales than from paid apps. This also eliminates headaches like dealing with returns (on the Android Market, a user can request and receive a refund within 24 hours of purchase).

On the flip side, this adds a dependency to your application on third-party ad code, and in turn a dependency on an Internet connection. For applications that already need an Internet connection to be worthwhile, this is not a big hurdle. For applications that are expressly designed to work disconnected, ad networks may or may not be the best approach.

Model #14: Give Away the App, Sell the Account

Remember The Milk (RTM) released their Android application yesterday. The application is free. However, the only way to effectively use the application is to have a “pro” account on their service, which runs $25/year. RTM offers much more than just an Android application as part of a base free service available via the Web. Here, they are using the Android application as additional incentive to upgrade to the paid RTM service. This model may work well if you have significant value outside of the Android app itself.

Model #15: Give Away the App, Sell Support

This model is more frequently seen in larger open source projects, such as Red Hat. In principle, it might work for a free mobile application, particularly if the “support” being sold might be of interest to enterprises, such as custom integration. The percentage of individual purchasers who might want support is probably fairly low, so you would need a large audience in order to get much income that way.

Model #16: Give Away the App, Sell the API

I suspect that one or more of the augmented reality (AR) platforms will adopt this strategy — give away the application, but sell developer licenses to those who want to integrate with that application. To some extent, this is variation on the previous model, this time selling support not to users but to integrators. This strategy will only work if the base app (without any integrators) is compelling enough to download, yet also offers a rich enough extension model that third-party developers will be interested in “hitching a ride”.

Model #17: Give Away the App, Sell the Content

Digital book readers, music players, and similar apps may employ this strategy. If there is already a way to sell the content (either directly or on an affiliate program commission basis), you could give away the app and try to convince people to buy content for your app through your app. A rich game engine might use this approach as well: give away the engine with 1-2 game packs pre-installed, then make money helping other game developers sell their wares for your engine through your engine.

Model #18: Give Away the App, Sell Premium Placement

Given that you are already employing the previous model, you can boost your income via premium placement. You see this in stores all the time — the retail world is full of terms like “end-cap placement” and “co-marketing” to cover scenarios where a manufacturer pays extra to have their products made more visible to consumers (e.g., putting them on the aisle “end caps”). So, you might sell any number of pieces of content, but your in-app catalog may have N slots for promoting specific applications (think the Android Market’s gallery of apps on its home screen). Sell or auction off those slots to earn money on top of whatever commissions you earn from content sales.

Model #19: Give Away the App, Sell the Firm

Of course, the ultimate in app giveaway strategies is to not worry about the revenue much at all, but to simply gain “mindshare” with an eye towards selling rights to the application outright…frequently by selling the firm. Recent history is filled both with success stories (e.g., MySQL) and the corpses of sock puppets who have tried this strategy. I am not aware of any pure mobile application that achieved enough success to make this work, though, so this strategy may be more plausible where an Android application is only one facet of a larger gem of a business.

Tomorrow, we will switch gears and look at ways to make money from Android other than selling Android apps.


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.