GetJar: Making money from free app distribution - Mobile World Live

GetJar: Making money from free app distribution

30 SEP 2010

When it comes to app stores, there are plenty of challengers looking to unseat Apple: Google’s Android Market, Research In Motion’s App World, Nokia’s Ovi Store and multiple operator stores are fighting hard to gain traction in the market. However, the numbers indicate that in real terms, it is GetJar that is leading the resistance, being only the second store to pass the one billion download mark, and the only cross-platform store (so far) to reach this milestone.

GetJar originally launched in 2004, as a site for mobile developers interested in sharing and receiving feedback on their mobile applications. It evolved into a distribution platform in 2005. The company is backed by venture capital fund Accel Partners, and closed its US$11 million Series B funding round in June 2010 – at this time, it was said that the company had “maintained its profitability despite a challenging economic environment.”

Ilja Laurs (pictured), chief executive officer and founder of the company, is clear about what GetJar offers: “The most valuable service that we provide developers is distribution at a massive scale. Facebook has achieved 80 million downloads with us, many apps have 30 million plus downloads, even very small developers can get millions of users. When you have users, you can use any business model to monetise – paid for, cross/upselling, virtual goods, ad supported, freemium, premium, subscriptions, etcetera.”

In addition to its direct-to-consumer activities, GetJar works with a number of operator and device manufacturers to power their app stores, whether on a white-label or branded basis. Partners include operators 3 UK, Virgin Mobile India, Virgin Mobile France, DiGi (Malaysia), Reliance Communications and Sprint, and device manufacturers LG and Sony Ericsson. Laurs said that such partnerships are “quite important” for GetJar, accounting for around 15 percent of users and downloads.

GetJar’s unique selling point is that its catalogue contains only free apps, whether in full or trial versions – how they are then monetised is up to the developer, with “dozens of alternative business models” available to this end.

Bidding for exposure
GetJar generates its revenue from a ‘pay-per-download’ system, where developers bid for ad slots on the store in order to get premium visibility, paying GetJar when downloads are made. Campaigns can be targeted by country, operator and/or handset, depending on how a developer wants to build the customer base, bidding what they are prepared to pay for target users. Pay-per-download is used as an alternative to the revenue share model used by other stores, where in general 30 percent of the sales price is retained by the store owner – although 30 percent of nothing would not be much use in creating a sustainable billing model.  For companies looking solely for a distribution platform, GetJar remains free.

“If other app store business models could be compared to Amazon, selling goods to the consumer for a revenue share, then our model would be like Google’s Adsense, where Google runs a click/referral auction on premium visibility. While Google charges for clicks to a website, we charge for downloads to an app. For a developer, this is a very convenient model, because they name their own price, depending on what kind of user value they get with their own business model. For example, if a lifetime value of a user is US$5 to a developer, then he will be happy to pay US$1-2 to get that user,” Laurs states.

Because GetJar earns its living from the marketing budget of an app rather than sales, it does not need to ‘own’ the billing relationship between customers and developers. GetJar supports a range of billing options, with developers given the option to choose “one or more”, which Laurs also said is significant because  “depending on the app and user demographics, different billing works best.” Options supported include credit card, PayPal, operator/SMS and vouchers, enabling developers to “optimise their billing for better conversion, and maximise revenue.”

App use in the mid-range
Interestingly, Laurs does not see a difference in usage patterns between smartphone users and feature phone users, instead splitting consumers into “non app user” and “app user”. Regardless of device type, once shifted from the former category to the latter, customers become more likely to purchase additional apps. GetJar’s statistics indicate that after the first successful app download, the user is 80 percent more likely to download more in the next month and thereafter. However, the ‘app cocktail’ of ingredients necessary to promote app use is biased in favour of smartphone users, which explains why feature phone users are less likely to cross the bar.

“Converted app users are more or less the same on both smartphones and feature phones, downloading 3-5 apps a month on average. However, the ‘entry barrier’ to start using apps on feature phones is much stronger than on smartphones — the absence of data plans, configuration difficulties, compatibility issues, etcetera,” comments Laurs. “This explains why only a small portion of feature phone users become active app users, compared to smartphones. On the other hand, once ‘converted,’ they’re the same,” he says.

Survival of the fittest among the app stores
According to Laurs, while supporting a raft of different platforms is a bigger issue, maintaining an app on an app store, including submission, posting updates, and so on, is a “real effort” — meaning that developers only invest their time in the app stores that perform for them. This is why so many smaller app stores fail to perform: “if you don’t have massive traffic to your store (ten million-plus users per month), then you can’t provide relevant download numbers to each of the tens of thousands of developers.” Without maintaining the “sustainable interest of tens of thousands of developers” it is not possible to offer a “fresh catalogue of tens of thousands of apps to your users”, meaning they will also leave the store – leaving a store provider with neither developers nor customers.

“I think the multitude of app stores only helps with popularising the concept of apps with the consumer. However eventually I believe consumers will gravitate to one or several dominant app stores, putting other ones out of business. The same happened to search, online retail, social networking, and the same will happen to app stores,” Laurs concludes. 

FACT BOX
Established: 2004
Headquarters: San Mateo, California
Ownership: Privately held
Key Investors: Accel Partners (US$11M, Series B, June 2010)
Key Execs: Ilja Laurs (CEO & Founder); Chris Dury (Chief Operating Officer); Patrick Mork (Chief Marketing Officer)
Milestones: 1 billion downloads – June 2010; 3 million downloads per day – July 2010

 

Steve Costello

Author

Mobile World Live

Mobile World Live is the online service dedicated to providing the mobile industry with daily news coverage & analysis of the biggest global market developments.

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