The Monetizing 'Droids series of posts are ways of thinking about the identifying, pricing, marketing, and selling Android applications, blending what has worked in other areas with the subtle nuances that Android imposes.
In a previous post, I argued that recurring Android application revenue requires continuous new products, or extensions to existing products. The challenge there, of course, is that each new product requires new marketing to reach a new audience. It would be nice if there were some way for each product to not only reach new customers, but to add those customers to a pool of people interested in purchasing future products from you.
Humanity solved that problem ages ago. It's called the subscription.
In a subscription model, subscribers pay a periodic fee (monthly, quarterly, annual, whatever) and get access to a library of applications and content. Once their subscription lapses, they lose access to the library and anything new that appears. This is the basis behind periodical media (magazines, newspapers, etc.), premium television networks, and the like. So long as the developer is continuing to augment and update their offerings, there is a good chance that current subscribers will renew their subscriptions. Over time, this provides a predictable revenue stream — you know the number of subscriptions that are up for renewal in any given month, and you know what percentage of those historically have renewed.
One of the big concerns with the subscription model and Android, though, is the Android Market's terms and conditions. The Market is set up such that if one purchases an application through the Market, updates to that application (free or priced) are supposed to go through the Market as well. For example, it is up to you and your legal counsel to determine the scope of terms like "You may not use customer information obtained from the Market to sell or distribute Products outside of the Market".
This, of course, is one of the reasons why developers need to be cautious about relying upon, or perhaps even using, the Android Market. Its terms are not necessarily bad immediately, but they do have a chilling effect on business model innovation and so may cause you harm over time.
Even the Android Market terms do not preclude you from offering a subscription model. However, you may not be able to include applications or content you distribute via the Android Market in that subscription. One strategy is to use single-purchase applications to drive up name recognition, which you use to sell a subscription outside of the Android Market. While this approach will not help in the short term, it may provide you an avenue to solidify success after a while.
Of course, one can only hope the Android Market will either relax its terms or be supplanted by something with more flexible terms.
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