When Apple’s iPhone/iPod touch app store opens this Friday, many apps will cost money — $10 or so for some games. But many other apps will be free. So how are developers planning on making money from their work? In some cases, we’re told, they intend to sell ad space on their programs.
This sounds both logical and risky to us. Logical, because ad-supported applications are now commonplace, and consumers will surely put up with a promotional message or two in exchange for access to a cool app. And risky, because it’s unclear how Apple intends to handle ads on its platform — or whether it will allow them at all.
Since Apple (AAPL) first showed off the iPhone developers kit a few months ago, a cottage industry has sprung up to offer iPhone developers ad services for their apps. To name a few: AppLoop, Pinch Media, Medialets, and PurpleTalk.
For developers, this could be big: Residual revenue is attractive, and free, ad-supported apps could spread more rapidly than apps with even licence fees. But ads present two potential problems for Apple:
- An open hole — for ads, or anything to come in — could jeopardize the iPhone’s performance and security.
- Just as important, unsightly ads could ruin an app’s — and therefore, the iPhone’s — clean, uncluttered aesthetic.
And Apple doesn’t have a huge incentive to allow any ads in its walled garden. For starters, it doesn’t have any revenue-sharing arrangements in place with its app makers, so it won’t be able to get a cut. And Apple may well have plans to sell ad space itself at some point down the line, setting up a potential conflict.
That’s not to say Apple is banning all ads, sight unseen. “At least a couple large publishers” and “an independent developer, well known in the community” are selling their own ad inventory for their apps, Pinch Media founder Greg Yardley tells us via email. “Apple’s seen all of the above applications and hasn’t said anything.”
But: “It’s very possible that applications with ads that aren’t respectful of the user experience or end up being bandwidth hogs/resource strains could fare differently,” Yardley continues. “The platform has its limitations, and if you’re designing complex ads that use a lot of processing power or shuttle a lot of data back and forth, in my opinion, you’re inviting trouble.”
We agree. And we think that Apple could easily take a hard-nosed approach to anything that could taint its carefully curated platform. Especially ads.