Is this the death of paid apps?

3.1.2014 Magdalena Gauci

Turns out we all like free stuff more than the stuff we actually have to pay for. Not the biggest breakthrough in human psychology, but passing on even those apps that cost under a dollar to purchase is a trend that could still transform the mobile app market for both the users and the developers.

An analytics firm called Flurry published a report demonstrating the shift in the app industry: between 2010 and 2012, free apps on the Apple Store comprised about 80% of all available applications. But that number quickly rose to 90% at the start of 2013, and of the remaining 10%, over half goes to the apps that fall in the “under $0.99” category. There are still a couple of categories in which paid apps have a decent possibility of ranking in the top 10, mostly the utilitarian sections of the market like productivity, weather reports, health and fitness etc. But departments of gaming and social networks are now almost exclusively dominated with free and freemium apps, Minecraft being the only game in the top 10 that requires any cash to be able to play.

Many developers are disappointed by the trend, claiming that most apps still cost less than buying a medium-sized cappuccino in a decent coffee shop. But the fact is that if people drank coffee as much as they downloaded apps, they would both overdose on caffeine and be completely broke by the end of the month. Those couple of dollars per app combined with in-app purchases quickly add up, leaving most users more comfortable with being spammed by ads and irritated by locked features than with more money escaping from their wallets, even if it’s only a buck or two.

So how are developers and investors supposed to make money from the apps then? Well, two main ways to profit from a free app are to include ads, or to go freemium, meaning that the app itself is free, but many of the most important features still require you to cash should you want to use them. In games, you can either spend hours and days collecting virtual coins to buy that new golden armor for your avatar, or you can spend a couple of dollars to get a week’s worth of in-game cash at your disposal immediately. And since the top free games currently rake in more profit than most of their paid alternatives, it looks like many people are willing to pay to get that suit early. Just, apparently, not willing to pay before they see what the suit looks like in the first place.

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