Iron Ink Media: Inked Up

Fortune has a great article out today discussing the life span of iPhone applications. If you’re a developer, or are just interested in the App Store phenomenon, you know that there are two types of money-making apps: ones people pay for and ones that are free but have advertising in them. So, which is the way to go?

Philip Elmer-DeWitt breaks it down:

In a slide show packed with hard-won insights, Jesse Rohland and Greg Yardley of Pinch Media offer the results of a statistical analysis of 30 million App Store downloads. Among their findings:

* Users tire of applications pretty quickly; fewer than 20% ever come back to run a free app the day after download.
* Time spent on any app declines by almost 1/3 in the first month, stabilizing at just under five minutes.
* Paid applications see slightly more use than free apps and are used for slightly longer periods.
* The biggest usage differentiator is category — games are used for longer periods than any other type of application.

Behind these general observations are some very useful stats:

* Appearing on the top 100 list increases daily new users 2.3 times.
* The average price cut increases demand by 130%
* The average price increase drops demand by 25%

Bottom line: only a few of the stickiest applications — less than 5% — are suitable for advertising at the current ad rates, and a developer won’t know if he or she has got one until after launch.