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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.



61 comments
Prashant Bhosale
Prashant Bhosale

Great Info.  Thanks  for  the  your effort. Appreciate  it.

ModErator1
ModErator1

Hey Download Free apps from www.playapk.org

RhShamim
RhShamim

I am from Italy ( http://www.fat-brain.it/ ). Actually Paypal payment method really a most important issue for Google's application market, basically for android market.

RhShamim
RhShamim

I am from Italy ( http://www.fat-brain.it/ ). Actually Paypal payment method really a most important issue for Google's application market, basically for android market.

erer
erer

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.

Martin
Martin

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

Frank van Rest
Frank van Rest

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.

John
John

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.

Paladin
Paladin

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.

Deus Eks
Deus Eks

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 ?

Ryan
Ryan

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.

Peter Kirn
Peter Kirn

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.

Ulayneth
Ulayneth

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

Olie
Olie

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.

Daniel Santini
Daniel Santini

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...

medlaw
medlaw

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?

tawani
tawani

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.

Frank Denbow
Frank Denbow

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.

George Moschovitis
George Moschovitis

Yeah, Google should iron out the issues with Google Checkout ASAP. It's amazing that Google Checkout is still not supported outside of US/UK.

ashish
ashish

How about Google giving some money depending upon how much ad revenue each app brings in? that would work from all countries and would make payments easier. of course, this only applies to those developers ready to include apps.

gawker
gawker

What's silly is that you can pay for apps in Canada but as developers, you can't sell paid apps from Canada. So whatever's left of the revenue from the paying crowd goes elsewhere.

Louis Jackson
Louis Jackson

A centralized market will live together other decentralized options since is hard for Google to tackle not only with geographical dispersion but also with conflict of interests. One of the interesting alternatives is Aptoide (http://www.aptoide.com http://dev.aptoide.org) that is under GPL and has already 3 or 4 forks (ApkTor,...). Aptoide let us set up our own repository / market.

Worky
Worky

Android's payment covering captures the biggest part of the market, don't make it sound as if it's a big problem for everyone just because it's a big problem for you. The Swedish market is very small, just be patient en they'll hook you up eventually.

jimmylemas
jimmylemas

The future of money makin' for app developers is via advertising and in app payments, not from charging for app downloads. Why would a developer want a 3rd party store front to take a cut when they could take 100% of revenue direct to the end user by selling to them direct from within the app?

Hassan
Hassan

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.

Digital Fruit
Digital Fruit

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.)

Ryo
Ryo

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?

lamapper
lamapper

"..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.

jacobian
jacobian

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

Mark
Mark

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.

jeff
jeff

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.

bonelyfish
bonelyfish

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.

EtienneK
EtienneK

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

DNK
DNK

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.

Charbax
Charbax

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.

N Jay
N Jay

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!!!

Small Player
Small Player

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.

rabidgremlin
rabidgremlin

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 :(

Tim Maly
Tim Maly

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

Adrian Scott
Adrian Scott

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...

SockRolid
SockRolid

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.

Pingdom
Pingdom

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

Pingdom
Pingdom

@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?)

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  1. [...] Many developers are uncertain if Android is a lucrative enough market (we wrote about one aspect of this last week), although there have been voices raised to the contrary recently. The iPhone (and iOS), [...]