Want to get rich with iPhone apps? Only a very few do

Half of all paid apps are downloaded 1,000 times or less -- and only 10 percent get close to 75,000 downloads

About 30 percent of Apple's App Store downloads are paid applications, and about half of all iPhone and iPod Touch users have downloaded at least once. These downloads have reaped close to $1 billion in overall developer revenue since the online iPhone catalog was launched. So there's a lot of opportunity to make it big by developing youir iPhone apps, right? Wrong.

Athough paid applications clearly drive most App Store revenue, the influx of funds is heavily skewed to a relatively few developers, according to Greg Yardley, CEO of Pinch Media, which has analyzed Apple's App Store and provides to iPhone developers software that collects anonymous data from client applications to shows how they're being used and how developers could improve them.

[ Want to develop iPhone apps? Chck out InfoWorld's review of iPhone app dev tools -- and one developer's tale of iPhone app rejection. | Get the InfoWorld editors' 28-page hands-on look at the new iPhone OS from the perspective of business and IT pros. ]

10 iPhone apps that could get you into trouble. 8 iPhone VoIP apps that can help you save minutes

According to a blog post on the company's Web site, Pinch's data pool covers about 10 percent of all downloaded applications. By titles, paid applications are about 77 percent of the 100,000 applications in the online catalog. Yardley estimates that the average number of downloads for a paid application is 9,300, compared to about 71,000 for the average free application. That number translates into an average revenue of $12,100, with a net to the application's author of $8,500.

"That's not to say this is a common result!" Yardley writes. "The arithmetic mean can be misleading. App Store sales and distribution are top-heavy, with the most popular applications receiving a very disproportionate amount of sales. A small segment of developers do dramatically better than this average. Most do much worse."

Even that's an understatement.

Pinch Media divided the paid applications into tenths, and then looked at how the downloads distributed among them. The top 10 percent of paid applications average nearly 75,000 downloads. The second 10 percent of applications fell to a mere 9,232, slightly less than the overall average cited above. The third 10 percent fell by more than half that, to 3,849. A full 50 percent of all paid applications have an average download of less than 1,000.

Within a certain range, users are not price-sensitive. Pinch Media found that the average 99 cents application "is not downloaded substantially more often than the average $4.99 application." Yardley speculates that the performance of these more expensive applications is a "reflection of their quality, and a sign that the App Store [users] will support higher prices for an engaging experience." Most costly applications trigger much stronger price sensitivity among users, according to Pinch Media.

Paid applications overall are used slightly more often and for somewhat longer periods than free software, the survey found. The average number of user for all free applications is about eight or nine; for all paid applications just over 10. Yardley suggests that difference could reflect application quality or increased user "attachment" to something that actually cost them money.

According to the Pinch figures, 99-cent applications have an average of about eight or nine uses, the lowest number for all paid application categories. The $4.99 programs have an average of nearly 20 uses. But when application's price doubles to $9.99, the average number of uses nearly halves, to about 11.

These numbers are in line with Pinch Media data released earlier this year, which found that most iPhone apps after being downloaded are rarely used.

This story, "Want to get rich with iPhone apps? Only a very few do" was originally published by Network World.

Copyright © 2009 IDG Communications, Inc.