The higher volumes of downloads for free apps compared to their paid-for siblings is attracting developers to switch to monetisation methods other than paid purchases, according to Distimo’s research into the market during 2010.

The top 300 free applications in the US generated, on average, more than 3 million downloads each day during December 2010, while only 350,000 paid apps were downloaded daily. However, comparing the download figures with those of June 2010, it was the paid-app category that witnessed the strongest growth, “increasing almost 30 percent more,” the company said.

In line with this, Distimo noted a sharp growth in the use of alternative payment methods such as in-app billing: comparing the December 2010 and June 2010 figures, in-app purchases for the highest-grossing free applications “more than doubled” for iOS devices. Interestingly, it was also noted that the share of revenue generated by in-app purchases from free applications is much smaller on the iPad (15 percent) than the iPhone (34 percent). Combined, the total revenue share for in-app purchases from either free or paid products on the iPhone is now 49 percent, indicating that this is almost as important a revenue stream for developers as app purchases.

In addition to the strong performance of free apps, there was also a decline in the average price of paid-for titles, which can be noted in the 100 most popular applications in the App Store, BlackBerry App World, Android Market and Ovi Store. The only store to provide any form of positive was Android Market, where there was an increase in prices of 1 percent across the whole store. The sharpest decrease was seen in Ovi Store, which saw a 61 percent decline for the top 100 apps, compared with 24 percent for BlackBerry App World, 19 percent for App Store (iPhone) and 9 percent for Android Market. Distimo notes that changes in the prices of different products means that “the four application stores became more in-line, thus more comparable with each other over the course of the past year.”

Across all stores, there has been a shift toward the US$0.01 – US$0.99 and US$1.00 – US$1.99 tiers, with the sharpest reductions in price points above US$5.00. Although this is evident across-the-board, it was also noted that a change of pricing policy in BlackBerry App World, which added support for price points up to US$2.00, also contributed.

The most popular paid-for titles came from a variety of categories across different stores. For the iPhone, games dominated, while for the iPad, there were a number of productivity titles, including Apple’s three iWork products – which also retail at a higher price point than many entertainment titles. The biggest paid for titles in BlackBerry App World came from a number of categories, which was also the case for Android Market. In Nokia’s Ovi Store, many of the most popular paid-for titles have been free for some period in time, which could have led to a popularity boost.