
Half of all app store revenue goes to just 25 developers - bitcartel
http://www.theregister.co.uk/2012/12/04/top_25_app_devs_earn_half_of_revenue/
======
wallflower
I've said this before. Almost all iOS developers (who are not full-time
employees) I know make their money by building free apps for Fortune 500
Corporations, smaller companies, and other organizations. The consumer never
knows, the developers handle everything from walking the company through the
App Store initial registration to initial submission to updates.

It is all about ego. There is immense peer pressure on executives to have an
app on iOS (and sometimes Android).

~~~
saryant
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.

~~~
yskchu
Don't let that experience sour you too much about working for a megacorp. It
sounds you got quite a crap deal.

The worst project you can be on is one:

1\. With no clear goals, he has no idea what he wants.

2\. No support team; basically, like you said, you're the team, and even
worse, you're "green".

It sounds like you got one of those "pie in the sky" projects; there's no
clear benefit that the CIO can get from this, and if you succeed, he looks
awesome; if you fail, he doesn't care, it's one of those "throwaway" projects.

In a megacorp, you have to get into a project which is directly involved in
their day to day business, directly contributing to revenue, to get more
recognition, resources, and $$$. Get into such a project, or make yours give
some visible benefit to the company.

In your example, I'd have tried to pivot it to be a reporting tool; I find
that senior management in banking generally have a poor visibility in their
business monitoring, current transaction levels etc; this can give clear and
visible benefit to the company.

Once you can show the benefits to your Boss and the CEO, the extra help and
resources will follow.

~~~
facorreia
I agree. You got handed a pretty sweet opportunity to learn and to shine. The
CIO had a goal: he wanted to impress the other executives with an iPhone
application. You even had a hint: he liked a news carousel. IMO choosing to
build a mobile website instead was a mistake. I would have chosen a
"RAD"-style app builder and produced a first version with visual appeal. You'd
make him look good, achieve a first win, and become known as "the mobile guy",
on the route to become Mobile Development Technical Lead.

------
Tloewald
How much non app store shrinkwrap software revenue goes to the top developers?
I would imagine a far bigger proportion than 50%. Just consider Microsoft,
Adobe, EA, Activision, and how much is left for everyone else? (B2B is
probably the same but it's harder to figure out.)

For example, Adobe (usually considered number 2 in shrink wrap desktop
software) has roughly $10B in annual revenue, Autodesk is barely a fifth of
that. Microsoft is $70B, a good deal of that is just MS Office. Activision is
maybe $5B, EA less than $4B. Pixelmator — one of the standout success stories
of indie Mac development — probably has under $5M. If there are 100 indie devs
as successful as Pixelmator I'd be surprised — MS Office alone is 7000x
bigger.

If anything the iOS App Store sounds far more democratic

An article like this is worthless without context and it offers nothing new.

------
dirkdk
This will hurt Apple in the long run.

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.

Biggest reason imho is that these top 25 are one big self fulfilling prophecy:
A top 25 position guaranties big download numbers. And to get there you need
either a collection of apps already out there for cross promotion or buy lots
of ads and installs.

Switching to a metric that indicates quality much like engagement measured by
# sessions or # minutes use/month will make quality apps stand out much more.

~~~
tsotha
>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.

~~~
WhaleBiologist
The biggest problem is when the 1% of good apps get overlooked, or have 90%+
piracy rates.

------
brudgers
Over the long run, Apple may not want small developers playing a prominent
role in the App store.

There's more risk to the brand compared to Electronic Arts, and Apple could
probably charge for Fortune 500 companies to place their apps in the store.

Stripping out the small developers would remove a lot of scams and address
discovery issues.

700,000 apps isn't consistent with the way Apple's other stores operate. Nor
is it consistent with their brand strategy of high quality via curation.

~~~
brianchu
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.

~~~
brudgers
My point is now that they have Angry Birds, etc. they may not really need
small developers. Back in the late 1980's and through the mid 1990's there
were lots of independent computer shops building PC's in the U.S. The industry
changed and those shops are largely gone.

What the report indicates is that the gold rush is ending. Yes there's still
mining, but it's increasingly being done by Rio Tinto with giant trucks, not
someone squatting in a stream with a pan.

------
Samuel_Michon
_"Of the $120m in total revenue generated from paid app downloads and in-app
purchases in the US during the first 20 days of November 2012, fully half was
split between just 25 developers."_

That's actually pretty diverse when you compare it to other markets: there are
6 big publishers [1], 6 big media conglomerates [2], and only 3 big record
labels [3].

I also wonder how the pie was divided when software was only sold in boxes. I
believe that Electronic Arts and Disney have been doing well far before the
App Store came along.

[1] <http://www.criticalpages.com/2012/the-big-six/#more-1252>

[2]
[http://en.wikipedia.org/wiki/Media_conglomerate#Notable_exam...](http://en.wikipedia.org/wiki/Media_conglomerate#Notable_examples_.28the_big_six.29)

[3] <http://en.wikipedia.org/wiki/Record_label#Major_labels>

~~~
jonknee
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.

~~~
Samuel_Michon
_"the stores themselves are more akin to your examples than the developers
selling through them."_

How so? Game publishers sell their products through iTunes – book/magazine
publishers, movie studios, and record labels do too. The game publisher
invests and curates, Apple acts as distributor and retailer – that's the same
as how other media work.

 _"If you are a mobile developer you can sell through one of the app stores or
you can pound sand."_

Or the third option: you can work for one of the successful software
publishers. We now know there are at least 25.

Writers don't have to pretend to be publishers. Recording artists don't have
to run a record label. Mobile developers don't have to be software publishers
or distributors.

~~~
jonknee
That's like saying you can get a big 3 record contract or become a studio
musician. As long as you're playing music right? My point is just that
comparing the disparity in the app stores to the disparity in other media
verticals is not a good one.

------
sumukh1
There's a strong power law with app revenue on iOS . The new updates in the
iOS App Store continues to favor the top producers.

Among iOS games the bottom 80% of apps make around 3% of the revenue. [1]

This blog post has more information from game developers:
[http://www.streamingcolour.com/blog/2011/09/28/results-
ios-g...](http://www.streamingcolour.com/blog/2011/09/28/results-ios-game-
revenue-survey/)

Here's a graph of self-reported revenue among iOS Game Devs:
[http://www.streamingcolour.com/blog/wp-
content/uploads/2011/...](http://www.streamingcolour.com/blog/wp-
content/uploads/2011/09/03_AllLifetimeRev.gif)

[1] : [http://www.streamingcolour.com/blog/wp-
content/uploads/2011/...](http://www.streamingcolour.com/blog/wp-
content/uploads/2011/09/05_RevDistribution.gif)

------
coryl
This is really just a result of app store architecture. Being on a top
grossing or top download list simply perpetuates an increase in your download
numbers and consequently your placement on the ranking.

~~~
gurkendoktor
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.

------
ZeroGravitas
I wonder if Steve Jobs came to regret the famously ambivalent attitude Apple
had to gaming on the Mac?

There's a great scene in the (generally great) BBC dramatization of Sinclair
vs Acorn in the 80s, where Acorn are disappointed that all the games are being
made for the Spectrum, meanwhile Sinclair is annoyed that his amazing machine
is being reduced to a games console.

The greatest achievement of the iPhone (despite it's many amazing feats)
appears to have been producing a socially acceptable Gameboy, just as Sony
managed to associate the Playstation brand with nightclubbing and other grown-
up pursuits in the early 90s to great success.

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

~~~
89a
Wipeout was one of the launch titles in the UK and featured techno/dance music
on the soundtrack

~~~
ZeroGravitas
Some details from the Wikipedia page for Wipeout:

 _Wipeout was developed and published by Psygnosis, designed in part by The
Designers Republic. Aimed at a fashionable, club-going, music-buying audience,
The Designers Republic created art for the game's packaging, in-game branding,
and other promotional materials. Music tracks were licensed from non-
mainstream electronica acts to create an original soundtrack album to promote
the game.[3]

Wipeout was first released alongside the PlayStation in Europe in September
1995. It was the first non-Japanese game for the console. Two months later in
November 1995, it was released in the U.S. The game went to number one in the
all format charts, with over 1.5 million units of the franchise having been
sold to date throughout Europe and North America.

Launch activities for the game included installation of PlayStation consoles
running Wipeout in popular night clubs, the release of an accompanying
soundtrack music CD, and the sale of a range of Wipeout clubwear._

------
gdilla
Well, this might not be that accurate. There are several app/companies that
generate revenue outside of iTunes run transactions. Apple's in-app purchase
rules only apply to digital content and services; they do not apply to
physical goods and servicse. So, Kayak, Expedia, Hotels tonight, Viator,
Amazon's store app, etc are all quite popular and earn money from their iOS
apps that wouldn't be recorded or "taxed" by apple.

~~~
Ologn
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...](http://www.appbrain.com/stats/libraries/details/tapjoy/tapjoy)
) 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...](http://techcrunch.com/2012/03/06/in-mobile-apps-free-aint-
free-but-cambridge-university-has-a-plan-to-fix-it) ) 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.

------
vijayboyapati
Yet another zipfian distribution in computer science. Hoocuddanowed

------
shimfish
As an indie dev, I'm way more worried by this development:
[http://www.usatoday.com/story/tech/personal/2012/12/05/new-a...](http://www.usatoday.com/story/tech/personal/2012/12/05/new-
amazon-kids-service/1747421/)

If everyone moves to this subscription model, the indies won't even be invited
to the party.

~~~
angryasian
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.

~~~
shimfish
The article mentions that apps are included also.

------
polemic
So, really, just like all the other long-tail internet market segments?

------
jessaustin
I'm not a mobile app dev, but I could have sworn that I'd heard until recently
that no one made money from this stuff. Obviously this article implies that
many people are like that, but it also seems to imply that there is a
transition area -- a middle tail if you will -- in which independent devs can
make money without becoming Zynga or Rovio.

~~~
ja27
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.

------
MrJagil
Well, isn't it the same with desktop software? I bet the big desktop-software
developers (Apple, Microsoft, Adobe etc) get about half the revenue of that
market as well.

That doesn't mean there isn't room for smaller companies/products, as is
clearly evident looking at my own applications folder (Flux, Transmission,
Switch, Appcleaner etc).

------
nicholassmith
I think the assumption is "there's no one making hundreds of thousands but
these people", but I'm willing to be there's plenty of people making a living
from apps on the app store. Maybe not as good as they could make taking a
corporate wage, but probably more satisfying.

------
pedalpete
Dig into these details a bit deeper, and you'll see the average revenue of
these 25 developers (by my math) is $4.38m/year. But of course, the developers
don't get the full $4.38m, apple get's a 30% cut, leaving the developers with
$3 million in revenue.

How many of these top 25 developers can operate on $3 million per year?

Of course, their is likely another significant difference between the #1
developer and #25, so I wouldn't be surprised to see #25 developer making <
$1m while #1 makes $15m+.

All of this is of course assuming that the first 20 days of November are
consistent with sales for the rest of the year.

~~~
Samuel_Michon
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).

~~~
pedalpete
Oh you're right, sorry about that. Funny how a factor of 10 makes things so
much better... Or worse.

------
CesareBorgia
Seems like a misleading title to me. "Disney, ​Electronic Arts, Gameloft, Glu,
Kabam, Rovio, Storm8, and Zynga," employ many developers; certainly more than
25.

------
wildranter
Like monkeys trapped in a little room, we killed ourselves until there was
just 25 smart monkeys left. Kudos to us in markeiting and pricing strategy.

In this process we also programmed people to relate software to free content.
Good luck trying to revert this damage.

We should all quit coding and go to business school. Rule or be ruled.

~~~
teh
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)

~~~
wildranter
Just because developers have been treated as a commodity it doesn't mean we
are. Sure I don't feel so. Do you? Anyway, we have to change this as it is not
right. We put a lot of effort to make good software, and cutting each others
throats in a mindless price war isn't going to pay anyone's bills.

What you find unsurprising and good for consumers is extremely bad for
developers. The AppStore Price Wars Attack of the Clones was catalyzed by
basic naïveté towards widely known business practices. Worst, we could've
fixed it by reading some business books before committing to such low price
tiers. But, unfortunately the damage is done.

It is inconsistent with our intellects that we developers behave like mindless
monkeys. Also, unacceptable is the fact that any guy selling bananas at any
given farmers market understands more about pricing, and the facts of
microeconomics, than most of us. This should've been fixed in the
universities, but even so there's time for that.

I'm not proposing price fixing as that's immoral, and against law. What I'm
stading for instead is for us as a community to start behaving more
intelligently regarding business matters. Also, I crave for us developers to
value more the sweat and tears we put into our craft.

Programs aren't just code, instead they're the materialization of our ideas
through hard work. I think that worthy more than a buck.

I am a developer too.

~~~
teh
How I feel has little to do with how markets work.

Putting a lot of effort into something means nothing. I can spend days digging
a hole with a lot of effort and then someone with a digger does it in one
hour. The only metric that matters is what buyers are willing to pay.

I'm curious what you have in mind when saying "more intelligently regarding
business matter"?

As an aside: I always find it slightly offensive when someone speaks for me by
using "we", "us" or "our". I may or may not share your opinions but I'd rather
speak for myself.

~~~
wildranter
Too bad you felt offended by my use of pronouns since I evidently wasn't
speaking about you. Just because you're a developer doesn't mean you're the
representation of an entire group.

Perhaps you never heard about Behavioral Economics [1], and that's why you
quickly dismissed your feelings from this subject. Nonetheless people's
feelings play an important part on how the markets are played.

I understand you're curious to learn about my views on business, but first you
need to understand more about emotions, without it you're a dead duck. Sorry
as I can't give you a link or recommend a book to help you out here. But you
can always go out and interact with real people, be openharted, and try to
learn from them.

[1] <http://en.wikipedia.org/wiki/Behavioral_economics>

------
paulhauggis
What do you expect when customers expect apps < $5?

The only way to make a living is to get tons of purchases, which isn't easy.

