As the mobile market is exploding, it is time to mark a pause. Daily, we see new apps being launched with the not so secret hope that it will gain enough adoption to be sold to a cash fat company. The issue here is that

Let me explain. A camera app, for example, just adds some feature to the phone. Once downloaded X number of time for $2.99, it has no financial revenue. People pay to add those features to their phones once and that’s it. Same goes with any other apps.

Instagram who gives away it’s app for free has built a business outside of its app, by selling it’s social media traffic to advertisers. Hipstamatic, in reverse, failed in trying to build a business in and around selling new features for its feature app and has since launched a sharing platform, a video spin-off and more recently a stand alone filter app.

There is nothing wrong in building features for people to customize their mobile experience but it shouldn’t come as a surprise if they don’t turn out to be the next Google. Once passed the initial download and maybe – if you are lucky – a few additional high value upgrades people would be willing to pay for, there is no revenue stream.

For investors, unless they are at the seed level and can recoup on a successful launch, there is no point in participating in any series since the returns will be diminishing.

The typical business idea behind any photo app is to build an active sharing platform that can then be sold to advertisers, as per Instagram. In the last five years, only one has been successful at it, Snapchat. Every other photo app has failed at moving from a feature to a business. There are some success stories obviously at apps grabbing substantial revenue from massive downloads – Facetune comes to mind – but none can claim to still be pulling in any revenue in the next 2 years.

So, before you decide to create a photo app that will be downloaded a million times and sell it for even more millions, think about what you have in your hands:  A business or a feature?

Photo by thetechbuzz

Photo by Stitch

Author: Paul Melcher

Paul Melcher is a highly influential and visionary leader in visual tech, with 20+ years of experience in licensing, tech innovation, and entrepreneurship. He is the Managing Director of MelcherSystem and has held executive roles at Corbis, Stipple, and more. Melcher received a Digital Media Licensing Association Award and is a board member of Plus Coalition, Clippn, and Anthology, and has been named among the “100 most influential individuals in American photography”

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