24 dic. 2010

The Android apps economy: a new mass-media

Despite its enormous and increasing growth and real leadership, Android apps economy is still not understood by most companies and developers. Much part of the confusion comes via comparing it with iOS environement, but that is a common mistake we helped to clarify in a previous post, which may be summarized with this sentence: Apple is a hardware company, so iOS is an strategy to sell devices, while Google is an ad seller firm, so Android is the weapon to dominate a new world: mobile, a space where Google wants to be ubiquitous.

Developers who do not follow this statement try to repeat on Android what learned on iOs, but usually this tactic may not work properly. The first common complaint has to do with the giant amount of free apps: "Android users do not buy anything, it is a different culture". The conclusion most people obtain is that the Android apps economy is not worthy. It is sadly odd that many big names in the industry have not entered Android Market. The first ones (Zinga or EA) are just doing some experimental movements.

But it looks like they may learn soon what Rovio and other smart companies have experienced: they earn even more on an add-financed-free-app model than in a pay-to-buy-app approach, and money is even bigger than on iOS.

What companies should look at is the mobile ecosystem as a new mass-media. That is a common sense statement big Tomi Ahonen likes to repeat as a mantra. And it is completely true. And what does it mean to developers?

If we think in mass-media, as radio, television or newspapers, there are usually two common business models: pay-to-consume and ad-supported. These two business models may work also together, and that is very common. In fact, the first one works alone if and only if the content deserves a payment because it has a very big demand. It is the case of live sports events or real premium content. But most of the times, what really finances mass-media is advertisement. And that is very clear in nearly every mass-media.

So, what about the mobile ecosystem as a mass-media? It is certainly a very new environement, and there is still a lot of confusion, but it is starting to be clear that the free model is gaining economic traction. Of course, as in other mass-media, a good option is to mix the two biz models, or mantaining only the pay-to-consume one if you have a really objective premium content.

But, for 99% of contents, behave as a mass-media. We in Okapi Lab are going to do it and shall comment our discoveries. Stay tuned!