With yesterday’s announcement by Apple that In App Purchase will now be enabled in Free Apps, we’re one significant step closer to a prediction I’ve been making for several months now:

it is my firm belief that the vast majority of Apps in the future will be free

The strategic imperative for companies of all sizes, brands, retailers, small businesses to launch iPhone Apps has never been greater.  Before the change in policy, in order to ever sell anything or charge for anything through an App the App could not be free.  So developers had to offer a lite version, and then a paid version.  For Brands, if they had any hope of selling or monetizing usage over time, they had to sell the App.  Yesterday’s change further cements the perfect analogy with websites — you can go to the vast majority of them for free, and publishers have a myriad set of ways in which to monetize consumers’ engagement.

With yesterday’s announcement, every company out there can offer a free iPhone App, thereby reducing the friction of driving adoption, knowing that over time they can work with their consumers to find offers that make sense for both parties.   At the Apps For Brands Conference we co-produced with Advertising Age in September, we heard again and again the incredible engagement and passion of the iPhone customer. Couple that data with the iPhone’s incredible market share growth - reported to now be 30% of the US Smartphone market, as reported by Alley Insider, and the marching orders to businesses are clear:  Develop an iPhone App!

As I’ve also been saying (click for my most recent interview with Robert Scoble), this also means that the number of iPhone Apps will balloon from the current 90,000 or so to well over 1,000,000 in very short order.  The challenges facing consumers to find iPhone Apps and for businesses to drive adoption of these apps will continue to exponentially grow, and we think the only scalable answer to this challenge will be the harnessing of word-of-mouth to drive true value to consumers and corporations.

At Appolicious, our goal continues to be to enable folks to find iPhone Apps by connecting to friends, and friends and friends;  and to help corporations drive adoption by unleashing the power of word of mouth for the quality apps they create.

Note:  Roy Furchgott of The New York Times posted a story this morning  (10/5) on the same topic; please read it and compare to this (originally posted 10/1).

There’s been a lot of commentary on Peter Farago’s great post on the Flurry Blog entitled: Mobile Apps:  Model, Money, and Loyalty.  In it, Peter uses actual Flurry data to graph app retention vs. frequency of use.  There’s a lot of great insight into frequency of use vs. retention.  Not surprisingly, the more frequently an app is used, the greater the retention.  Peter also makes the point on how more frequently used apps lend themselves to a subscription model vs. a purchase model.  It’s a great piece and I recommend you read it.

My question, as we think about the future over at Appolicious, is how important is frequency and engagement to apps for Corporate America?  As I stated in this post, we believe that the 75K apps in the iTunes App Store are going to 1MM;  and the vast majority of apps will be free.  We further believe that every company, brand, retailer, store, you name it will have an app in the iTunes App Store.

At the Apps for Brands Conference we co-produced with Advertising Age last week, we heard from many brands talking about strategies for adoption, reasons for app launch, and how to build an app.  So we are more certain than ever of this large macro trend.

But the question I ask is this - how important is it really for a large brand/retailer/corporation to have frequency of engagement?  The answer in my mind lies in web sites, as I believe the analogy to the early days of the world wide web is spot on. An online retailer fully well knows and understands that you are not coming back to their web site every day, not nearly as often as you will go to a news website for example.  An online brand understands that you will never visit their site with the frequency of your fantasy football website in the fall.

The key for these companies, however, is that when you do have a need for their product or service, you do go to their website.  Put another way, they really want engagement around the Christmas/Holiday Season — I would posit less important during the dogs days of summer for most toy retailers as an example.

So engagement to me is not the key issue for these companies and their apps.  They key is how to make sure that when the appropriate time comes, a) you have their app and b) you will use their app.  That is the challenge.  Unlike the web, where the search engines led by Google provide a straightforward (but not easy nor cheap) path to capture people’s intentions and use that to direct traffic to the site, the challenge to a brand or retailer is significantly harder.

First a brand must provide true value-add from the app — not just a reskin of the website but rather true use of the full functionality of the mobile device:  GPS, camera, accelerometer, etc.  The app has got to make the shopping and information experience better.  Second, brands must put together an integrated marketing strategy to ensure that these apps get downloaded at key times close to natural purchase decisions and also that awareness of the already installed apps gets regularly promoted.

As a brand, I would be extremely happy if on an annual basis my most loyal users used the apps enough, when necessary, to increase their satisfaction and hopefully spend.  As an analog, I am certain there are plenty of websites that are happy with 2-3 uses a year, as long as they are during the month of December.

Our approach to this problem at Appolicious is to focus on word-of-mouth — by enabling folks to easily find people like themselves who are using certain apps and to communicate with them pre, and post purchase of the app, we hope to do our part in “getting the word out” on these great branded apps for consumers.

What do you think?

MG Siegler of TechCrunch wrote a great piece breaking the news that Google was launching a new News Reader at the TechCrunch50 today. According the Google Blog Post on the subject:

Like a print magazine, Fast Flip lets you browse sequentially through bundles of recent news, headlines and popular topics, as well as feeds from individual top publishers. As the name suggests, flipping through content is very fast, so you can quickly look through a lot of pages until you find something interesting. At the same time, we provide aggregation and search over many top newspapers and magazines, and the ability to share content with your friends and community.

….

… we believe that encouraging readers to read more news is a necessary part of the solution.

Essentially what FastFlip provides is a means to quickly browse though mini-screenshots of the participating publishers’s sites — mostly magazine publishers along with NYTimes, Washington Post and several others.

From a consumer standpoint, I don’t get this at all.  I’ve spent from late 2005 to the end of last year almost exclusively on online news — seeing what’s worked and what doesn’t — and this feels like those “magazine readers” that appeared regularly through the last ten years.   Consumers want to be able to read  and scan and absorb and digest on headlines as fast as they can.  The more “news-junkier” an consumer is, the higher the link density they are looking for.  The emerging winners in large scale news aggregation over the past 5 years have all used a straightforward formula - great headline writing/editing, many many links, clearly laid out in a way that allows a consumer to quickly figure out what they’re looking for.  See HuffPo, RealClearPolitics, and DrudgeReport for just a few examples.  And certainly  Drudge (their traffic numbers are on the site) is not niche - I would put their self-reported 665MM visits in last month against any other news home page out there.

While I was GM of Yahoo News in 2008, we launched a highly successful redesign of the news article and news home pages, one that resulted in a 300% increase in engagement.  What was the driver of this engagement?  Putting more relevant links and more relevant headlines, including from the BuzzTracker service under the Most Blogged About feature, very close to the the story folks were reading.

It’s all about relevancy, and the propinquity of available links.

So what’s the hubub over this new launch by Google? Yahoo News remains the number one online news source, by far, with a slew of competitors rounding up positions 2-5 (I dont believe Google News is in that list).  What has gotten so very many people excited is that this site deigns to solve a problem for the Publishers — the very publishers who in many cases cover this news.  Theoretically, if the audience here can be large enough (I obviously don’t buy that assertion), Google can put in place contextual ads next to the content itself and can then share the revenue back with the publishers.

Of course, this model further exacerbates the consumer problem — instead of reading NY Times content within the NY Times paper, and all the close-in links looking for my further engagement — I read one page that stands alone with arrows to read more to the left and right.  If I do click on a link with the Times page, it takes me into the Time site so I have to click again.  On top of that, you have a design that was optimized for standalone being force fed into this new model.

The problem Newspapers and Magazines are all having right now is driven by the accelerated shift of advertisers to measured/online media.  Since newspapers and magazines are fixed cost businesses, as revenue declines super rapidly (although we’ve been watching this for years), at some point they go unprofitable and can’t ever make it up online.  The reason is CPMs are much much lower online due to the availability of many substitute media to reach the same user, so traffic to create similar business models needs to be much much larger - something only a few properties, like Yahoo News, can pull off in a real way.

The right approach to fundamentally improve the business models of publishers online starts with the consumer experience and reach.  There have been and will continue to be new winners in this space - winners that have innovated on the consumer experience.  While I applaud the sentiment here - it sure feels to me like a concept that was driven by publishers’s needs vs. any actual consumer preference.