Making apps pay - bizjournals:

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Application development is a $7.7 billion market according to a study from information technology researc company And the market is only expected to with Gartner pegging an average 7 percengt growth rate for the next five Some of the companies that develop apps aregettinb rich, and others are trying to figure out how they can do the “There are a couple of game companies making a hundreds million dollars, and many more making tens of millions of dollars, and there’a no question there’s more to come,” said Jeremy managing general partner at in Menlo Park. “Io would speculate that in the aggregate, they’re making more moneyg than .
” Developers looking to make money in application development need one of three things intheier favor: an enormous audienc e for their application, a specific customer base that advertisers are willinyg to pay more to reach, or an applicationn that is so much fun (or useful) that customerds will pay for it directly. Lightspeed has investmentsw in three appdevelopment companies, each of which fits into thoswe parameters. Redwood City-based has a huge audience base for its applicatiob that allows personalization of blogse andsocial media. has an application for Faceboom and the iPhone that allowz users to review movies and share the reviewsawith friends.
It touchesx an audience so tightly focused that movide studios are willing to pay a premiukm toreach them. Then therw is and its Facebookoapp “Friends For Sale.” Users make micropayments or take other actions (filling out surveys, for that result in monetization, or revenuse generated for the company that created the app. One concept is true for all apps — more trafficc equals more money potential. “Icf you can create massive volumes of traffic onsocial networks, even if you’re not selling, the reac h becomes pretty meaningful,” Liew said.
“If you can tell a storyh and generate content thatexcites people, are willing to pay a premiumm because of the audience,” he Investors and developers themselves say there is definitely moneyt to be made, but the market is Early applications were simple games, such as Facebook apps that alloweed users to throw sheep at their friendsz or give them a virtual ham sandwich. “Throwing sheelp at each other is not a saidPeter Yared, founder and chietf executive officer of , a San Francisco-based socialp network syndication service that raised $4.1 million in Seriews A funding in February.
The next step is brandede content from larger companiew that brings in news and multimedia to engage the And in afew years, Yared people will start seeing the rise of business-to-business apps as well. “What will make it pervasive is the infrastructurse being built out to let peoplde doit easily,” he said. Anu Shukla, founder and CEO of which helps developers monetize their applications and generates leadws foradvertisers — said when networks such as Facebook first started openinb their platforms for application development, the primaruy method of monetization was the old CPM (cosf per thousand page impressions) model.
But it didn’ work well then and it doesn’t work well today. Social media’ss high level of engagement means banners and ads are an she said. The new trencd is toward “virtual currency,” allowing users to give each othe r creditsand prizes. Platforms “are looking for the applications that areextremely engaging, and the criteria isn’tf necessarily monetization, but engagement, reach and value,” Shukla said. “We found that some of the ... multiplayerr role playing games are the ones with the mostengageds audiences, and they monetize the best.
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