Today the global app economy is a good bellwether for the overall digital economy. As a platform it’s enabled the rapid scaling of many services, and the ubiquity of the mobile phones that apps run on have lead to an enormous outpouring of creativity and coding. Truly if you have any need, there’s an app for that, and there’s someone, somewhere in the world trying to build a business off the back of it.
In the international development community we have been hugely excited by the potential of the app economy for the past five years or so, and there have been many app training programmes, app competitions, coding boot camps and articles about how places like Nairobi have become a ‘Silicon Savannah’. But we are aware that app platforms, although ostensibly neutral and meritocratic, are far from level playing fields, and the brutal Pareto’s Principle that guides how few apps survive on the top ten list within the app stores means that few are making any money at all.
Within this new research report we want to put some solid data underneath our assumptions. We’re lucky to have Bryan Pon as one of our Senior Research Directors, as he recently completed a PhD thesis on this very topic at UC Davis. Over the past year, with the support of the Mozilla Foundation, he has expanded the scope of his research to look deeper at the global trends in revenue flow, with a particularly lens on emerging markets.
The findings are hugely interesting, and sometimes stark. For all our excitement about Silicon Savannah, most emerging market countries – including India – are rounding errors when we look at their share of global revenues on the app stores. Revenue is concentrated into a handful of markets that take the lion’s share back into their own countries, with local sales from local developers almost absent except for unique markets such as China, South Korea and Japan.
Trade moves sometimes alongside country proximity, or sometimes along language and culture (Spanish app developers export well to South America). There are surprising countries such as Vietnam and Belarus which outperform their size, and then countries like Finland that rise up the ranking based on one massively succesfull app development company alone (Supercell). The one common feature is the dominance of the US, which takes a massive double-digit majority of revenues from virtually every country in the world.
This may be for purely meritocratic reasons – we know Silicon Valley is a hive of talent – but we believe there are also structural reasons behind this. For instance, Google allows developers in virtually any country to upload apps, but only allows merchant accounts in a relatively small group of developed world markets. Clearly, if you can’t get paid for your app or benefit from in-app purchases in virtually any country in the African continent, then it’s no surprise their revenue flow is such a trickle.
We hope this research provokes debate, about what can be done to improve discoverability for local app developers, about how we can create more equitable platforms that encourage and support developers better, and also whether the focus that we have had on encouraging app development as a tool of international development has been the right strategy or not. We strongly believe that healthy local content and services are crucial not only in encouraging new users to come online, but in making sure that the massive digital dividend that the app stores have delivered is distributed more evenly. At this stage in the commentary on an Africa-focused report like this, there’d usually be a clichéd analogy along the lines of ‘we need more app lions to roar’. We don’t want to fall back on clichés like that – but we wouldn’t mind the possibility of a few unicorns.