
Apple has paid over $2 billion to app developers, $12 billion to record labels - ssclafani
http://www.asymco.com/2011/01/17/itunes-has-paid-over-2-billion-to-app-developers-and-12-billion-to-record-labels/
======
maxklein
Think about this rationally: How much software do you actively use on your
computer? I use perhaps 20 types of software. In total, I may have used 50 or
60 different software in my life.

In contrast, I have about 4000 songs. One conclusion that one could make from
that is that the app market will stop growing at some point because people
will have the software they need. Seems like the logical step.

But I'm in the app market, and the market is not what you think it us. People
are not buying utilities, they are buying consumable software. For an example
of what I mean, take a look at KreciDevs android apps:
[http://www.kreci.net/reports/android-developer-income-
report...](http://www.kreci.net/reports/android-developer-income-report/)

X-Ray Scanner

Daily Beauty Tips

Those are consumable software and they are the most popular. WP Stats, what
seems like more traditional software is the least popular.

And I'm not pulling these numbers out of my arse, I write such software also,
and I have 40k downloads a day. FourSquare boasts about gaining 100k users in
2 weeks - I do that in 3 days.

I believe the nature of mobile software is fundamentally different from the
nature of desktop software, and that growth could indeed follow the same curve
as the music store.

~~~
revorad
Are your apps mostly free or paid?

~~~
maxklein
70% are free I think, and drive traffic to the other 30%.

~~~
vijayr
Is there a page that has links to your apps?

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aditya
So, app developers are the new rock stars? Finally, revenge of the nerds! :-)

On a more serious note, this is fascinating data. I wonder what the comparison
to web apps looks like, but that's a much harder (almost impossible?) number
to get at.

I say fascinating, because who would've thought that having a centralized
marketplace with a builtin secure payment mechanism would've created so much
value/wealth over such little time, kudos to apple.

~~~
InclinedPlane
_"who would've thought that having a centralized marketplace with a builtin
secure payment mechanism would've created so much value/wealth over such
little time"_

eBay. Amazon. Valve. Microsoft (XBox Live).

Apple isn't the sole innovator in this area, a lot of businesses have done
excellent work in similar veins. Nevertheless, they do deserve a lot of kudos.
They helped cement digital music as fully legitimate and accepted by the music
industry. They helped push DRM free music. And they've done good work pushing
the boundaries, often in the right direction, in mobile phones and apps.

------
trotsky
Jobs reported $1,000M to developers in the lifetime of the app store in Jun
'10, so that's for the first two years. (~$1,400M gross revenue)[1]

Now asymco has that doubling to $2,000M in the following 7 months. It's
possible, I suppose, but seems quite optimistic.

I don't have the numbers in front of me, but I think it's safe to say that iOS
installed base hasn't doubled in the last seven months. I think I recall iOS
market share being reported as growing 2% in the last 12 months.

That seems to leave the lions share of the revenue acceleration to increased
ARPU. Higher ASP on the iPad may account for some but it's hard to believe it
would be enough.

In more traditional stock analyst estimates, Citibank has 2011 app store
revenue at "up to $2B" [2]. With asymco's estimates he says we're already
exceeding that currently, showing $2.5B in yearly revenue with no growth. If
you extrapolate asymco's growth curve that puts 2011 at more like $5B in gross
revenue.

I just don't see it. I wouldn't be surprised if the estimated/assumed app ARPD
of $0.29 is the issue.

[1] [http://tech.fortune.cnn.com/2010/06/23/app-store-1-of-
apples...](http://tech.fortune.cnn.com/2010/06/23/app-store-1-of-apples-gross-
profit/)

[2] <http://www.intomobile.com/2010/12/31/apple-app-store-iphone/>

~~~
silvestrov
The smartphone market is exploding (esp. in the rest of the world), so even if
Apple's market share stay the same, they will sell a lot more iPhones.

The CDMA iPhone will expand the market even more: think China.

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tlb
10% gross margin doesn't mean that the labels get 90%. Bandwidth and storage
cost a lot too.

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motvbi
I don't think it is fair to include free apps in the analysis and then ignore
the revenue that may have been generated with ads. The article does end with a
note saying that $2b was paid out in 31 months for apps compared to the music.

------
credo
The headline seems to make an assertion about $2B paid to developers.

However, it appears that the $2B number is an asymco estimate. It is not clear
how they arrived at this estimate. Does anyone know how the they arrived at
the $2B number ?

 _[edit: Thanks for the explanation, Trotsky. His post didn't mention any
download numbers.

However, it looks like he discussed download numbers in a different post.
Given those download numbers, his estimates make sense - of course, with all
the caveats that you've outlined]_

~~~
trotsky
He took the June 2010 WWDC numbers of $1B to developers ($1.43B gross) and 5B
downloads over the first two years of the app store to come up with $0.29
revenue per download over the lifetime of the app store. Then he applied that
$0.29 per download to new download figures. This assumes that the percentage
of free downloads or no cost upgrades has stayed static over the app store
lifetime.

------
what-to-do
Not one member joined in to say he was making any serious money from apps.
Interesting.

------
JoeAltmaier
Apple didn't pay anybody; the users paid, Apple skimmed, the developer got
what was left over.

I'd like to see the headline: Apple leeches off of millions of developers.

~~~
angstrom
They're a middle man providing a service that has taken different forms in the
past. You can be cynical, but realistically their goal is to make a profit by
providing a service which has it's own costs to cover. How much would those
developers have reaped without their service?

~~~
JoeAltmaier
Lots, lots more. If the Apple their devices weren't monopolistically locked
down, or the store was an open market.

Really, you think its worth their cut, just to operate the store? How much
overhead would it take you to put up a web store? They only get away with it
because they aren't Microsoft.

~~~
ceejayoz
> Really, you think its worth their cut, just to operate the store?

That's not all they do, though. They build the platform and heavily market it,
too.

~~~
JoeAltmaier
They get paid for their hardware. Everybody else does too - phones, Android.
Apple adds to that a 'company store' model that is unjustified.

They do it only because they can get away with it.

