Paul Reddick is the CEO of Handmark, which publishes software and games for handheld devices.
If you believe what you hear, it’s going to be either free or paid across the media world–just like it’s got to be either the Yankees or the Red Sox, Batman or the Joker, Tom or Jerry.
Well, forget what you hear. In many media markets, free channels exist next to paid channels—newspapers are a good example. And so it will be in the world of mobile apps: both free and paid apps will have significant roles moving forward.
People love to create stark choices around economic models. But the app business will not be a winner-take-all market, and is not a competition between strict concepts. In the app business, these options can be used to support each other. There can be hybrid approaches where free becomes both a promotional vehicle and a distribution channel for app sales and additional monetization methods.
Here are some of the key things we’ve learned about the app business:
1. Conventional app stores powered by device manufactures, carriers or other third-party providers, aren’t the only place to “sell” free apps.
Brands can distribute them from their own web sites or other traditional media outlets. Expect tons of apps to be distributed from places that don’t exist primarily for the purpose of selling applications. Consider the analogy of sporting events or concerts. You go for entertainment reasons, but you are sold a hot dog or a T-shirt while in attendance. The same goes for mobile applications, as they are an extension of a broader experience and can also be sold as a product or service related to an event.
2. In some cases, free dominates simply because it is so much easier than dealing with complicated purchasing mechanisms—not because of the quality or value of the underlying app. Making transactions simple goes a long way toward increasing the sales of paid applications. Companies that already have your credit-card information or carriers that can do direct billing clearly have an advantage.
3. Distribution channels matter. Something can be free in one channel (such as an open store like BlackBerry App World) and paid in another (such as a carrier-specific app store). It happens.
4. Free apps can be incredible audience builders and directors of traffic. Companies can use house advertising and other methods to deep link into the large “open” app stores, or to cross-promote other applications and products that are likely of interest to an end-user. Lots of people may talk about this concept, but like most things, execution is the key to success.
5. Cross-platform (e.g. iPhone, Android, BlackBerry, Windows Mobile, etc.) support is essential for audience building. Marketers and product managers need to address the types of customers they want to reach rather than simply a technology platform. When selecting only one platform, the question is, “Which 80% of the market do you want to ignore?”
6. Think of content, quality and benefits regardless of free or paid. The price for most apps is either free or very inexpensive. Time and effort are just as important as price. Apps must feature useful, engaging content, and be easily available and easy to use. Lousy apps that are “free” are still lousy and won’t generate audience or revenue.
So to answer the question of whether there will be more growth in free or paid apps, the answer is “yes.”