Why it's harder to make money on Android than on Apple's iOS

Out of 72,000 paid apps in Google's Android Market, only two have sold more than 500,000 copies

80% of Android paid apps have sold fewer than 100 copies. Source: Distimo

The Utrecht-based analytics company Distimo generated some catchy headlines last month with a report suggesting that Google's (GOOG) Android Market was rapidly catching up to Apple's (AAPL) App Store and might surpass it by July.

What that report didn't mention, as Roughly Drafted's Daniel Eran Dilger pointed out in a pungent analysis entitled "Distimo polishes the Android turd," is that the App Store is generating billions for developers, while hardly anybody is getting rich in the Android Market.

In a new report issued Friday, Distimo looks at why that might be. One obvious factor -- not highlighted in April -- is that there are nearly three times as many paid apps on Apple's App Store (211,369, by Distimo's count) as on Google's (71,801).

What Distimo discovered this time is that, for a variety of reasons, Android generates far fewer runaway hits. The most successful app in the Android Market, with more than 50 million downloads, is a Google freebie: Google Maps. Nothing else comes close.

Among the other findings: (I quote)

• Looking at paid applications in the Google Android Market, downloads are significantly lower than they are for free applications. The percentage of all free applications that have been downloaded less than 100 times is 24.8%, and the percentage of paid applications that have been downloaded less than 100 times worldwide is 79.3%.
• In March and April together, six paid applications have generated more than 500,000 downloads each in just the United States in the Apple App Store for iPhone. In the Google Android Market however, only two paid applications have exceeded more than 500,000 downloads (but under 1 million) worldwide to date [emphasis ours].
• There are five games in Google Android Market with over 250,000 downloads worldwide. In the Apple App Store for iPhone ten games generated more than 250,000 downloads in the United States alone in two months. [emphasis ours]
• Being visible in the top charts is very important for generating more downloads... The top 10 free and top 10 paid applications together have seen only 26 applications in the Google Android Market, while there have been 94 applications in the top 10 free and paid in the Apple App Store for iPhone.

Roughly Drafted's Dilger, an Apple partisan who clearly has a stick in this fire, suggests that the rapid ascendance of the Android Market is an illusion. Android may be gaining in sheer volume, he says, but not in quality. He quotes the app guidelines Apple issued last September:

"We have over 250,000 apps in the App Store. We don't need any more Fart apps. If your app doesn't do something useful or provide some form of lasting entertainment, it may not be accepted."

Google has no such policy, Dilger writes. "All one has to do is pay a fee and shovel junk into its online listings. Suddenly it's obvious why Google is 'beating' Apple in free titles: 134,342 to 121,845 according to Distimo: they're only comparing Fart Apps, ringtones and wallpapers. Of course Google is winning in that regard."

Below: Two more charts from Distimo's new report. You can read it in its entirety here (registration required).