New Monetization paradigms sought to support Profusion of App stores
The count of application stores in September 2010 was 95 and I expect it to have crossed 150 as more and more “independent app stores” stores crop up. The latest in this count includes MDLE Alliance, Opera and Allview Mobile, each making their store announcements on consecutive days.
App store downloads and usage has seen huge growths. The first phase of growth has been a feature of in-device apps stores: Apple, Android, Ovi, Blackberry have dominated this era. Consider calling this “Apps as a support to device differentiation era”. In an earlier post, I had mentioned this as the 1st Gen App stores. The 2nd Gen App stores are the Operator apps stores. Essentially, these are white labeled independent app stores which the operators customize to themselves in the hope of differentiating themselves from the other. The revenue models in both these app stores is basis data downloads (for operators) apart from app subscription, in-app purchases and ad revenue.
The current profusion of App stores mostly independent ones, with no device integration and no short-cuts to discovery could thus be attributed as an “app bubble”. Having a few thousand applications in a web-based server, does-not guarantee anything for the app stores as long as there is no traffic. After traffic comes the question of monetization, which would be a far shot for most of the mushrooming apps stores.
Where’s the Money?
The point that I make here is that independent app stores would not be successful if they follow the 1st Gen App store model of monetization through App downloads and purchases. Thus these App stores would need to go beyond the current revenue and monetization paradigms.
Relook at Monetization Paradigm
The answer to this conundrum is provided for by the 3rd Gen App store model, where apps are a channel for brands to engage consumers. This differs from the ad being served up by the likes of Admob and inMobi and instead reaches out to much deeper levels of consumer interaction via APIs. What causes this shift is the fact that more and more of user behaviour is shifting “online” and Apps which assist this behaviour are likely to find “user stickiness”. Apps thus are the next gen internet delivery medium for the user delivering relevant targetted content and context to the users.
For instance, if my Facebook page shows that I am a “fan” of a brand, next time, I am in a mall which has the brand, there could be push communication asking me to visit the outlet to check out the latest offerings et all. This is a complicated process and would require a lot of APIs and Engines tracking consumer behavior and offering brand-relevant messaging at the right times. In essence, apps would thus be re-defined from “a stand alone app to augment the phone functionality” to a “active media channel which would be used to engage users and consumers by those who intend to do so”. That would be the next evolution in app-terms.
What would also be important in this context is that the app store is able to trace the user across different interfaces: Mobile, Web, TV and Car. The ability of an Apps store to combine these interfaces would give it the unique ability to profile target campaigns according to relevant audiences. How much money is there for taking? Lets just begin by saying this would be a substitute to TV advertising: far more focussed and relevant.