Show me the money The importance of network effects for mobile application business models

Abstract

Recent years have seen a fundamental shift in the way that mobile applications are delivered to users. Developers are increasingly moving away from custom deployment approaches towards the use of platform markets for advertising and distributing their applications. Application developers use the platform to manage distribution and payment for applications. In return the application developer pays either a fixed and/or variable fee to the platform provider. Platform providers benefit from the availability of quality applications necessary to attract and retain end users to the platform. In this paper we present results from an original survey. We find that overall willingness to pay for applications remain low consumers are willing to pay for key apps which are perceived to significantly enhance everyday life. We then discuss opportunities for developers to increase cooperation with platform providers in order to enhance value creation, value delivery and value capture.