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Mobile apps: to charge or not to charge?

By: Dr Lynda Kelly, Category: Museullaneous, Date: 11 Jan 2011

The mobile world is here to stay, I think we all agree with that. The next big thing for museums then is developing applications for smartphones. Whether to charge or not to charge for these seems to be the question ... or is it??

 

There has been some discussion about charging specifically for museum applications on the #mtogo stream on Twitter. Responses have ranged from (and I’m paraphrasing here): “I will not be using your app if you charge”, “we already pay taxes for content so it should be free” to “it could be considered that you need to cover your expenses” and “it is a revenue raiser”. One comment said it depends: “you'd charge for a book but not a pamphlet, and for some talks. just depends on what the quality and intent is”.

As at 5 January 2011 (when I last searched the iTunes Store) there were around 259 iPhone apps that were categorised as “museum education”. Of these around one-third seem to be actually produced by museums, although it was difficult to tell as lots of city guides and commercial art apps seemed to be tagged this way too. Anyway, of these several are paid (some examples include the iMusuem Musee du Louvre $3.00; Gauguin Exhibition at the Tate $3.99; Houdini at the Jewish Museum NY Acoustiguide Smarttour $3.99; $5.99 for the Mucha Museum). Current apps from the Smithsonian, Cal Academy and AMNH are free. However, just today the British Library released a much-trumpeted app for around $4 for iPhone and $6 for iPad.

From chatting to folks here and on Twitter, it seems to me that, rather than a blanket statement saying they must always be charged or free, there are a number of charging models that could be considered, each with its own set of positives and negatives.

Model 1: Free app
Positives:

  • More likely to be downloaded and shared
  • More widely used
  • Goodwill
  • If the organisation’s first app then a great way to test the market

Negatives:

  • No revenue stream
  • May set up an expectation that all future apps will be free

Model 2: Free app for (say) two-three months then charge
Positives:

  • Good marketing opp (hurry and download!)
  • Gives some revenue stream

Negatives:

  • May be hard to implement
  • May have limited take-up and bad feeling (i.e. why pay now if was free before)

(Note @jvsankar suggested “maybe cost can be tied to a real visit to a museum that then provides a time limited code for free access, benefit both worlds”)

Model 3: Free app, then charge for version 2 (i.e. offer as a 'light' version first)
Positives:

  • Eventual revenue stream
  • Incentive to improve on app, not just leave it
  • Goodwill

Negatives:

  • Deferred revenue stream
  • May not cover costs
  • Version 2 had better be good and sufficiently different!

Model 4: Charged app
Positives:

  • Revenue stream
  • Sets expectation that will be charging for apps

Negatives:

  • What to charge? May set price too low or too high (but could discount later)? What costs are we actually covering?
  • As a Government organisation we could be seen as charging for content that should be free
  • Potential loss of goodwill

Another model seems to be "freemium", as stated in this Smartphone owners paid less for apps in 2010 article: “More applications on Apple's App Store switched to a freemium model, which lets users download applications for free and then makes money by selling premium services through the application. About 34 percent of all revenue generated by App store applications came from in-app purchases on free applications. Half of the revenue generated from the App store came from paid application sales.”

And while we’re at it here’s a link to the video Mobile Year in Review with some stats that will amaze you, as well as some online resources thanks to the folks on #mtogo (especially the lovely @nancyproctor and prolific @musebrarian and yours truly):


In summary then, it seems that the answer to this question is "it depends". Or, indeed the question may not be whether to charge or not, but how much and when - which charging model best suits that particular circumstance?

One final thought: perhaps museums could market charged apps as users paying for convenience (i.e. pushing content to their mobile device) rather than paying for the content itself which may also be free on the website or the physical site anyway?

So, just my two cents worth and I'd be keen to hear your thoughts, as well as any alternate charging models.

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11 comments

derekjw - 10.12 AM, 14 December 2011
Here at the Museum of Human Disease we have just completed an app to connect people to our "Images of Disease" database. Allowing them to explore our specimens and access expert information about the specimen and the disease. We will be making this available as a free tour - on a set of iPads - to visitors to the Museum. Currently in a Beta trial it is proving popular with both our school and public audiences. As the database is part of a larger faculty project we are still discussing how we might make this available to non-visitors. Most likely booked groups will be given access for a period before and after a visit. For the public we would most likely be charging - and at a text book rate, so at the higher end of museum apps, if at all. To try and balance our desire to make content accessible while maintaining the integrity of the IP for use in other circles.
AronAmbrosiani - 11.12 PM, 13 December 2011
Very interesting read. Some remarks from a Swedish perspective: at the Nobel Museum (my main place of work), we have offered audio guides both for free and for a fee (20 SEK, appr. 3 USD). The audio guides are just as popular when the visitors have to pay extra. I believe they value the "enhanced experience". Audio guides & apps are still not considered part of the basic offer in the public mind. That might change, of course, and then I assume the willingness to pay for apps etc might decrease. I do think that for most museums, the primary target group of apps will be the visitors at the physical museum, to offer an enhanced experience or make it possible to prolong the visit by adding a virtual part after the physical visit. Stand-alone apps might work for art museums, displaying artworks (and here the iPad/tablet versions will dominate, because of the user experience), but for cultural history museums the interest just isn't large enough. Right now I'm coordinating a mobile strategy for the National Maritime Museums in Sweden, and right now (although we're just at the earliest stages of discussions) my feeling is that we will focus on mobile web rather than apps, since it might be hard to get people to use the app "stand-alone", not connected to the museum visit. A steadily rising proportion of our web visitors arrive via mobile and those visitors will probably be more plentiful than possible app users. thanks for a nice post and interesting comments as well! best regards, Aron Ambrosiani web project manager, Swedish National Maritime Museums
Lynda Kelly - 2.03 PM, 14 March 2011

Here's a good paper on this topic: Getting on (not Under) the Mobile 2.0 Bus.

Lynda Kelly - 7.01 AM, 19 January 2011

Just in via Twitter: "@sherah1918: 73% of museum iPhone apps are free, others range from $.99-7.99: http://bit.ly/foihJL . Compiled #s from @CharlesOuthier's list. #mtogo"

Interesting!

Lynda Kelly - 4.01 PM, 12 January 2011

Thnx Lucinda and look forward to hearing what happens at Te Papa.

Jen - I think partnership could be the fifth model actually. I hadn't thought about that before so thanks. I guess if it's a commercial runaway success the revenue sharing arrangements could get messy? Apart from Angry Birds, I'd also be curious to see what apps are making big bucks? Might have a sniff around...

lucinda_blackley - 2.01 PM, 12 January 2011
Great discussion, thanks Lynda. These are issues that we're debating at Te Papa as well - probably an issue for all museums everywhere
jenrgriffiths - 1.01 PM, 12 January 2011
Very interesting Lynda. I wondered about the public/private partnership/sponsorship that is often used for exhibitions or other events at museums - is this a viable option for apps or is this type of thing really only available to the big guys anyway?
Lynda Kelly - 11.01 AM, 12 January 2011

Nice post, Floods, community spirit and Australia #qldfloods, by Kate Carruthers that sums up some of my earlier comments. What can museums learn from this I wonder??

Lynda Kelly - 10.01 AM, 12 January 2011

Also here are some comments I got on my facebook post:

"Charge but keep it cheap"

"I would easily spend up to $6 on an app that I wanted without thinking twice."

"If they are for kids to use then they need to be free or very cheap. This is a way to get the kids more interested in museums and will have flow on effects in other monetary and non monetary ways. Charge more than cost for the ones you expect adults to use - this will at least cover some of the cost for the free or cheap ones. I don't think a "one cost all apps" should be applicable. Also, make sure you have good apps for all types of phones not just iPhones! Hope this helps!!"

"… even in the commercial world different revenue models can co-exist. Whether it is free or fee, it has to be terrific!"

"I think this is an interesting question and wonder if it would be related to how the app. is being used. How often does the "visitor" use the app? Do they update it? How much did the museum spend to create it? The Pentimento app. at the National Gallery in London, I believe cost $2.99 but cost $90,000 to create it. Perhaps it could be argued that if the app. is an "in visit" app, such as the Smithsonian app, then it should be free, as the visitor has to go to the museum to fully appreciate it. However, if the museum is reaching out to the world, creating an experience with their collection, like the National Gallery, then perhaps a small "admission" fee isn't so bad."

Thanks for your interest all everyone!

Lynda Kelly - 10.01 AM, 12 January 2011

 Thanks so much for your insightful comments Nancy and generous sharing of links.

The Freemium model as mentioned in our Tweets and this post seems an interesting idea, and I’m with you on Option 4, however attractive it may be to museum managers it is a risk (however I’m not saying we shouldn’t dismiss it out of hand).

As you and Mike have consistently pointed out, there is a much bigger issue here. Business models aren’t the only thing that will have to develop and change. The rapid development in mobile means that the ways we work to deliver content across both our physical and virtual sites are now being disrupted. Today more than ever, museums need to be nimble and flexible and on top of our game. However, most of all we need to be prepared for major change – this I see is the fundamental challenge for the 21st century museum and is something that will not go away! Our traditional models of exhibition development, interpretive strategies and learning programs, as well as collection management including databasing, will need to be re-thought to include what’s happening in the mobile sphere. I don’t see that we are having these major conversations at senior levels across our sector, and any discussions are patchy. There was a piece in the Harvard Business Review just today about strategy which stated that: “Ultimately, strategy is a way of thinking, not a procedural exercise or a set of frameworks.”

Trite now it may sound, but the Queensland floods have yet again brought home to me the power of social media and, even more so now, how it functions in the mobile arena through galvanizing communities, providing information and support (and raising big bucks too) and museums could well learn from this.

Be interested in seeing your museums and web paper at some point too and can’t wait to see you guys at our Museum 3 March event (can’t help the shameless plug!).

NancyProctor - 7.01 AM, 12 January 2011
Really useful summary, Lynda - thanks so much! I agree that it is valid, and acceptable to most users, to charge for convenience, and I also agree with your summary, "It depends" - different projects will benefit from different models and probably the most lasting value will be had from the model that offers network effects - that supports not just the app project, but other platforms and initiatives from the museum too. At the Smithsonian, which is characterized by being largely (half) publicly funded, I've just written in to our mobile strategic plan the following assertion: "Profit should not be SI Mobile’s imperative; mobile should instead aim at network effects in support of existing revenue streams and other initiatives. Execution of successful mobile business models will require new levels and kinds of collaboration among SI interests than are currently the norm." As Mike Edson wrote in the Institution's Web & New Media Strategy: “Ultimately, the most valuable business asset we can cultivate – and the one that is most fundamental to our core mission – is a community of engaged and committed Smithsonian enthusiasts.” Both of these plans (the mobile one still in draft) are accessible from: http://smithsonian-webstrategy.wikispaces.com/ There's one negative I'd add to Model 4: Charged app - download numbers fall off a cliff once you start charging for an app. The National Gallery of London's Love Art app is a good case-in-point. See Charlotte Sexton's discussion of this in her paper from Museums & the Web last year: http://www.archimuse.com./mw2010/papers/lagoudi/lagoudi.html Peter Samis & I addressed mobile business models in the Tate Handheld Conference this year; the videos of our presentations are online: http://tatehandheldconference.pbworks.com/w/page/29018648/Keynote-presentation:-Nancy-Proctor-2010 http://tatehandheldconference.pbworks.com/w/page/29523573/Keynote-presentation:-Peter-Samis-2010 We are also collaborating with Allegra Burnette from MoMA and Rich Cherry from Balboa Park Online on a paper for Museums & the Web on mobile business models. We'll keep an eye on the discussion you've started here and look forward to learning from others' experiences! Thanks again for your great post, Nancy

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