'AppStore Secrets' : Price Drops, Usage and Ad-Supported Models

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2009/02/20/appstore-secrets-price-drops-usage-and-ad-supported-models/)

Greg Yardley, co-founder and CEO of mobile analytics firm Pinch Media (http://www.pinchmedia.com/), recently gave a presentation (http://www.slideshare.net/pinchmedia/iphone-appstore-secrets-pinch-media) at the New York iPhone Developers Meetup highlighting data gathered from over 30 million App Store downloads of applications utilizing Pinch Media's analytics libraries. The presentation, entitled 'AppStore Secrets', reveals a number of interesting of statistics and conclusions.

Notably, Pinch Media's data on price changes reveals that a price cut on average results in a 130% increase in sales demand, while a price increase decreases demand to 25% of previous levels. The data, however, also suggests that while price cuts can be beneficial, developers should not initiate price cuts on apps that are already seeing a trend of increasing downloads, and that applications that have already seen broad visibility benefit less from price cuts.

Regarding the ability of applications to sustain users' interest, Pinch Media discovered that only about 1% of downloads end up being used long-term, with only about 20% of users of free applications using the application beyond the first day. While paid apps generally perform a bit better in this regard than free apps, the drop-off in usage is still steep in the vast majority of cases. Similarly, the amount of time users spend engaged with an application decreases significantly, stabilizing at approximately five minutes per day, although games do perform approximately twice as well as other applications in this regard.


http://images.macrumors.com/article/2009/02/20/121545-pinch_media_500.png


Pinch Media also performed analysis on ad-supported and paid applications to determine which model is likely to perform better. Based on their data and estimates of ad pricing, they concluded that in general an ad-supported application would have to "bombard" users with ads in order to generate as much revenue as a paid version. There are, however, certain applications (less than 5%) that can either command higher ad rates due to their audience or keep users engaged for a long enough period to make an ad-supported business model worthwhile. Consequently, Pinch Media recommends that unless there is a compelling reason to launch an ad-supported application, developers should charge for their apps and only switch to an ad-supported model if usage data suggests that such a move would be successful.

Article Link: 'AppStore Secrets' : Price Drops, Usage and Ad-Supported Models (http://www.macrumors.com/2009/02/20/appstore-secrets-price-drops-usage-and-ad-supported-models/)

[Mykbibby]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5G77 Safari/525.20)

Hmmm... Sound like consumers win always!

[Kilamite]

I for one can't be bothered with the AppStore much (in the sense of surfing it for the sake of surfing it) - if something really cool gets reviewed, I might be tempted but I never check the Top Free Apps/Top Paid Apps at all now.

I have everything on my iPhone I need, and anything else I'd add to it, as the research says, would probably never get used again.

[bacaramac]

I would say that this trend applies to me on usage. I wonder if the app store will slowly calm down or if people will continue to buy apps they won't use long term.

[Enuratique]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the ******* at work.

[ipoppy]

Thats nothing....I have already forgot what I've downloaded from app store today. Is there any graphs for this???
:confused::eek::confused:

[jhilla]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the ******* at work.

I couldn't agree with you more, for the most part I'll download new apps as they come out but they don't last long.

I love Tangram Pro, I prefer the apps that offer more than entertainment. Utlities are what drive the iPhone for me such as WhatTheFont, Shazam, Converter, TipStar to name a few.

That doesn't mean I don't have a page filled with games I enjoyed at one time that I keep onboard for an unseen circumstance such as the bus, subway or "*******". :D

[Furrybeagle]

I wonder if the data about ad-supported versions takes into account that there may be people who use the ad-supported version of an app like a software trial. Perhaps these are people who wouldn’t initially want to pay for the app, but after trying the free, ad-supported version, they are more likely to pay full price to upgrade and get rid of unsightly ads.

The software devs may not see revenue from the ads, but they probably *do* see revenue from users upgrading from the ad version to the “premium” version of the app (who wouldn’t have bought the premium version had there not been a free version).

[Yarg]

I agree with Kilamite. My phone is fine without the 3rd party additions however I wish apple would release some "skins" so we're not stuck with the same icons all the time.

[kornyboy]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2_1 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5H11 Safari/525.20)

Very interesting. Some of the stuff was obvious but still interesting to see.

[jhilla]

I wonder if the data about ad-supported versions takes into account that there may be people who use the ad-supported version of an app like a software trial. Perhaps these are people who wouldn’t initially want to pay for the app, but after trying the free, ad-supported version, they are more likely to pay full price to upgrade and get rid of unsightly ads.

The software devs may not see revenue from the ads, but they probably *do* see revenue from users upgrading from the ad version to the “premium” version of the app (who wouldn’t have bought the premium version had there not been a free version).

I agree, it's like downloading a demo from PSN. I'm not sure if I actually wanna buy Resident Evil 5 but by playing the buggy demo, I'll get a taste of the gameplay and what not then I might be more inclined to purchase or decide it's not for me.

I agree with Kilamite. My phone is fine without the 3rd party additions however I wish apple would release some "skins" so we're not stuck with the same icons all the time.

I wish they would release themes just like my old moto and SE used to have. More user driven content that could be released through the AppStore. Although I saw footage of a jailborken iPhone and they had custom skin/theme.

[kas23]

All very interesting stuff (except for the part above not dropping your price if your sales are increasing. really? :p), particularly about useage. iPhone users end up using about 1% of their total apps on a long term basis. Makes sense. This is also a reason why people don't want to drop money on an app - they won't likely use it every again.

This is also why we should have a 24 hour period of testing an app. I know developers don't want to hear this, but this would clear the App Store out of a LOT of crap.

[SolRayz]

Well I am certainly not surprised by all this. For me the most useful programs are found in Cydia for my jb iphone such as the iPhone Video Recorder and Qik.:rolleyes:

The usefulness of the majority of programs offered in the appstore clearly remains to be seen.

[jc46]

This reminds me of the days of HyperCard. Within a short period of time there were a Gillions of "stacks" (That's what they called programs) posted. Most of them worthless, but fun never the less.

[shiseiryu1]

This isn't too surprising. Some of the apps I download I also only use once. However, I have found Logmein, Firebox, and Pocketmoney to be apps that I do use on a regular basis. Once the Slingbox app is available I'll probably use that a lot too.

[ewoods]

Is there anything stopping a developer from charging for their app and then later, when sales have significantly declined, releasing an "update" that includes ads? To the best of my knowledge, having already paid for the app and with no easy way to revert to a previous version, there wouldn't be anything the consumer could do about it other than stop using it, right?

[marksandvig]

Interesting.. I just did a sync of my iPhone last night and boringly looked through all the apps I had downloaded.. Mind you I only like to have 2 pages total (id have one if I could delete some of apples default apps XD.) I counted 50-something apps.. Even though the majority were probably in the first week when I was a downloading machine.. Interesting article though

[manhattanboy]

This confirms what most people already know... most of the apps on the store are useless.
Now if we can just get a streaming 3G hulu app..........

[manhattanboy]

Is there anything stopping a developer from charging for their app and then later, when sales have significantly declined, releasing an "update" that includes ads? To the best of my knowledge, having already paid for the app and with no easy way to revert to a previous version, there wouldn't be anything the consumer could do about it other than stop using it, right?

You could chose not to update!

[Michael73]

What I'd love to see is a correlation of AppStore app data with data about dashboard widgets. Sounds odd at first, but I bet the same thing happens with widget usage. Lots of downloads but most get tossed after a day or less. Very few see true long-term usage.

[manhattanboy]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the ******* at work.

I disagree to a certain extent. I use my internet radio free apps and weather/radar app quite a bunch and use them consistently...well except for when the ******* AT&T network isn't cooperating :(

[Bonte]

I would say that this trend applies to me on usage. I wonder if the app store will slowly calm down or if people will continue to buy apps they won't use long term.

Do the apps need to be used long term?
We pay $3 to rent a movie that has 2 hours of entertainment, 99 cent for a fun app is a no brainer for most users.

[wooo]

I disagree to a certain extent. I use my internet radio free apps and weather/radar app quite a bunch and use them consistently...well except for when the ******* AT&T network isn't cooperating :(

I'd have to agree here, sure the fart and beer apps etc. are going to be collecting dust and are really just a fad (a lucrative one of course) but some apps that provide real utility (radio apps, ssh access, air sharing, etc.) have real staying power.

From just under 2 weeks of being in the store, my own app (ooTunes Radio) has shown me that it has a quite a bit more "staying" power and useage time than the average (which is of course brought down by the gimicky stuff that is really only funny or fun for a few minutes). Of course, the downside of that is that It's increasing my server/hosting costs, but if it comes with > 100 downloads a day, it's gonna feed my family, which is nice.

[kmcrawford]

Now I feel dumb for making my one of my apps ad-supported. :)

But I went from just a few downloads a day to 1000s.

[jhsfosho]

I can't say that graph surprises me much. I'd say that I fall into the category of download and forget, though there are a couple games that were free that I tend to play every once in awhile.

[ChrisA]

...Pinch Media discovered that only about 1% of downloads end up being used long-term[/QUOTE]

So in other words iPhones apps are mostly just novelties that ware off very soon and most people have no need to them at all and just get them only because they are free of very low cost.

Kind of figures... for most people cell phones are like that too. Just entertainment that they don't really need.

[bigmc6000]

Do the apps need to be used long term?
We pay $3 to rent a movie that has 2 hours of entertainment, 99 cent for a fun app is a no brainer for most users.

Was wondering when someone would say this. I mean, let's say you get 10hrs of entertainment out of a 99 cent app. I know of plenty of people who buy video games for their PS3/Wii/360 that get less than 10 * 50 hrs of entertainment out of them so from that perspective a 99 cent app can actually provide more entertainment than a $50 console game. As for me - I've probably gotten over 50hrs of entertainment out of Orions and easily over 100hrs of entertainment out of RealSoccer. I've also gotten probably 50hrs or more out of Wordle (a 100% free app w/ no ads).

[NewSc2]

I'm not sure if their reasoning is correct. There are some apps out there that I love, but will never use on a daily basis. Shazam, Labyrinth, heck--even default ones like Weather or Stocks.

[kdarling]

Interesting that people are willing to pay for throwaway apps that "last" them only a day or two.

But I guess it fits the current model of instant and temporary gratification.

Heck, in comparison, I only get about five minute's pleasure from a 99 cent Peppermint Patty or Twinkie. :)

[ewoods]

So in other words iPhones apps are mostly just novelties that ware off very soon and most people have no need to them at all and just get them only because they are free of very low cost.

Makes sense to me. Most of the apps I buy are games and while very entertaining, there really aren't that many games on ANY platform that have infinite replay value. With my PS3 and my Wii I usually buy a game, finish it, and almost never play it again (the notable exceptions being simulation and party games). My iPhone is the same way. I've got two or three staples on my front page that have true replay value and the rest of the games get played and then uninstalled. That does NOT mean they weren't worth the cost, nor does it mean that they were just novelties.

[Peace]

Weird. I use multiple apps on a daily basis.

Guess I'm a statistical anomaly :)

[phelix_da_kat]

If it "makes my life easier"..

There are a few apps I use daily.. like the one that shows delays on the subway (TubeStatus). Just lets me know if I should make alternative travel plans.. very simple... brill!

There are other apps I want to use. Like Where. I got this for when I actually travel, but I wanted to test it out in my home city, so used it like crazy for a few days... I haven't used it since, but will do when I go on vacation.

Games... are a fad. And I only play with them for a few days/weeks before I get bored.

Have maybe 50% apps, I would likely not use again. Partly due to the network.. takes too long. The free WiFi is too slow, more often than not slower than 3G in some areas... and/or the refresh is too slow.

The 24hr test is a good idea. Especially for the more expensive apps. Or insist they have "lite" versions. ie any app over USD5 (or GBP3)

[henrystar]

I have a web page I'd like to make available as an app. Just to get more hits. Has Apple ever approved something like that? If they have, can anyone give me the Xcode of the app so I can just copy in my URL and submit? Please send your reply (if positive!) to henry@jhu.edu so I don't miss it. Thanx!

[goodwilldrums]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the ******* at work.


My thoughts EXACTLY. I do the SAME thing at work.

[rockosmodurnlif]

Skins? Apple release skins? Talk about a pipe dream.

But on topic, looking at my iPhone I have 17 apps, 9 of them free, 1 ad-supported, and I'll admit of the free apps, I use only 3 everyday but the other ones are on my phone for when I need them.

If my computer is on and I remember, I will check the weather there instead of using the Accuweather app (the default weather app is slightly better than looking out the window). Which would be a reason why I don't use some apps daily.

I have 4 games on my phone, 2 of which have been on the phone since I got it. Of my purchased apps, the 2 I paid the most for I still have on the phone and use at least weekly.

[mirv]

As the author of the (currently) free iPhone app "Baseball", that graph seems to be somewhat close to what I've seen except for seasonal influence of the baseball season. There have been over 400,000 downloads of Baseball, almost all of them during last year's season but there is a small but steady continuing flow of downloads. I am planning to release version 2.0 in the next few weeks and charge $2.99. It will be interesting to see if it drops to 25% of the free version or not.
-Mark

[marine610610]

...Pinch Media discovered that only about 1% of downloads end up being used long-term

So in other words iPhones apps are mostly just novelties that ware off very soon and most people have no need to them at all and just get them only because they are free of very low cost.

Kind of figures... for most people cell phones are like that too. Just entertainment that they don't really need.[/QUOTE]


Absolutely, there is a lot of money to be made in selling people things they don't really need/won't really use.

[rockosmodurnlif]

As the author of the (currently) free iPhone app "Baseball", that graph seems to be somewhat close to what I've seen except for seasonal influence of the baseball season. There have been over 400,000 downloads of Baseball, almost all of them during last year's season but there is a small but steady continuing flow of downloads. I am planning to release version 2.0 in the next few weeks and charge $2.99. It will be interesting to see if it drops to 25% of the free version or not.
-Mark
Is that the one with all the old teams whose logos you had to remove?

[MacEyeDoc]

Maybe I'm missing something here, but how can Pinch Media tell how many times you use an app?

I realize they can find out quite easily how many apps are downloaded but how the heck do they know how many times you actually touch the icon to open the app on your iPhone? This amount of knowledge seems to be a bit of overkill - why would anyone want to waste the server space to catalog the number of times you use an app after you buy or download it?

Does Adobe track how many times you open Photoshop, etc?

Just asking for info . . . .

[Jayomat]

Maybe I'm missing something here, but how can Pinch Media tell how many times you use an app?

I realize they can find out quite easily how many apps are downloaded but how the heck do they know how many times you actually touch the icon to open the app on your iPhone?

That's what i thought by myselft. I have no idea and hope that they just made a guess............

[lucidmedia]

I realize they can find out quite easily how many apps are downloaded but how the heck do they know how many times you actually touch the icon to open the app on your iPhone? This amount of knowledge seems to be a bit of overkill - why would anyone want to waste the server space to catalog the number of times you use an app after you buy or download it?

Does Adobe track how many times you open Photoshop, etc?

Just asking for info . . . .

Not overkill at all, in fact I would argue that how many times an app is used is more important that how many times it is downloaded...

Many Iphone apps connect to a server for content. This allows developers to track their usage. Its also how they can track how many more copies of the app have been cracked and stolen vs. downloaded from the app store.

and yes, photoshop and the rest of the creative suite does "call home" just about every time you open it... I don't think too many people outside of adobe knows what they do with that data. I assume that a great deal of it is ignored. Last time I was at Adobe's headquarters, however, I was very impressed at the types of penetration and usage statistics they were able to present to me.

[twoodcc]

very interesting. i believe it though. i didn't think ads really worked all that well. but as a user, i think i'd rather see ads than pay for apps.

[jonjamesm]

Link - http://http://uk.news.yahoo.com/16/20090221/ttc-iphone-users-not-using-apps-6315470.html (http://uk.news.yahoo.com/16/20090221/ttc-iphone-users-not-using-apps-6315470.html)

anyone think its true? Do you download and then not use the app... I use most of mine I'd say...

[The Tall One]

I don't like that they know when I use my apps and when I don't.

[MacEyeDoc]

Not overkill at all, in fact I would argue that how many times an app is used is more important that how many times it is downloaded...

Many Iphone apps connect to a server for content. This allows developers to track their usage. Its also how they can track how many more copies of the app have been cracked and stolen vs. downloaded from the app store.

and yes, photoshop and the rest of the creative suite does "call home" just about every time you open it... I don't think too many people outside of adobe knows what they do with that data. I assume that a great deal of it is ignored. Last time I was at Adobe's headquarters, however, I was very impressed at the types of penetration and usage statistics they were able to present to me.


Thanks for your answer. I can see now that a developer might want to know how many times an app is used. I'm surprised that data is so easily obtained.

Still the ability for someone else to know exactly how many times I use an app is a little unsettling. Now that my eyes are opened a bit, I could see that someone could be tracking not only how many times I use an app, but what time of day it is, or where I am when I do it.

In fact, lucidmedia, I cracked open that database and found that you used the app "iFart" 3600 times in the last month. And 1000 of those times where in church!! (Just kidding - but you see where this could lead)

I like being informed of who knows what about what I'm doing. It is interesting that a few years ago you could buy a CD and listen to it once or 1 million times, and no one would know the difference. Now, apparently, if you use something on the iPhone, someone knows exactly what, when, where and how many times you are doing that "thing".

Kinda sobering . . . . . .

[mirv]

Is that the one with all the old teams whose logos you had to remove?

Yes, that's the one. I'm getting a pretty continuous stream of feature requests and other comments, so people still seem to be using it.

[bruinsrme]

There are some itune apps and 3rd party apps that I use ona daily basis.
I tend o pay a lot more for 3rd party apps than I would on an itunes apps.

[CoSkay]

This confirms what most people already know... most of the apps on the store are useless.
Now if we can just get a streaming 3G hulu app..........

agreed. Hulu would be awesome, and this article is pointing out the obvious. People become bored with apps that either addicting (games), useful (Yelp, maps, etc.) or community based (facebook, twitter).

It would be much more interesting if they broke out each of the various types of apps.

[SkydiveGuy]

The problem is, there is no "Demo" available for apps.

If I download a free app to see what it is, and don't like it, I remove it.

Paid apps NEED to be able to get a sample prior to purchase.

[alFR]

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the ******* at work.

My thoughts EXACTLY. I do the SAME thing at work.

Aaargh. Thanks for that, I'll do my best to blot those images from my mind for the rest of the day. :)

I'd have to agree here, sure the fart and beer apps etc. are going to be collecting dust and are really just a fad (a lucrative one of course)

Kind of figures... for most people cell phones are like that too. Just entertainment that they don't really need.

Definitely agree with this. In the UK we have multiple mobile phone game/ringtone/wallpaper download services: probably the best known one is Jamster (may they burn in Hell for the Crazy Frog). These things cost £4.50 PER WEEK to subscribe to, just to get something that you could get for free with 10 minutes on google. People will, quite obviously, pay good money for any old crap. From that point of view I'd guess that the average MacRumors member is a bit of an edge case, as we probably tend to be more techy than the average phone user and maybe more likely to be discerning about what we download and more likely to take the DIY route than paying for stuff we can easily do ourselves.

[slughead]

lol only 20% use it the first day.

I must confess, I do that a lot with free downloaded programs.

When buying programs, however, I usually wait until I absolutely need it to actually purchase it, and it's usually accompanied by cussing under my breath because I'm such a cheapskate.

[branjosef]

I don't like seeing trendline graphs going down like that unless its gauging my chances for contracting communicable diseases. :eek:

[XCool]

I'm not sure how big their sample size, in terms of the number of apps tracked that they came to conclude the graph.

So far, I am aware of only one app that calls home to Pinch Media, which is Analytics App, which I reviewed here: http://www.onemoretap.com/2009/02/14/review-analytics-app/
Note that the developer's privacy policy did mention about this, so no worries.

Anyone knows of any other app that calls home, and when it does, calls back to Pinch Media?

[chimerical]

Not overkill at all, in fact I would argue that Many Iphone apps connect to a server for content. This allows developers to track their usage. Its also how they can track how many more copies of the app have been cracked and stolen vs. downloaded from the app store.


Interesting to see. What about people who are offline though? For example, Wi-Fi based iPod Touches are generally offline most of the time, and many apps do not require Internet access for their functions (including many games). And for those where part of the functionality requires Internet access, do they queue up data and wait for Internet connectivity to phone home? If not, then that's a lot of data unaccounted for.

[chimerical]

It seems one of the factors this study overlooks is that the lack of a demo or trial system for the app ecosystem means that the only way to try out an app (without particular intent to keep using it) is by downloading it. I would surmise this comprises a bulk of the apps they're talking about.

In the end, most users find a select few they will use often. The multitude of other "one-time-use" apps are simply evidence of the path of discovering those few.

[cwwilson]

When I first got my iPhone I couldn't stop downloading apps. Currently I have 3 pages of them and most are purchased and yet there's so few I even use anymore and a couple I haven't even launched.

[grahamtriggs]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

Interesting sweeping statement... I would argue there are a lot of buggy / poor paid apps too.

What doesn't take a rocket scientist to realize is the people will download the free app and play with it, whether they are particularly interested in it or not. Even if you create a really good app, if it's free, you are going to see a lot of early interest in it, that loses some of it's user base as they realise it's just not relevant to them.

[branjosef]

There are definitely alot of buggy apps out there, that I am almost scared to pay for any because nothing is worse than paying for something that doesn't work as advertised. I've had that happen a few times, so now if i find an app I like, I scour the comments to see what other people are saying. So far, ive passed on a few promising apps because people complained about them not working correctly.

[Bodypainter]

i think that the most important feature on the app store is still missing: to be able to "test" a program!

i have decided not to buy as many programs anymore, because i am fed up with programs that look cool on the screen, but are totally unusable on the iphone. one of the main features on the new android phone's app store is that you can "give back" programs after a certain amount of hours.

it would be a nice move from apple to allow giving back applications within the first 60 minutes. i can imagine that it would lower the peoples risk to buy crappy programs and should motivate programmers to put more effort into their programs quality!