In the Mobile App Market, Few Get Mega-Rich

shutterstock_Dedi Grigoroiu

Apple paid out $10 billion to third-party developers last year, industry analyst Horace Dediu wrote in a much-circulated blog posting this month. Combined with Apple’s cut of developer revenues, that’s more than Hollywood earned from the U.S. box office in 2014 (according to Dediu).

Whatever the comparison, it’s clear that the app market is huge, and rapidly growing as the years pass. But as Charles Perry pointed out on the corporate blog of app-builder Metakite Software, those developer revenues aren’t distributed anywhere near evenly. In most economies, it’s natural to expect that a relatively small percentage of players control the majority of resources or profits; when it comes to App Store revenue, the dichotomy is especially stark. (Hat tip to Daring Fireball for the link to Perry’s entry.)

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According to Perry’s calculations, the top-grossing 870 apps in Apple’s App Store (a mere 0.07 percent of the store’s total app count) collected more than 40 percent of the revenue. The relatively few apps at the very top of the distribution curve can earn close to $20,000 a day, or millions of dollars per year; the many apps further down the curve, far less.

Despite that dichotomy, indie apps that place even moderately high in the rankings can expect to make enough money for their creators to survive. “It seems that even with the revenue curve tilted so heavily towards the big hits, the shape of the App Store still allows room for sustainable businesses to develop in the long tail,” Perry wrote. “It seems that developers who work hard, mind the details, and treat their business like a business have a real chance of making it.”

That might seem optimistic to some, given the number of articles over the past year about app developers struggling to make it in an overcrowded market. With millions of apps available for iOS, Google Android, and platforms with tinier market-share, it’s harder than ever for any one app to stand out; sure, you could make millions (or at least several hundred thousand dollars) off your app, but it’s just as likely that the product of your blood, sweat, and sleepless nights fades into obscurity without anybody much noticing.

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One Response to “In the Mobile App Market, Few Get Mega-Rich”

  1. It took me a while to understand what the article was saying. It appears that it’s comparing daily revenue vs daily ranking and uses it to estimate how much money app make on a daily basis.
    It seems that ranking at about 6000 generates the daily equivalent of $25K. Not much, but helpful while you work on your next app. However, it doesn’t give any indication of how long before that revenue stream dries up–1 week, 1 month, a few hours?

    Maybe someone can write an app to query all apps in the app store and find out their daily revenue, daily ranking, and how revenue trends to see what the mean revenue is for any given app…

    BTW…how much does Apple charge to allow you to generate revenue for them? Isn’t it something like $100 to get in then an additional monthly fee and a percentage of sales?
    I’ll stick with making web-based apps and try to figure out how to get more ad revenue.