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App Developers Making $8,000 A Year

Posted by Nick O'Neill on June 19th, 2008 1:02 PM

According to news posted on Techcruch, SocialMedia, the leading Facebook ad network, has paid out $8 million to developers over the past year. Divide that by the approximately 1,000 developers that are on their network and you get an average of $8,000 per developer. This isn’t a fair analysis though because revenue is clearly skewed toward those application with a higher number of active daily users.

According to Jason Kincaid, “during a talk at the Web 2.0 conference last April, members of an expert panel were predicting total revenues on the Facebook platform of as little as $10M this year.” While that estimate has been underestimated, there is no sign that the number is going to be substantially higher. Then again it would be difficult to predict how much is actually being generated considering the numerous ways that applications are currently being monetized.

There are virtual currencies and rewards programs that are generating revenue as well. The real questions about the revenue in this space are if this is sustainable and if it will continue to grow. Not even Facebook or MySpace have been able to generate massive revenues so it continues to be an industry wide issue. What creative solutions do you foresee for solving the monetization issue?

Disclosure: SocialMedia is a sponsor of my sites.

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This entry was posted on Thursday, June 19th, 2008 at 1:02 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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    Nick -- i think you're on to something about virtual currencies and rewards programs (and not just b/c my company happens to be one of the players in that space). These systems are embedded into the user experience directly, so the ads have much more relevance to the consumer than interruptive ads such as the typical banners that other networks are running. Granted, not all apps are amenable to virtual currencies, but for those that are, the conversions and revenues are certainly impressive.

    But overall, I'd put the size of the revenue possibilities as at least twice the $10 million that was quoted, and that number will only grow. What do you think?
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    Nick,

    You know where I stand on the issue, but I can't resist chiming into the discussion. These figures give further credence to the fact that app developers need to diversify their revenue streams, further if they can introduce subscription revenues they will both deepen their relationship with the end user and create reoccurring revenues.

    I'll be the first to tell an app developer if their content isn't appropriate for mobile, however I believe not enough app developers are asking the question to begin with. Mobile content offerings have a built in payment mechanism today. While it may not be the most attractive solution with the carriers taking a cut of every transaction, it works and is generating millions in revenues for content owners who understand how the ecosystem works.

    I'm in Seattle right now meeting with T-Mobile and AT&T. Both organizations are eager to see more social media companies exploring mobile opportunities.

    Craig
    Hook Mobile
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    What missing from this analysis is that Social Media ads are largely a closed system. That is apps advertising on other apps. Since Social Media takes a cut, for that $8 million paid out, $10 million was probably paid in by apps. Using your 1000 developers number, that averages out to negative $2,000 per developer. The average app is losing money on ads, not making money from them.

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