Online games have developed this to the level of an art form. As subscription-based games lose favor and "freemium" gaming comes to the fore, the game makers have come up with any number of ways to scare up revenue that don't depend on selling the game itself. Ferraro concurred on this point in an e-mail interview: "App publishers can monetize free by capitalizing on the audience they obtained, and promoting upgrades. This is particularly visible in mobile games, where more advanced gaming levels are only available at a premium."
That said, reluctance on the part of app makers has been one obstacle to use of the freemium model. "Publishers of well-known brands didn't want to be perceived as giving things away or devaluing the brand," says GetJar's Mork. "But this has changed in the past couple of years." Electronic Arts, for instance, has been moving toward a freemium model for its online games -- something enhanced all the more by its purchase of game publisher Chillingo, creator of the hit game Angry Birds. Chillingo's game-development SDK includes technology to easily create freemium applications, something useful to any company that wants to push out such applications across multiple mobile platforms.
Microsoft sensed, quite correctly, the need for developers to create freemium apps. The Windows Phone 7 SDK has direct provisions for this. The free and full versions of an app created with the SDK can be the same binary; all that's needed is an unlock code. No new download is required. This takes the work out of building a separate trial version -- and gives app developers that many fewer excuses not to offer both options.
The service-and-subscription model. A major business model for mobile apps is to sell access to a service and give away an application that's just a convenient front-end for that service. The biggest question is: What service is worth paying for?
It's not just a question of the service being useful. It's about the integrity of the data provided by that service as well. Consider Zagat, the venerable dining and entertainment guide, which has a subscription version of its review service accessible through its mobile apps for $24.95 a year. Zagat's main competition is from crowd-sourced services like Yelp, but Zagat's business model is based on the idea that its information has such a known pedigree, it's worth paying for. Yelp's database may be contributed to by a broader range of people, but it's arguably much messier and more inconsistent.
Another method for selling data involves creating applications that offer a repository of locally stored data. For example, let's say you worked for a company that is known for publishing foreign-language dictionaries, and you wanted to sell mobile versions of its books. You could give away the app itself, with a minimal version of the dictionary data thrown in on top of that (say, 2,000 words), then sell the full-blown version of the dictionary, either all at once or in a regularly updated, periodic-subscription version. This wouldn't stop amateur competitors from creating their own apps and data sets, but a free dictionary that's not very accurate would have less appeal to a serious language student than a modestly priced one that has a brand-name pedigree behind it.
The ad-funded model. A third way to generate revenue from mobile apps is a method ported directly over from the Web at large: advertising. But be aware: Ad-supported apps come with all the controversies associated with using advertising as a revenue model, plus a few new ones.