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The mobile app developer's dilemma: How to get paid without annoying users

Monetizing mobile apps isn't easy when there's virtually limitless competition

By Brad Reed, Network World
March 14, 2012 04:21 PM ET

Network World - CAMBRIDGE, Mass. -- If there was one common theme among the app developers speaking at Xconomy's Mobile Madness program today, it was this: Don't take your users for granted.

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The dilemma faced by many up-and-coming mobile app developers is very similar to the dilemma that Facebook's Mark Zuckerberg was depicted facing in "The Social Network," as developers want to make money but are loathe to turn off their core user base with unwanted and intrusive advertisements. During a panel discussion on next-generation consumer mobile applications at Mobile Madness today, four app developers reflected on both when and how to start monetizing their apps.

Nearly all panelists agreed that it was first important to build a strong, loyal user base that not only downloads your application but that uses it weekly or even daily. That's because lots of companies can get download surges when their app is featured for a day or so on the front page of the Apple App Store or the Google Play store, but such surges typically don't result in long-term growth.

"[Getting featured on an app store] can be a slight addiction," said Jeff Chow, the CEO personal organization app developer Spring Partners. "We've all been featured on some level. In our experience, you'll see those numbers go up five times or 10 times the number of our daily sign-ups after we've been featured on the Android front page. We always hope they don't take us down and then they do and you have that hangover feel."

Michael Putnam, the vice president of products for mobile marketing firm Jana, also said that successful mobile app companies need to avoid the addiction of simply getting lots of downloads and focus instead on developing a strong experience for their core user base.

"Companies usually say, 'We have x-million downloads,' but it really is a vanity metric and it doesn't matter," he said. "What you really care about is your monthly users. Across the board you see much more engagements in apps than what you see in the mobile web."

So let's say you've done all the proper legwork and your app now has a strong base of users that engage with it on a regular basis. How do you go about trying to make money off your app's popularity without turning them off? Charles Teague, the CEO for mobile fitness app LoseIt, said candidly that his company was planning to monetize its app but that it currently had no real strategy or concrete plans for doing so. However, Teague did emphasize that the company would like to avoid using advertisements as the primary source of income.

"We're focused on creating a great experience for users and we don't think advertising produces a great experience," he said. "This is the year that we're working on our business model but we have not figured out what we're going to do. We haven't yet talked about it."

Meredith Flynn-Ripley, the CEO of free texting service app HeyWire, also said advertising can be a real drag on user experience but also said it could be beneficial as long as companies maintain control over how ads are displayed and delivered on their applications instead of simply letting the advertising companies run wild and annoying their user base.

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