Are Subscriptions the Future of Apps?

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Do people really download that many apps? New data from Nomura and app-tracker SensorTower suggests the answer is “no,” with top app developers seeing downloads drop by an average of 20 percent year-over-year in the U.S.

(It’s a different story outside of the U.S., where download rates for top apps grew by 3 percent in May.)

The (very) few exceptions to that declining-downloads trend include Snapchat, Uber, and a handful of ultra-popular apps. Nonetheless, this latest data reinforces the longtime premise that consumers don’t download as many apps as companies would like to believe. As far back as August 2014, research firm comScore reported that 65 percent of smartphone users downloaded a grand total of—wait for it—zero apps per month.

This decline in downloads may help explain why Apple is reportedly shifting to more of a subscription-centric model for the next version of its popular iOS App Store. Under the new terms, Apple will allow apps in any category to adopt a paid subscription model, and give developers a bigger cut of app revenues if the latter can keep users subscribed for more than a year. In theory, this could lead to developers adjusting their business models to focus on a continuous stream of updates and feature add-ons, rather than the build/launch/profit/forget model that dominated the app world for so long (and which clearly isn’t working for many).

Google has reportedly embraced a similar model. If more developers respond by leveraging subscriptions, it could create a viable revenue engine for the “middle class” of the app development world—the indie creators and small firms that craft the majority of apps, but don’t profit to the same enormous degree as tech enterprises and gaming giants.

And considering the decline in app downloads, a subscription model may be the best way forward for many firms. If you want to get into the nitty-gritty of what Apple’s new subscription might mean (as well as its possible downsides), John Gruber has an excellent piece up at Daring Fireball.

Image Credit: Bloomua/Shutterstock.com

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