
The Majority of Today’s App Businesses Are Not Sustainable - uladzislau
http://techcrunch.com/2014/07/21/the-majority-of-todays-app-businesses-are-not-sustainable/
======
tsunamifury
I built apps for android, iOS, windows incarnations, and even bb10. In
aggregate maybe 25-30 branded apps on the iOS store could make 10k per month.
The rest were garbage.

The most I ever made was 1m over a year on 7 BREW apps we made. That's right,
those old dead handsets had only 20-30 apps in their store and we owned about
20% of the market.

What made that possible is that the ecosystem was so bad and it was so hard
and expensive to get apps reviewed and built for multiple handsets, you could
make money as long as you just got on the device.

The relative ease of launching has made a plethora of nice but unprofitable
apps on the other ecosystems... And it points to what happens in any work
economy when the barrier to entry becomes hobbiest-level easy. Happened to
photography, writing/publishing, and others. There are too many people
relatively skilled enough to do an average job and give it away for free for
anyone but the best marketed and connected to make money.

~~~
dredmorbius
What's "BREW"?

~~~
billions
Before iPhones the battle was between Java and BREW for the language of mobile
apps. This was 2000-2005 when Motorola and Nokia were heavyweights.

~~~
dredmorbius
Thanks. Particularly for spelling it out and not just linking elsewhere.

------
zxcvvcxz
Is it worth it to be an App developer? How about versus working at Google or
Apple?

From their perspective, the purpose of your work is to enrich their platform.
The difference is in the distribution of payout and work conditions. Rather
than having a stable 100k salary at said company, you have the chance to earn
absolutely nothing, or be an outlier and beat the 100k. Is it worth it, by
expected value? Well, according to the article numbers,

Expected Monthy Payout = 24% _0 + 23%_ 50 (using half of max of ranges) + 22%
_500 + 19%_ 5000 + 9% _50K + 3%_ 200K (using double the greatest lower limit)

Which gives an expected monthly payout of $11,600. Not bad! I think 30% of
this goes to the respective platforms, so an expected yearly salary for an app
developer might be something like $97,500. And I believe this matches up
fairly well with what companies are willing to pay app developers (on average
it seems higher, aside from maybe in the Valley).

What's interesting is the distribution of payoffs into the "haves" and "have
nots". There are few app developers pulling that $100K or so salary. Instead,
two thirds of everyone is below poverty, and a select group are killing it.
This seems to be the new modus operandus of the tech economy. The implication
is obvious: extreme economic inequality (especially as non-tech jobs become
less relevant), which by necessity will increase social inequality.

~~~
tomjen3
I think you are underestimating what the really big guys are pulling in. I
doubt twice is high enough for the tail end, three or four times is likely
better.

~~~
zxcvvcxz
I also think we underestimate just how many apps are being created with the
intention or desire of generating revenue that fail to do so.

It's a fairly arbitrary calculation anyways, the point is the expected value
is on the same order of magnitude as that of a stable company man. The big
question is what implications this new "career salary distribution" will have
as it becomes more popular.

~~~
danbucholtz
This 10000x. It is incredibly hard to compete today when there are 10 apps for
every idea. Most of them suck - but it is damn near impossible to charge from
day one and be successful unless you have a very large platform to advertise
or are a prominent figure (something like Vesper from John Gruber). We're in
it for the long haul with PaperBox (gopaperbox.com) - we intend to be the best
app and continue to iterate for 3 years or so, and then figure out how to make
money when we hopefully have a million or so users. Having said that, it is
very hard to project out and keep growth going without a significant
advertising budget.

~~~
moonka
This looks awesome, but then I saw there was no android support yet. Is there
somewhere I can sign up for a notification once android is out?

------
wpietri
Doesn't this title conflate "app businesses" with "developers"?

I'd also expect that the majority of app companies aren't sustainable. But
from the people I've talked to, it seems like a lot of apps are being done as
something between a hobby an a side business.

A lot of the people you see selling art and jewelry at fairs work like that.
They don't expect it to be their full-time job; it's a fun way to make a
little extra cash. So what looks like a non-living wage can be perfectly
sustainable as long as you're doing it to supplement other income.

------
chrishallquist
I find this completely unsurprising. Maybe because I'm someone who used to
(kinda sorta) make a living as a writer?

Writing software is more profitable than writing prose (or poetry), because
fewer people can do it, but at the end of the day the economics are the same:
the fruits of your labor are easily copied, so making something that 10
million people read or use is not inherently much more expensive than making
something 100 people read or use. Under those circumstances, it's easy for
everyone to read the best content, and use only the best apps. People's
differing tastes, need for variety, and imperfect awareness of their choices
means the authors of the "second best" thing aren't _completely_ screwed in
either case, but it's still pretty close to winner-take-all.

(Also, social proof—people's tendency to use what other people are doing as a
proxy for quality—amplifies winner-take-all tendencies, even when there are no
obvious network effects.)

------
abk
I feel like to a large extent this is just techcrunch being techcrunch and
writing link-bait articles.

My thoughts on this:

1) Just about everyone is "interested in making money" from their apps. I'm
not sure how they're filtering the developers in the survey, but I'm willing
to bet the amount of effort put in, and the actual methods used to "make
money" differ wildly among those developers. Apples to oranges.

2) 5-10k per app per month for a single developer with a full-time job doing
this in his spare time is pretty good. For a 300 employees company, not so
much. Similarly, millions a month will sustain a large company and make an
individual developer extremely wealthy. What are we comparing?

3) I'll go out on a limb here and say that games make more than any other
category on the app store. They also tend to require a higher budget and
production value: better graphics, sounds, a storyline, etc... Maybe the 100
flashlight / todolist apps competing for the same spots don't make much money
but they also cost nothing besides a weekend of work and the $99 / year ADC
membership. I also wouldn't be surprised if most of that "1.6%" were game
developers. Lumping every app together and trying to get stats out of it
doesn't tell us anything about how much the developers are spending to get
those apps out.

4) Obligatory plug: Storm8, the company I work for, is recruiting. We're a
mobile games developer (on the App Store we tend to be better known as
TeamLava) and have been profitable and fully bootstrapped for over 5 years now
through rapid growth. We're all very passionate about creating new games and
refining our existing ones and have a lot of interesting projects to work on.
We're looking for developers interested in learning more about the mobile
games industry, no experience required. Email is in my profile if interested
:)

~~~
thegeomaster
Can't see your email mate... Put it in your "about me" field if you want
peopleto see it, the email field is private.

~~~
abk
Thanks!

------
patmcguire
There was a good glib observation I saw today:

"Monument Valley costs $6 less than it's own soundtrack. That’s how
dysfunctional app pricing is."

[https://twitter.com/gregmaletic/status/493430279122350080](https://twitter.com/gregmaletic/status/493430279122350080)

It really can't continue like this. What comes after, who knows.

~~~
kumarm
Thats not a fair argument. It appears soundtrack has less than 1K downloads
where Game has around Million downloads (Approximation based on number of
ratings).

So it appears to me Soundtrack generated 10K where as Game Generated 3M.

------
Avalaxy
On Windows Phone / Windows 8 this problem is even bigger. No matter how much
effort you put in to build the best app in its genre, earning even $100 per
month is extremely hard. I know a lot of Windows developers who are serious
about building apps for those platforms, and none of them makes $100 per month
or more from those apps.

~~~
lifeisstillgood
Have you more on this - I assumed winphone would be so limp in the market that
no one would develop for it, leading to the big wins for the few that
bothered.

I am assuming I have been proven wrong by the market. But would like to know

~~~
jbigelow76
There are a handful that seem to get touted as the poster children for viable
Windows app developers. Atley Hunter who has 500+ apps in the ecosystem
(currently all phone targeted but a recent podcast mentioned he was moving to
Universal development so that they can run on Win 8 too), he looks for trends
(like "Don't tap the white tile" type stuff) and then implements them in the
Windows Phone store.

Then there is Rudy Huyn, another full time Windows Phone dev that targets the
"flagship" type apps that MS is dinged for not having on their platform, think
Instagram or Vine before they finally released an "official" app and now
Tinder. His MO seems to be reverse engineering the HTTP apis and delivering a
client app that works with those services.

I'm not aware of any Windows Phone app developers like iOS's Marco, where a
single well executed app was enough to sustain a developer over a long cycle.
But I could be missing somebody in one of the other markets, Windows Phone
does well in GB, France and Italy among other non-North American markets.

~~~
lifeisstillgood
Sounds very much like the German brothers who go round making French German
Spanish language versions of bi popular sites. Nothing particularly wrong but
just odd the innovation stays on the iOS / android areas

~~~
rahimnathwani
Samwer?

~~~
lifeisstillgood
Thank you !

------
forgottenpass
>As Apps Disappear, Will They Be Seen As Disposable?

Haven't they always been? They're mostly games and toys. The number of actual
tools I have installed is really really low, I have a half dozen additional
apps because they're currently fashionable for communication. Everything else
on the store is either serving a need I don't have, or ephemeral nonsense.

I'd even lump things like pandora in with the ephmeral as disposable. I got a
new smartphone a few months ago and haven't even thought of installing it
until writing this post. So even if the company pandora will be around for
decades, I've reached the point of diminishing returns from installing apps
before I get to them.

------
dredericktatum
App stores are just download managers now. Still a huge win - remember how
hard it was to get your software into a users hands, free or not, 10 years
ago?

------
gregpilling
from the PDF (downloadable):

"Game design is a highly creative art that takes a lot of practice. Angry
Birds was creator Rovio’s 52nd title. It is therefore not surprising to find
that those who have shipped a lot of game titles are the most successful. The
3% of mobile game developers who have shipped 50+ titles are nearly 9 times as
likely to be earning over $50k per app per month than the 62% who have only
shipped between 1 and 3 titles."

I was quite surprised that is was the 52nd game! Wow. That is a lot of
persistence!

~~~
philiphodgen
This sounds like the app developer's equivalent to the "10,000 hour" rule of
thumb.

Fifty attempts to hit the nail with a hammer is likely to improve your aim.

In addition, anyone willing to try 50 times is likely to be a survivor. Those
unwilling to persist will go try their luck elsewhere.

It is oddly inspiring to see the "try 50 times" story and the payoff for the
doggedly persistent developer.

------
chasing
Am I to understand from those charts that over 25% of iOS apps make more than
$5,000 per month?

That sounds like great odds to me! Especially given the amount of garbage in
the App Store.

~~~
Bamafan
Not so great if it took 10 employees to create it.

~~~
megablast
The top 25% of apps did not take 10 employees to create them, unless there are
2.5 million iOS app developers running around.

~~~
rahimnathwani
A team isn't always 100% developers.

------
Ologn
They analyze the data on a per app basis, which may not be the best way to do
it. Let's take the Facebook developers on Android. The Android Facebook app
has been downloaded over 500 million times. Facebook's Android Slingshot app
has been downloaded less than half a million times. With the way
Visionmobile/Techcrunch break down the data, on an average per app basis, the
existence of the Slingshot app drags the achievements of the flagship Facebook
app way down - it halves it, basically. This doesn't really bear any relation
to how much success Facebook has had though.

HN often contemplates the power law, so it's natural a developer might have
one app which is very successful (Rovio released 51 apps before releasing
Angry Birds), then another app which is half as successful, then a third app
half as successful as the second app, and so forth. This analysis doesn't
think in those terms though, they are more of the idea that every app released
by a company will be more or less as successful as the other ones it releases.

Also the report sets the bar fairly high. It calls people who make $9000 per
app per month "strugglers". I'd be happy with one app making $9000 a month,
and wouldn't be struggling making the resulting six-figure salary. Even if I
had two or three apps making $9000 a month each I'd be considered a struggler.
This isn't really struggling. Maybe for a firm with venture capital that was
expected to grow quickly it would be considered a failure, but not for a
bootstrapped developer, or partnership of developers.

------
perlgeek
An App is often just a tool, and tools aren't a sustainable business on their
own.

Ideally you have a profitable business, and the app is just one way for the
customer to access your business. Then the app doesn't need to be sustainable
in itself.

------
onmydesk
The app store that came with iOS6 totally destroyed the income of developers
on iOS. Many developers pointed out the problems, many left the platform. With
iOS7 apple plainly ignored the problem. With iOS8 _some_ changes are coming
which _might_ help.

Apple did it. They had better undo it if they don't want their iOS devices to
be nothing but ad display machines or in app purchase tricks.

~~~
archagon
IMO, if you're relying on the App Store app for all your marketing and
discoverability, you're probably doing something wrong.

~~~
onmydesk
The apps themselves are marketing channels of their own with cross promotion,
social network sharing etc and word of mouth.

Paid advertising is not possible when you make 70 cents per sale. It costs
more to advertise a copy than you make from a sale.

A way around this is to increase your lifetime income per download, which is
where IAP comes in, which is where candy crush etc show the way.

If Apple don't want the store to only be that, they've got some work to do.

------
r_singh
"However, states the report, only the top 1.6% of developers make more than
$500,000 per app per month, but of those who do, some are earning tens of
millions per month. The next 2% – those who make between $100,000 and $500,000
per month."

I think these percentages are not low at all. In fact, they're almost pretty
good. This is how success is distributed in almost any profession.

~~~
rahimnathwani
Are these figures net of both the App Store's cut and paid ads?

~~~
r_singh
The language of the article (& the report) suggests that it's what the
developers earn.

I may be wrong though.

------
Donzo
Releasing apps seems increasingly pointless. Unless you get featured, there is
pretty much no visibility and almost 0% chance of discovery. At least with web
based apps your ranking can improve overtime for a variety of keywords and
traffic can begin to find you. I have not had a similar experience with
development for the app store.

~~~
Donzo
I see that I am getting down voted for my sentiments, so perhaps I should
better explain my experience.

I programmed an app that was featured in several publications including the
Washington Post and coverage by one of the writers for the Guardian. These
favorable reviews led to a handful of sales. If this were a web app, these
valuable links would have given my product a real boost.

With the app store, there's almost no way for a third party to influence the
discovery of your app. Everything is sold through the app store and Apple
holds all the keys to the kingdom. Who knows what mysterious process they use
to select their favorites, but if they don't select yours, that's pretty much
it. No recourse. The web, on the other hand is much more open and many
different people can influence and contribute to a developers success.

~~~
snowwrestler
Did you have a website to promote your app?

Edit to add: no judgment implied; I'm just curious.

~~~
cheese1756
I thought the same thing. The app store page shouldn't be the be-all and the
end-all for discovery. Instead, it should be the last step in the marketing
process. A promotional website, along with using mailing lists and social
media as funnels, would go a long way.

Web apps don't hope that people stumble across them because there happens to
be a centralized directory. The same active promotion used for web apps should
take place for mobile apps.

------
danbucholtz
These numbers are actually quite rosy in my opinion. When I built PaperBox
(www.gopaperbox.com), our chief competitor was getting about 50K downloads per
day - this compared to maybe 50 a day for us back then. We knew we had a
better offering - but we also knew that charging right off the bat would shoot
us in the foot. Instead, we've opted to go the free route to build our user
base & brand, and figure out the business model later on.

I cannot imagine an app charging and being successful right off the bat unless
they have a platform for advertisement (something like Vesper and
Daringfireball.com) or it's made by a very prominent figure/company. The
reality is there are 10 apps for every idea in the app store (in 2014) and the
best app likely won't win market share if they charge from the start.

~~~
thrownaway2424
What about Paper? Not only did they charge from the start, they charged a
rather high price, and entered a market full of existing competitors, some
free.

~~~
otisfunkmeyer
Unless you are talking about a different Paper, Paper was a free app with an
in-app purchase of tools (different brushes) available.

I know this because I downloaded it because it was free and then bought the
tools. I wouldn't have tried it if they wanted the (I think) $4.99 up-front.

------
ronyeh

      Half (50%) of iOS developers and 
      even more (64%) Android developers
      are operating below the “app poverty line”
      of $500 per app per month.
    

Maybe it's because there are so many clones and one-off experiments on these
stores. For example, how many versions of Piano Tiles / Don't Tap the White
Tile are there??? I can't even tell which one is the original at this point.

Also, some people will just write an app as a hobby, or to pad their resume.
At least for the App Store, if you make $9 per month, you've already paid off
your yearly subscription fee of $99, and can safely leave your apps up
forever, even if they are below the "app poverty line."

I would be interested to see what percentage of developers who are actually
trying to make a living from their apps are succeeding or failing.

~~~
forgotpasswd3x
> Accounting for 47% of app developers, the “have nothings” include the 24% of
> app developers – who are interested in making money, it should be noted -
> who make nothing at all.

This kinda implies they're filtering out people releasing apps just for fun,
but I'm not sure how "interested" you have to be to qualify as an "interested
in making money" developer.

~~~
ronyeh
Yeah, I sorta feel like "everyone" is interested in making money. Why not? :-)

I'm curious about those who really want to quit their day jobs, or who have
already quit their day jobs to start a company, who are still struggling to
turn a profit.

------
mmanfrin
A majority of today's small businesses are not sustainable either. Isn't it
something in the range of 85% of small businesses fail after a handful of
years?

~~~
bjelkeman-again
That was an interesting thought. I had to look at the numbers a bit. In Sweden
in 2012 69,216 companies where created [1]. In all of 2012 7,471 companies
were declared bankrupt [2], about 10%. If 85% fail, then another 75% should
have shut down voluntarily. That is out of 1.1 million companies of which
888,000 had some turnover last year [3], Can't find the statistics for the
year on year growth though right now.

Edit: found the stats. Seems the number of companies have only grown by 10% in
total or so in six years [4]. So maybe you are right then.

(all references in Swedish, sorry)

[1]
[http://www.tillvaxtanalys.se/sv/publikationer/statistikserie...](http://www.tillvaxtanalys.se/sv/publikationer/statistikserien/statistikserien/2013-03-19-konkurser-
och-offentliga-ackord-2012.html)

[2]
[http://www.tillvaxtanalys.se/sv/publikationer/statistikserie...](http://www.tillvaxtanalys.se/sv/publikationer/statistikserien/statistikserien/2014-02-11-nyforetagandet-
i-sverige-2012.html)

[3] [http://scb.se/sv_/Vara-tjanster/Foretag--och-
myndighetsregis...](http://scb.se/sv_/Vara-tjanster/Foretag--och-
myndighetsregister/Foretagsregistret/Aktuell-statistik-ur-Foretagsregistret/)

[4]
[http://www.statistikdatabasen.scb.se/pxweb/sv/ssd/START__NV_...](http://www.statistikdatabasen.scb.se/pxweb/sv/ssd/START__NV__NV0101/FDBR07/table/tableViewLayout1/?rxid=44afc400-b603-466a-b0c0-a06ecbcb8e3c)

------
pjmlp
The ones making a living are actually the consulting firms selling trainings,
mobile developer certifications and doing apps alongside enterprise
deployments of the main application,

In gold rush times, the ones selling shovels get the real money.

------
nwenzel
Shame they didn't put more thought into their info graphic to better
communicate their point. Different graphs using the same color scheme to
represent slightly different sized bins of what may or may not be the same
measure. Lower to higher is left to right. But on a different graph it's right
to left. No explanation of time period for Revenue Distribution graph. Choice
of graph type seems somewhat arbitrary. Donut charts and stacked bar charts
become harder to interpret as the number of bins go up and the trend line gets
buried. The colors seem to be the dominant feature of the graphic.

Plain old bar charts might be boring, but they would have more clearly
communicated the message without all the extra distractions. They would also
allow the graphic to use fewer code and require fewer text (legends could be
omitted). At least they did specific actual graph values in the graphs. The
area graph shows how one color can be effective when the graph contains only
one type of data element.

Lesson here is to think carefully and make conscious choices about how you
communicate your message. It's true in pitching an investor, pitching a
customer, or presenting to an audience. Make sure your message gets through.
Otherwise you just have a bunch of graphs dropped on a page and the reader has
to search for what you're trying to say.

Also, hire a designer. You'll be happier.

------
habosa
Like others have said, it's hard to separate the 'App Businesses' from the
'App Hobbies'. For example, I have published 4 Android apps with about 250k
combined downloads. On two of them I did not monetize at all, I just did them
for the exercise and because I like to code. The other two I did monetize, but
only in ways that kept non-time costs to $0 so it was all profit (aka no
marketing, no employees, no paid services).

I've made some decent money off one of the apps, but definitely not enough to
live on for any amount of time. Still i consider my efforts a success, because
I did it as a supplemental activity to my full-time work. If I was trying to
make a living, I'd probably invest in marketing, hire a designer and/or co-
developer, and monetize more heavily.

------
rokhayakebe
This just means "most" businesses are not fully ready yet to run critical
functions primarily on mobile and tablets.

Seriously, even email sucks on mobile phone let alone anything else.

------
opendais
This seems to go a long way to basically say "90% of new
businesses/apps/[insert here]" fail.

Why yes, we've known this forever. It is why it is risky. :/

~~~
visakanv
I know right? Life on Earth isn't sustainable. The Sun will eventually blow up
and destroy it. The universe isn't sustainable, either. Eventually all the
stars will go out and there'll be a lukewarm nothingness...

Sustainability is such a fairy tale.

------
analog31
Replace "app business" with "musician."

------
facepalm
500$/month for an app that took me a month to develop would be OK. Maybe I
could earn more as a freelancer, but you also have to take fun into account.
It's valid to trade fun for money, otherwise people should never go on
holidays.

------
tomjen3
Well neither are most startups - in the sense that most of them will crash.

That is the nature of those kinds of businesses.

------
th0br0
I wish they'd split up the revenue percentage by app category...

~~~
T-A
Look at pages 22 and 25 of the report:
[http://www.developereconomics.com/reports/developer-
economic...](http://www.developereconomics.com/reports/developer-
economics-q3-2014/)

------
gfd54ydfgf
Looks like income inequality is FAR worse in the app store compared to the
rest of our economy. Will the Apple loving leftists speak up about this?

~~~
fyolnish
Most apps are terrible and nobody wants to buy them.

~~~
PeterisP
When in the future the same happens to workers - when most workers are
terrible at the (very few) skills that are still needed and nobody wants to
hire them - then we'll have a problem.

