Tapjoy: Developer revenues nosedive after Apple bans pay-per-install apps

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Roughly six weeks after Apple (NASDAQ:AAPL) began aggressively rejecting iPhone and iPad applications that offer incentives--e.g., virtual currency--to encourage consumers to download other apps, monetization and distribution platform Tapjoy reports the move is dramatically impacting iOS developer revenues and customer relations. After surveying 496 iOS developers, Tapjoy found that two thirds of respondents credit the pay-per-install model for generating 20 percent of revenues, with some saying PPI revenues account for more than 60 percent of their earnings. "PPI revenue was our biggest revenue source as a company," one unnamed developer said. "It has been completely removed in a single day." Said another, "PPI is a great way for those users who don't have a credit card, or that much cash on hand, to earn some content that otherwise would be restricted to premium users. It is also a great way for small developers to both monetize their apps, and, if needed, get some attention for games, that otherwise might be lost in the App Store."

Tapjoy adds that almost half of developers report an increase in user complaints concerning the absence of options to earn in-game currency by installing or engaging with other apps, with 25 percent indicating they are receiving "way too many" user gripes. In addition, more than eight times as many developers report a decrease in daily active users since Apple began restricting incentivized apps compared to devs indicating a DAU increase over the same period.

Apple began cracking down on incentivized iOS apps in late April, contending that the banned apps violated section 3.10 of its App Store Review Guidelines, which state "Developers who attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods will be removed from the iOS Developer Program." At that time, Tapjoy said that Apple's move seemed to herald a new interpretation of the 3.10 clause: "Tapjoy, AdMob, iAd, Flurry, W3i and others all power various forms of app install advertising," the firm wrote in a letter to developer partners. "Many of the brands that promote their apps via Tapjoy also do the same on other major ad networks across the mobile advertiser ecosystem, and all of the apps we promote on iOS are Apple-approved... Unfortunately, we believe much of this is caused by misconceptions around pay-per-install, the free-to-play model, cross-app promotion and their collective value to the ecosystem."

Incentivized app installs were once viewed as a reliable launching pad into the App Store's coveted Top Apps countdown, enabling developers to create visibility and demand for their newest releases by promoting their efforts via existing iOS favorites. But while Apple claims a 30 percent cut of all in-app consumer purchases, the computing giant does not earn a share of pay-per-install app agreements: All money changes hands between developers and distribution platform providers like Tapjoy.

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