App Stores: winner-take-all markets dominated by rich countries

In Winners and Losers in the Global Economy, a new Caribou Digital report funded by Mozilla, surveys the top apps from 37 countries and analyzes where they come from and how the revenue from them flows around the world.

It's not pretty. In addition to being static, winner-take-all markets (only the companies at the top of the pile are making any money to speak of and once a company lands at the top of the pile, it tends to stay there), the markets themselves are largely dominated by developers from rich countries, often exporting to poor countries. The flows almost never go the other way — though some countries have cultivated successful code shops that do contract development for publishers in rich countries.

It's a far cry from the promise of a democratizing app store economy, which was supposed to simultaneously monetize the net and spread those funds among a diverse set of developers and publishers who'd share in the riches. What's worse is the Web is becoming more app-like in its wealth distribution and control chokepoints, and users are migrating from browsers to apps.

Apps stores are winner-take-all. The nature of the app stores leads to winner-take-all markets, which skews value capture even more heavily toward the U.S. and other top producers. Conversely, even for those lower-income countries that do have a high number of developers — e.g., India — the amount of value capture is disproportionately small to the number of developers participating.

The emerging markets are the 1% — meaning, they earn 1% of total app economy revenue. 95% of the estimated value in the app economy is captured by just 10 countries, and 69% of the value is captured by just the top three countries. Excluding China, the 19 countries considered low- or lower-income accounted for only 1% of total worldwide value.

Developers in low-income countries struggle to export to the global stage. About one-third of developers in the sample appeared only in their domestic market. But this inability to export to other markets was much more pronounced for developers in low-income countries, where 70% of developers were not able to export, compared to high-income countries, where only 29% of developers were not able to export. For comparison, only 3% of U.S. developers did not export.

Winners and Losers in the Global Economy
[PDF] [Bryan Pon/Caribou Digital]

Mozilla, Caribou Digital Release Report Exploring the Global App Economy
[Mark Surman]