There have been a number of posts recently in the iOS (née iPhone) development community about the shocking fact that app-store purchases follow a Pareto distribution. I assume this is shocking because developers don’t study economics, but I guess I had assumed that everyone in the internets had at least read shirky’s analysis of the same phenomena as regards weblog popularity.

From the perspective of the prospective iOS developer, the relevant question is: is it possible to make a living in the iOS space?

Sturgeon’s Law: 90% of everything is crud.

The first fallacy in analysis of the iOS market is that people take the market gross and divide by the number of apps and say “The average app makes $1,634 a year!” (or something to that effect).  This is not meaningful for an app developer, because it both includes the “superstars” that are making millions in a day, and the whole of the long tail.

So more intelligent analysts tend to cut off the top 1% or so. Unfortunately, this just makes the analysis worse. However, there is an additional fact that presents a more reasonable picture, and that is that 90% of everything is crud.

Now if we assume that iOS consumers are providing a loosely-coupled assessment of the cruddiness of a piece of software when they make a purchase, the iOS market starts to look a lot more reasonable.

In the simplest case, where the frequency of purchase is linearly associated with the cruddiness of the software, we can discard the bottom 90% of the app-store purchases from consideration. After all, you’re not going to make cruddy software, right? Now the graph starts to look a little better. We’ve discarded the top 1% of the sales chart and the bottom 90% of the sales chart.

The graph that results is a much more linear graph, with the top app in this zone selling a few thousand a day and the bottom selling several hundred to a thousand a day.  You can jigger the numbers to suit your preferences- for example, you could decide that some significant percentage of people have poor taste or don’t recognize quality – but most of the variants I came up with still amount to a survivable to comfortable revenue stream for a 3-5 person company.

This analysis is relatively simplistic. More advanced assessments would be based on revenue-per-app as opposed to sales-per-app.

Of course, you still have to make an app that isn’t judged as “crud”.