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Are App Stores Where the Real Money Is? (Editorial)

By Joe Levi February 15, 2012, 11:07 am

When Android was first released on the T-Mobile G1 it came with Google's Android Market built in. The Market wasn't the only way to get apps onto your smartphone, but it was the easiest way not only to install apps on your phone, but to find them as well.

Since then many other app stores have surfaced. Some help developers distribute their apps in other countries, others are geared more towards the "adult" market, and still others that are simply alternatives to Google's Android Market.

To date I've used Google's Android Market, Android Pit's App Center, and the Amazon Appstore. It's gotten a bit ridiculous to have three markets all trying to update your apps.


Other than the reasons mentioned above, why would someone want to "fragment" the app ecosystem with their own market? Money.

If you write an app and want to sell it in the Market, not only do you have to purchase a developer account (which isn't terribly expensive, but could be a barrier to entry for many hobbyist developers) but you also have to fork over a piece of every app sale to Google. In my experiments, if you want to make a dollar on every app you sell, you have to price it at $1.43 — almost half of what the user pays goes to Google.

Google is providing the infrastructure for warehousing and distributing the apps themselves, as well as a catalog (both an app and a website) from which users can find and install the apps, and they're providing payment processing, too. They're earning their share of the money, but it still seems like a lot.

Amazon offers a similar Appstore to Google's Android Market, so they're getting their share of every app sold, too.

So lucrative is the market metaphor that some custom ROM developers have reportedly attempted to contract with one market provider or another to pre-package the provider's market in their custom ROM — for a percentage of every app sold. This would arguably be a fairly small percentage but it would help fund continuing development of the custom ROM.

It's also rumored that when one particular negotiation fell-through, a particular ROM development group started tossing around the idea of building their own market. This would not only allow them to keep a much larger portion of the purchase price, it could also allow for distribution of apps that might not be available in a particular country, on a particular carrier, or in a competing market.

What do you think of this idea? Would a custom market that comes pre-installed on your custom ROM be valuable to you? Would you use it more than the Android Market or the Amazon Appstore? Why or why not?


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