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Why Android developers are losing money, and it’s not due to piracy

AndroidGoogle has made great strides with Android, and a ton of developers have flocked to the growing mobile platform. Not everything is rosy, though. One major concern among developers is that piracy levels are very high on the platform.

Google is of course not oblivious to this and recently announced plans to combat piracy with DRM methods that app developers can include in their apps. But there is one problem that is arguably much more problematic for Android developers when it comes to getting paid for their apps, and it isn’t getting nearly as much attention as we think it should.

The big problem with selling Android apps

Google is talking about fighting piracy, but perhaps the first thing they should focus on is actually making it possible for users to buy apps. All users. Sounds rather logical, doesn’t it? So what are we talking about? The problem lies with Android Market.

You can only pay for apps in 13 out of the 46 or so countries where Android phones are available. For those of you who like stats, 13 in 46 works out to less than 30%. Contrast this with Apple’s App Store, which supports paid apps in 90 countries. This is a huge advantage iPhone developers currently have over Android developers.

This is, in our opinion, one of the main reasons why piracy is running rampant on the Android platform. If a large portion of the world’s Android users can’t even pay for apps, is it so strange that some of them turn to piracy?

In other words, piracy isn’t the root of the problem, the inability to pay is.

This is of course bad news for Android app developers because:

  • It will result in fewer sold apps (obviously).
  • It may also get customers used to not paying for apps.

Let’s expand upon that second point, because it’s important.

Fostering a culture of free

We all like free, right? But the reality is that it can be bad news for developers if that mentality goes too far.

If Google doesn’t quickly make it possible for users in more countries to easily pay for apps, the company may create a long-term problem. People in those countries will simply get used to pirating their apps. They will get used to all Android apps being “free.”

So what happens once these users finally have proper access to paid apps? Sure, some of them will be paying, if nothing else because it’s more convenient, but the risk is that a significant portion of users will not like the idea of suddenly paying for something that so far has been available at no cost. Google will effectively have created “pirates” out of people who may otherwise not have gone down that route.

To say that this would severely hinder Android developers from making a living is an understatement.

The situation today

Paid Android apps are available in the following countries: Australia, Austria, Canada, France, Germany, Italy, Japan, Netherlands, New Zealand, Spain, Switzerland, United Kingdom, and the United States.

This means that big parts of Europe (for example all Scandinavian countries) are left without paid apps, all of Asia with the exception of Japan, and Latin America. Those are some pretty large markets to leave out.

We’re based in Sweden, one of the countries currently left out. Android is becoming a pretty popular platform here, but there is also widespread frustration among users that paid apps are not readily available. These are people who actually want to pay for apps, but have to jump through hoops to do it or turn to piracy. NOT good for business.



48 Comments

If the Android developers can make money from their Android apps, who will spend time developing apps for Android phones?
it’s absolutely a vicious circle that Google can’t overlook.

And what happens to Latin America? even you forgot to include us in you list of forgotten markets… bad, really bad…

Great that you’re lifting this issue also. I guess you’ve already signed our petition on the issue (http://www.petitionbuzz.com/petitions/androidmarket) but if you haven’t please do. And then get as many people as possible to get the word out on this so Google finally comes to their senses and get a move on!

Hamranhansenhansen

August 16th, 2010 at 3:43 pm


On future full-size devices this is even more important because you want full-size apps to be ported from PC’s. I have 2 productivity-oriented iPad apps that I paid $40 each for and couldn’t be happier with them because they’re better for my purposes than the original Mac apps, and they’re cheaper than the original Mac apps, too. But there is no way the developers would have done the work to bring them over to iPad if advertising was the only monetization, or if only 30% of the platform would have the opportunity to pay.

Could there be an ulterior motive?…

“The cynical view: Google prefers free Android apps over paid ones, because free apps try to make money through ads, and Google serves nearly all the in-app ads for Android apps.”
John Gruber (Daring Fireball)

Luis Alejandro Masanti

August 16th, 2010 at 4:36 pm


Do Google really want developers to earn a living selling apps in the Android Market?

It’s against its own interests!

Google lives on advertisement. They need the mobile platform to deliver ads. They should love if the developers accept to live on ads delivered thru their apps… free ad-supported apps to everyone is what’s best for Google! For developers? Who knows? What we know is that Google don’t care!

@Pitfiend: An oversight. Fixed.

Note: The App Store sells in 90 countries, and they had already paid out $1 billion to developers a few months ago.

Android seems to be just an advertising platform for Google. They will never add more countries to the list of countries with paid Android apps. They have better things to do, like the new Chrome OS and their coming war with Facebook.

Think about it for a moment. This is company that has a market valuation of $150 billion, they have $40 billion in cash and they allow you to pay for Adsense ads in every country in the World already. If Google wanted to have more countries with paid apps, they would have done it already. They must be laughing at our petitions. I have a feeling that they will remove paid apps from all countries. Open == free, right?

Android is a temporary step until Chrome OS is ready. Sergey Brin himself said that Chrome OS and its HTML5 web apps are Google’s future, at Google I/O earlier this year. So Google may be trying to limit Android’s success. (It certainly seems that way.) Android is there just to keep Google in the news and make a little money on AdMob ads until Chrome OS is finally ready.

Oh, and there’s one more thing. Google may have anticipated the Oracle lawsuit against the Java clone they use in Android. By the time all Android software is “impounded and destroyed,” Chrome OS should be ready. Which just might be enough to help Google stay in the smartphone game as a niche player after Apple releases a Verizon iPhone.

This doesn’t seem to me to be ‘the biggest problem’. The relevant stat is % of potential revenues, rather than % of # of countries, as there’s a power-law distribution in size of potential revenue on a per-country basis and they’ve undoubtedly mainly supported larger ones first…

A more useful/meaningful stat would be what % of USERS can pay for apps (and how many there are).

Just a small correction: although you can buy apps on the New Zealand market place, as a developer in New Zealand, you CANNOT sell in apps!

As a developer you need to be in Austria, France, Germany, Italy, Japan, Netherlands, Spain, United Kingdom or United States.

I had an email conversion with Tim Bray about this…

He said: “I hear you. We’re working on lots more countries. It’s an amazing amount of work to do each one. -Tim”

But did not indicate any timeline :(

It’s worse than that.

In most countries developers cannot develop paid apps. There are only _9_ (not 13) counties where developers can be paid: http://market.android.com/support/bin/answer.py?hl=en&answer=150324

Obviously this means more competition for those who are trying to make paid apps.

I’d say the real reason is that it is so difficult to sell through Android Market. The reason is taxes. Google doesn’t help you. Unless you are successful enough to be able to hire someone to figure out international taxes for your app sales, you cannot sell apps internationally through Android Market, legally.

Contrast the Apple way and the Google way. Apple takes 30% cut and handles everything, sending you a check and tax documents you need at the end of the year. Google takes 30% cut and says you need to figure out everything yourself.

Sorry, but I live in the US, and I don’t know how taxation works in each of the other 45 or so (and growing) countries where people can buy through the Android Market. I tried looking into one country, but it was so difficult to figure it out that I gave up.

I’ve put my applications on alternative markets (that handle international taxes for me) so that people in other countries can get my apps if they really want to, but basically nobody uses the alternative markets. Unfortunately there is no real option to Android Market, and Android Market sucks for developers.

One more point you left out I guess. The consequences that Google Android has to face once piracy is proliferated is, there will be very little benefit for the people who actually develop apps. So android platform might end up with very little number of apps (may be one of the reason for having less apps than iOS apps currently) which in turn might not encourage anybody to buy an Android phone.

It is a very serious issue!!!

@Jon: Of course the number of users and purchasing power will differ from country to country. The percentage calculation was “% of countries,” not “% of users” (we never claimed anything else). It’s still a huge problem, regardless.

Google should introduce a subscription plan to include free access to all the apps. Millions of people would gladly pay $5 per month for unlimited access to all the apps. Developpers can opt-out if they don’t want to be paid through it. But that would be a good way to prevent piracy and to much increase monetization for developers who make popular and high quality apps.

All google really needs is to allow other payment methods like moneybookers & paypal etc to buy apps. Android users that can get hacked or warez are the one that would already have the market workaround on their phones so geographic restrictions are not effecting them anyway.

Android is getting really popular here in South Africa, but there’s no way for us to pay for apps.

Sux.

So how do Nokia do it with their Ovi store? They sell in 190 countries, 85 direct carrier billing in 26 countries, credit card in most countries also.

http://www.forum.nokia.com/Distribute/Ovi_Store_statistics.xhtml

Remember: Selling Android and its apps are not the main business of Google. It succeeds as long as more people use the bundled Google web apps. From this consideration, it is senseless to stop piracy when it feeds the momentum. Its more than enough to make a few gestures to keep the developers dreaming.

As a app-buyer I’m mostly frustrated by apps that I can’t use. Not because I’m outside of the 9 countries or that the apps are just too crappy to use, but also:
* I see apps that don’t work on my phone because they are phone-model specific. Why am I being shown these apps? Seems trivial to filter.
* I see apps that don’t work on my phone because they require a rooted phone, which my phone is not. Why am I being shown these apps? Seems trivial to filter.
* I see apps that may work, but I can’t use because they don’t support any of the languages that I’m able to read. Why am I being shown these apps? Seems trivial to filter.

.. etc.

The point of an app-store/market is easy access to apps. Google isn’t making it easy at all. Unless you know exactly which app you’re looking for the process is a nightmare.

Another failing of the Marketplace is the inability to pay in your own currency rather than that of the developer.

Say someone in the UK wants a $0.99 app. They should be paying £0.63 but because they have to pay in $ there is the danger of being hit with £1 or more fee for a foreign currency transaction.

the same as blackberry appworld.blackberry appworld only sell its paid apps in selected country.very annoying though.

“..apps that don’t work on my phone because they require a rooted phone, which my phone is not..”

Said it once, will say it a million times….

If a phone does NOT allow ROOT access, it just is NOT a SMART device, period.

If the device does not allow ROOT access, do NOT buy it. More and more people are finally getting this message and as more and more people refuse to purchase hardware that is hobbled, eventually that dwindling market (proprietary crap hardware) will feed off itself and die a slow death.

There have been full Linux hand helds available for your use since before 2006! This is NOT new technology. Do your self a favor and buy only hardware that will let you install and configure applications on it.

No Root Access = STUPID device….just say NO!

Do this and you will NOT be a “frustrated app” buyer.

Every developer can sell their programs like they want.
For example put an app on the market for free with a trial version. You can buy a code to unlock the full version from the website of the developer.
There are no restrictions.

How can you make money with software in the internet?
Right the same way. You sell the stuff. Where is the problem, beside that you have a little more work with the payings?

The biggest problem for developers of the Android platform, even more than proliferation, is diversity. And I mean diversity is the problem. Too many phones, too many carriers. And that makes the development environment volatile. You can’t develop in a situation where you’re not sure where your customer is coming from. A huge part of the success from the iPhone is the fact that there is only one. The developers and the marketing people and the web-designers and the etc. etc., all of them benefit from the fact that it is one unified system. And you don’t have to mess with different app stores for different carriers.

Each carrier for Android insists on having their own app store, so the over all effect is having to set up an app store for each carrier in each country that Android is available. So in reality, this may not even be the fault of Google, but of corporate politics. Trying to get the number of companies involved in this to cooperate is staggering. With the iPhone competition, its one phone and one carrier. And not only that, the only carrier to claim that it has coverage in 200 countries. Simplicity. That had to be a major factor in the iPhone carrier decision.

So, what’s needed is some collaboration if Android is to become a serious system, and not just some huge glob of financial goop that can’t come up with plan. (And no, I don’t own an iPhone, nor do I want one, I would much rather go with an Android, but my carrier doesn’t offer any that are decent. I use a simple flip phone in the mean time.)

the main problem with the availability of Paid apps is that Google wanted to encourage the use of their own Google Check out to compete against paypal.
Luckily this is changing ,as google is now in talk with many Carriers to implement carrier billing and is now also in talks with paypal.

http://www.bloomberg.com/news/2010-08-13/paypal-said-to-be-in-talks-with-google-about-handling-android-payments.html

Quote:
Merchants in Austria, France, Germany, Netherlands, Spain, U.S. and U.K. can also use Google Checkout to sell applications on Android Market.

We’re working towards making Google Checkout more widely available. At this time, however, we cannot provide any details regarding when Google Checkout will be available in specific countries.

Another major problem is carrier billing and the process for buying apps. I tried 3 times to buy an app today and Google Checkout just did not work.

Google thinks they can have lightning hit the same spot twice .i.e. crowd sourcing. It worked with Google Search but for the Android platform, Google will have to actually do some PR work.
As an android developer, I got pretty frustrated by the lack of clear documentation and their horrible API. Chances are, if you are used to the Sun Java API (or even C# API), trying to develop in Android will easily get your frustrated with the Android API. Method names sound alien or don’t really mean what they imply.
Also, the whole XML resourced-based format prevents you from easily creating components dynamically (through java code) and referencing them in more than one project.

I could go on and on…

Evven the Developer portal on the Android Market is just horrible. I’m not sure what they were trying to accomplish.

Thanks for the article. I have developers putting the finishing touches on an iPhone app for my company as a joint venture. We talked about Android and they were cold to the idea, yet I keep reading how Android is gaining market share. Their counterpoint was that there is no Google equivalent of Apple App Store. Third parties sell Android apps thereby fragmenting the market. As others have commented, Google in fact puts no effort nor resources into app marketing. I am sure it contributes to all the problems reported above. For the small guy, the smart play is to wait for the Android app market to mature before investing resources … but without the army of small developers, how does the Android app ecosystem truly mature?

I am sorry, but I don´t agree. What you guys didn´t get is that there is no future for intellectual property. We have to find ways to finance the production (and pay developers), but make sure that people no longer will pay for software (neither for music, books or news).

I am journalist and live here in Brazil just the same drama. How to price information? Is that fair that some can access (culture, arts, games, agriculture techniques, medicine formulas…) and others no? That is what the guys from Google understood – and they are working based in that premise. We are getting to a point that it will be impossible to charge information – thanks to internet!

So there is two ways to go: 1 – Try to stop and control internet (with Google may try one day…), and therefore, control the distribution of information; 2 – Try to find other ways to finance the intellectual production. In that case, we can think that if we have public financial systems instead of market regulation, we may have more money in research to develop cancer cure, than in cosmetics, just for instance. The same for journalism… We will have less Murdoch in the world. And I suspect that we gonna have more quality in the apps market also…

You mention that Android apps are only available in 30% of the countries where you can buy Android phones, but then offer that Apple apps are available in 2x as many countries. While both facts are interesting, they’re unrelated and leave unanswered the question: in how many countries are iPhones/iPod-touches available? (Of course, the obvious follow-on: what percentage is that?)

I don’t know the answer; I suspect it’s in the neighborhood of 95-99%. I’m just saying that the comparison seemed awkward, and left more questions than it answered.

What about those developers who develope for the benefit of others. Many just don’t want users to have to pay.

Oh, come on. You’re absolutely right about the problems developers face when they can’t sell their apps in multiple countries. It annoys developers, and it annoys users.

But to suggest this is all part of an evil conspiracy to create a culture of free is downright irresponsible. And now through the magic of the Internet, people are picking up on this idea.

It’s certainly possible you’re right, of course, but you’d need to at least consider the possibility that Google doesn’t have their s*** together entirely when it comes to the Market, in these relatively early days.

Every interaction I’ve had with Google suggests the latter. Look, obviously ** Google likes developers **. And a lack of multi-country store support isn’t the only gripe developers have had. Basic issues with store organization, ratings, and many other issues have earned developer ire.

Every interaction I’ve had with Google representatives suggests that Google is aware people aren’t entirely happy with the Market, and that they’re scrambling to improve it as quickly as they can. Corporate efforts at big companies don’t always move as fast as we like. That isn’t to excuse Google, just to suggest possibly this isn’t part of a plan to make us accept everything for free.

After all, Google still makes revenue from app sales… which means your whole argument kind of doesn’t make sense, rationally.

This is vague; I don’t see any statistics that directly correlate pirated apps to countries where the market isn’t available. Seems like an assumption in the dark. Though it may play some role, but it seems to be entirely speculation..

Here’s a few things that might add to it:
A lot of android users are tech savvy, the more tech savvy the more likely people aren’t going pay for apps, esp if it’s very simple to steal them.

How about the policy allowing users to return apps within a day? I don’t know if this is just an american android market feature, but I know the app store market doesn’t allow this.

@Ryan: Follow the first link in the article for some examples.

@Peter Kirn: There is nothing in our article suggesting “an evil conspiracy.” We simply point out the possible consequences of the way things currently work. How is that irresponsible? (Or are you referring to some of the comments made by others?)

There is always http://code.google.com/p/market-enabler/
All you need to have is a Google Checkout account enabled which is fairly easy .. just do a purchase of other goods or services before using it in the market

The exponential growth in the availability of handsets – especially smartphones – that can handle android is too great for these guys to ignore. And they are tied in with the developers to take 30% of the revenue for something they did not build. No way they can ignore this.. chromeos or whatever. If I were google and I looked at where the money is… ChromeOS is a distant second to a platform that I know I can make money from.

Android will grow… it will just take the usual cycles of improvement.. just as Apple did in its time. Remember the first ipod anyone ?

This is Google being incompetent again. Most European countries could easily pay if only Google would open up for sales. But their excuse when asked by journalists the is that they want to be able to offer support – rubbish Google when have you ever offered support -just get the damn stores open – its embarrassing that you only allow paid apps to a handful of countries.

I develop for multiple platforms, my android apps are set up to be downloaded as a demo from the app store, then paid for via regular paypal or google checkout. I even handle activation this way. These other developers just aren’t creative enough in the way they do it.

There is yet another problem in The Netherlands. We indeed have Checkout but only if the user has a creditcard. Creditcards are not well spread here, we use other ways for (online) banking. So still almost no one buys apps. I’ve made an app for Android and iPhone. The same app on iPhone sold 100x more than the app on Android.

Hi all,

Great thread this, thank u all for your input.

We (Small Green Men AB) are a Swedish company that are about one month away from releasing our first mobile game. We will launch it for iPhone and Android. As Swedish developers with a Swedish company, how do we go about making money from the Android production?

Before reading this thread I thought that we had to start a daughter company in the UK or the US. My original question was (with a UK or US company)I could charge money for all downloads from these countris then;
Austria
France
Germany
Italy
Japan
Netherlands
Spain
United Kingdom
United States

Or can I just charge US customers with a US Company?

Otherwise I guess that paypal might be the sulotion for us for Android. Does anyone have any experience from this? Is it worth it? Do people bother coming to you site even with a really good production?

/Martin

I AGREE 100%. People will pirate a software if they cannot even pay. Its ridiculous how many companies and services dont allow payments in some countries. Just take a look at the Wii, you cannot buy from certain countries, so what yo do? You change your Wii settings to another country which accepts cards, like the US, and then pay. The system doesn’t check address and they charge your card just fine, but then again you have to reset your settings. Its incredible how stupid this is. Most people that I know that have pirated software is because they cannot buy it even if they want to. Same with PayPal, the only reason why PayPal isnt the number one ecommerce payment is because they dont accepts a big list of countries. Most of this people make a million tricks to get a PayPAl account, instead of PAyPal just opening for their countries.