Help your developers make money

(Reprint from my Mashery blog post)

Coders who work with APIs often have a strong entrepreneurial streak. Many have tried out just about every monetization model out there for app development. One-time paid subscription. Affiliate. "All-you-can-eat" monthly paid subscription. Advertising. Free-mium. Custom development fees. Just in the last two months, I've spotted some new trends in monetizing app development thanks to the help of a couple of smart guys, Steve and Neil. Both have great insights around how platform providers who offer APIs can focus on creating value for developers who build great apps.


Photo credit: WWDC Live Keynote Coverage, gdgt.com

1) Steve the Platform Provider: As shared at WWDC earlier this month, “Why are we doing iAds? For one simple reason: to help developers earn money so they can continue to create free and low-cost apps for users.” Steve recognizes that the deflationary nature of App Stores for mobile application developers has even the largest platform providers looking for alternative revenue models for app builders. The downward pressures on paid-app fees have interesting parallels with the music industry, where downloads are loss leaders for a variety of upsell and marketing opportunities. As confirmed in The Economist, in each case some make it big, but most never become hits. And apart from evergreens, such as games, utilities and programs to use Facebook and Twitter, even the most successful mobile apps often quickly fade into obscurity.

With emerging ad platforms like iAds, AdMob, and Promoted Tweets on the rise, it is clear that platform providers understand that more developers building great apps for customers need a clear path forward for making money. More attention will be given by app developers on how to use advertising (over subscription fees) to monetize their app development. This will have big consequences for the landscape of app development looking forward.

2) Neil the Coder: Neil Mansilla, a successful Web application developer, gave his own point of view at our unconference API Panel Discussion at Web 2.0 Expo in San Francisco last month. Neil shared with our audience that that platform providers offering him marketing opportunities to potential users of his app have turned out to be more valuable than structural differences in revenue share or access fees. When an Apple or Facebook or eBay or Salesforce.com select an app to showcase for their customers, the resulting awareness and downloads/registrations are at a scale developers generally never could have afforded on their own.

So, Steve signaled that advertising is positioned to play an increasingly important role for app monetization for developers, implicitly acknowledging the downward pricing pressures on paid apps. While Neil gave me a lesson in the value of app marketing to app developers, sharing that in many cases the most valuable offer that platform providers can extend to developers is actively promoting the best quality apps to their customer base.

Savvy app developers out there are quickly going to get a lot more comfortable with the role that marketing and advertising has in the overall value of their app development projects. Savvy Web and mobile platform providers with APIs should pay close attention.