2 billions app downloads, but how do you monetize it?

[1]Last week Apple announced downloads from its App Store exceeded the 2-billion mark, and the number of applications exceed 85,000. While those stats add up to an enormous addressable market for apps providers, how many will actually be able to monetize it?

Mobile ad exchange Mobclix [2] reports that consumers continue to download more free apps than paid apps, despite the fact that paid downloads make up 77.3 percent of the total App Store inventory. (You can read more details in FierceDeveloper [3].) Perhaps more disappointing to those companies wanting to make a quick buck from the App Store is the fact that a recent survey from mobile application development services provider Flurry indicates that cheap novelty apps lose their appeal virtually overnight.

Are we getting to the point where apps providers need to start putting some significant elbow grease into their applications by not only creating compelling apps but a whole marketing campaign around them? It depends, of course. Many marketer and media firms have chosen to introduce branded apps for free, as a way to bolster their brands. FierceMobileContent, however, highlights Kraft [4] and its ability to successfully charge $.99 for its iFood Assistant app.

"We look at iFood Assistant as a natural evolution from product to service," Kraft Foods director of innovation Ed Kaczmarek told AdAge. "We look at it as providing the consumer with a service that's of value, and we feel the 99-cent price, which is the same as a song, is a minimal cost, but it also signifies the content is more premium."

According to Kaczmarek, Kraft also is looking to exploit in-app commerce, a function that free iPhone applications don't support. "I think in-app commerce has a lot of promise," he said. "Kraft is in the process of developing new services that we'll eventually offer to consumers, and we look at iFood Assistant as a platform where we can not only introduce those new services but have consumers purchase them."

Last week, CNN debuted its $1.99 app [5], despite the fact that rival news organizations offer their apps for free. CNN said it believes users will pay for the app because it's more innovative than free offerings. For one, it allows users to submit their own photos and videos to the news outlet via its iReport functionality.

Louis Gump, CNN Mobile vice president, told Telephony [6] that charging for the app will be good for consumers because it gives CNN a business case that enables it to build better apps going forward. CNN is viewing its apps effort as a sustainable business, not another marketing effort.

Despite the fact that some 85,000 apps are on the App Store, I think we're getting to the point where we are seeing what is sticking, and it's going to take some more effort to continue to woo customers. --Lynnette [7] 

[8]P.S. Make sure to check out our new Android handset guide [8]. Though it's certainly not comprehensive, this guide highlights the major Android announcements, and includes the pros and cons of each device and that device's impact on the manufacturer, carrier and respective players. As always, feel free to leave your comments, thoughts and criticisms [9].