GetJar starts giving away premium apps

Correction: An earlier version of this story stated that GetJar would pay for free app distribution through in-app advertising. Rather GetJar is advertising “between apps” as explained below

Taking a page from Amazon’s book, independent app store GetJar is giving premium Android apps for free. But unlike Amazon, GetJar isn’t just using its new GetJar Gold service merely as a promotional campaign. Instead it’s turning premium into free apps permanently.

GetJar will be offering an initial catalog of 34 free premium apps that normally retail between $1 and $5 on other app stores, but it plans to add more gaming, entertainment and productivity applications as it strikes more deals with developers. Some of the initial Gold launch apps are Age of Zombies, TuneIn Radio Pro, Solo, Paper Glider and Splashtop Remote Desktop. GetJar is compensating each developer for the download—though the rates may be lower than their normal percentage cuts from a download—but it is making up the loss through increased advertising revenues.

“The apps will stay free—this isn’t a daily free app deal and these won’t be ‘lite’ versions,” a spokesperson for GetJar said.

GetJar CEO Ilja Laurs said one of the principle benefits of this shift to an ad-supported business model will be much more exposure for relatively unknown apps. Rather than advertise within the apps themselves, Laurs said GetJar is taking a “between apps” ad approach. GetJar estimates that free apps are downloaded 10 to 20 times more often than paid apps. Thus a search for free apps in GetJar’s Gold service would generate more sponsored results and theoretically lead to more downloads of those advertised apps.

The move definitely adds a new wrinkle to GetJar’s already unique business model (CP: GetJar: Operators have lost the consumer). Unlike other app showcases, GetJar doesn’t take a fee from every app downloaded. Developers are free to submit apps to and distribute in the GetJar using whatever payment method they choose. GetJar makes its money through app discovery, taking a percentage from or a fee for any sponsored download customer searches produce. GetJar Gold is an extension of that strategy, using the lure of free apps to generate more sponsored results. Since the sponsored results are often for free apps as well, GetJar believes it will collect enough money in advertising fees to offset costs of compensating developers.

Though GetJar isn’t viewing Gold as a loss-leader, it could enjoy substantial promotional benefits from the program. It essentially will be offering apps for free that Android Market and the Amazon App Store offer at premium rates. Once word gets around, that could drive millions of new customers to its catalogs. GetJar already claims to have 30 million active monthly users and an international reach far beyond the U.S. focus of Android Market.

Of course, the Holy Grail for GetJar would be to tap into the iOS ecosystem, but so far Apple has resisted any attempt at independent distribution of apps for the iPhone and iPad. GetJar’s chances of winning Apple’s blessing are likely nil, given the two are in a high-profile fight over GetJar’s use of the term “App Store” (CP: Apple tells GetJar to quit using the term ‘App Store’).

In GetJar’s press release announcing Gold, Laurs couldn’t help taking a swipe at Apple:

“We are able to develop programs like GetJar Gold because of our open and free business model. We regret that at this time we cannot extend our program to iPhone users, as Apple runs a closed ecosystem that does not allow for competing app distributors like GetJar. Unfortunately, iPhone users will have to continue paying for the very same apps that their Android counterparts enjoy for free.”