Apple App Store: Big pie, but not for developers

For Apple (AAPL), it is a milestone: $10 billion in app sales in 2013, with $1 billion of that coming in December alone.

While the mobile application market is red hot, that also translates to higher revenue for software developers who focus on the niche. Apple says it has paid a total of $15 billion to app developers. As Steve Ranger pointed out on ZDNet, if you go through past Apple announcements and do some simple math, it translates to $8 billion paid to developers in 2013 alone.

That is a large chunk of money. But these figures have other implications. One is that, on average, Apple takes 20 percent of App Store sales. However, the official cut is 30 percent. With $8 billion going vendors, the total (not counting sales of Apple's own software) should have been $11.4 billion.

So why isn't the actual total higher or Apple's take well in excess of $2 billion? The logical answer would be that vendors with the most popular software packages are getting a special rate unavailable to most software developers.

That would hardly be unusual in the retail world. An example is Apple itself. The company has historically offered retailers slim discounts on its products when other companies had to provide far bigger savings. When a vendor has a popular product that sellers feel they must offer, it can command special conditions that most vendors never see.

And while Apple's $8 billion in developer payments illustrates the rapid growth of the app market, it is less impressive when spread out over the number of apps and developers represented in the App Store.

According to the site, which calculates extensive metrics for the Apple App Store, there are more than 1 million active apps. That would translate into average annual sales of $8,000 per app, or $30,475 for each of the more than 262,000 active publishers. At an average app price of $1.29, $10 billion in sales amounts to $7.8 billion in paid apps. That's not a bad sideline business for a behemoth like Apple, but it isn't exactly a gold mine for app builders.

More likely is that sales -- both of apps themselves and from in-app purchases of extra services and features -- are heavily concentrated in a handful of vendors. In other words, if you're thinking of becoming a mobile app magnate, don't give up your day job yet.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.