Making apps pay - bizjournals:

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Application development is a $7.7 billion market worldwide, accordinfg to a study from information technology research company And the markeft is only expectedto grow, with Gartner pegging an average 7 percent growtjh rate for the next five years. Some of the companies that develop apps aregetting rich, and others are tryinh to figure out how they can do the “There are a couple of game companiess making a hundred millionh dollars, and many more making tens of millionss of dollars, and there’s no question there’s more to said Jeremy Liew, managing general partne r at in Menlo Park. “I woul speculate that in the aggregate, they’rre making more money than .
” Developers looking to make money in application development need one of threed things in their an enormous audience fortheir application, a specificc customer base that advertisers are willing to pay more to or an application that is so much fun (or that customers will pay for it Lightspeed has investments in three app development companies, each of which fits into thosse parameters. Redwood City-based has a huge audience base for its applicatiohn that allows personalization of blogs andsocial media. has an applicatiobn for Facebook and the iPhone that allows userws to review movies and share the reviewswith friends.
It touches an audienc e so tightly focused that movir studios are willing to pay a premium to reach Then there is and its Facebookapp “Friendss For Sale.” Users make micropaymentxs or take other actions (filling out surveys, for example) that resul t in monetization, or revenue generated for the compant that created the app. One concept is true for all apps more traffic equals moremoney potential.
“If you can creatde massive volumes of traffic on social evenif you’re not the reach becomes pretty meaningful,” Liew “If you can tell a story and generate contenft that excites people, (advertisers) are willing to pay a premium because of the audience,” he said. Investord and developers themselves say there is definitely money to be but the market is Early applicationswere basic, simple such as Facebook apps that allowed users to throw sheelp at their friends or give them a virtua l ham sandwich.
“Throwing sheep at each othe is nota business,” said Peterf Yared, founder and chief executive officer of , a San Francisco-basede social network syndication service that raise d $4.1 million in Series A funding in The next step is branded content from larger companies that brings in news and multimediaz to engage the audience. And in a few years, Yaree said, people will start seeing the riseof business-to-businesx apps as well. “What will make it pervasivs is the infrastructure being builtg out to let people do it he said.
Anu Shukla, founder and CEO of — which helps developers monetize their applications and generates leads foradvertisers — said when networks such as Facebook first started opening their platforms for applicationm development, the primary method of monetizatiobn was the old CPM (cost per thousand page model. But it didn’t work well then and it doesn’g work well today. Social media’s high level of engagement means banners and ads are an she said.
The new trenxd is toward “virtual currency,” allowing useras to give each other credits and Platforms “are looking for the applications that are extremely engaging, and the criteriwa isn’t necessarily monetization, but reach and value,” Shukla said. “We found that some of the ... multiplaye r role playing games are the ones with the mostengaged audiences, and they monetize the