From Thanksgiving to the end of the year, the W3i blog will periodically share thoughts on new or emerging trends our team sees developing/growing in 2011 in the world of consumer application marketing– development, monetization or distribution.

Opening the door for freemium to flourish

It was a little over a year since Apple opened the doors in the App Store allowing free apps to include in-app purchases. It was a move that allowed the freemium game model to not just flourish, but explode. Free vs. paid apps was the debate but people suddenly started seeing free as a bigger opportunity.

By November of 2010 more than 1/3 of the top grossing apps in the App Store were free. A majority (roughly 75%) of those top grossing free games were driven strictly by the consumption of virtual goods. At some point in 2011 the U.S. virtual goods market is expected to pass the $2 billion mark.

What a difference a year can make

In the mid-part of 2009 around 1 in 10 Americans were buying virtual goods. In a study published then nearly 12% of those surveyed indicated a virtual goods purchase in the last 12 months. Consumption of virtual goods, surprisingly were strongest among casual gamers, those using virtual worlds, social games or iOS devices. On average, those consuming virtual goods spent around $30. By 2010 the demographics of those consuming virtual goods began to flatten out including a broader range of age groups.

2009 Virtual Goods Key Trends

Casual gamers strongest virtual goods consumers

Females 25-34 largest demographic

Nearly 1/3 of iPhone owners buying

2010 Virtual Goods Key Trends

Casual gamers still remain strong

Virtual goods proves a competitive monetization method over subscriptions and advertising

2011 what’s in the pipeline

With transformative growth in the virtual goods market already taking place, it may seem logical to say the market is hitting a plateau. In the continuing series, we’ll take a look at why the growth is just getting revved up and look at where the it will explode in 2011, whom it will impact and what options are available to capitalize on this billion dollar industry.

Ryan Ruud, Associate Marketing Communications Specialist, W3i, LLC
Ryan is a new media communicator with a decade of traditional and emerging mass media experience. He uses his passion for apps and connecting people in W3i’s marketing/communications efforts.

Often times, marketers focus solely on getting their product installed by as many users as possible. Although high numbers of product installs are important, retaining users may be more valuable in the long run. W3i understands the importance of user retention and has a few different ways of finding the right user for your product using InstallIQ℠, the installation manager for smart software distribution.

One way W3i assists their clients with finding valuable users is through the Affiliate Feedback System (AFS). AFS is an optimization tool that gathers information on users’ computers compatibility that would show preponderance for an advertiser’s application. To implement AFS, W3i provides the advertiser with a unique ID for each install. The advertiser then relays performance data back to W3i for each ID. W3i uses this data to find common characteristics (similar traffic sources, browser versions, operating systems, etc.) among users and then recommends users for the advertiser’s application based on where the application performs the best.  Now that’s smart software distribution.

Another source that W3i uses to gain insight on users is the InstallIQ Updater (IQU). IQU is a resident application that provides users with an enhanced download and software usage experience. The benefit of IQU is that it tracks statistics for both installs and uninstalls, which can then be used to understand attrition, create a better user experience, and add insight into issues with installs/uninstalls.

W3i also allows full customization with the thank you page. The thank you page is the first experience users have with your product and W3i sees the value in giving clients the ability to customize it so as to see the most impact. A few ways a thank you page can be used is for remarketing, additional product information, or confirmation that the product has been installed.

How great would it be to make more money from each install? W3i has spent considerable time finding solutions to help clients make the most out of each install using InstallIQ.  When are you going to start capitalizing on smart software distribution by becoming part of the W3i Application Network?

Jessie Golombiecki, Marketing Specialist, W3i, LLC
Jessie uses her experience in internet marketing, graphic design, and testing to lead the charge in marketing management optimizing all touch points with consumers.

W3i Improves Ad Revenues with the Yahoo! Toolbar 

W3i searched for a way to offer consumers more value and to increase revenues through its free and trial computer applications.  The Yahoo! Publisher Network helped it do both by adding the Yahoo! Toolbar to W3i’s application network to monetize search ads and by partnering with the company to optimize user experience. 

Yahoo’s Full Case Study

There are many options available for building desktop applications; however, before you start there are three things you must consider. First, decide whether to build a cross-platform application or target a specific operating system. Next, choose the development tools to build your application. Finally, select an installation technology to deliver your application. Each of these decisions depends on a number of factors including your target audience, the type of application that you are building, and the distribution method that you plan to use.

In choosing a development tool, first consider the platforms (operating systems) on which your application must run. The top three operating systems are:  Windows, Mac and Linux. If you want your application to run on more than one of these, you should consider using tools that provide cross-platform capabilities, such as Eclipse, Flash and Adobe AIR. These types of tools can speed development and give you a larger audience. However, they can also add significant overhead in terms of distribution size, and may affect performance. Carefully examine the run-time requirements of the development tools you choose to determine the impact on the performance of your application and the ability to distribute it. Consider your distribution method—if users are downloading your application then size and dependence on additional components is a concern, whereas if you are going distribute your application on a CD or similar media, then size is generally of little concern. Also, review the run-time requirements of your development tool. You will most likely need to distribute extra software or require your users to download and install additional components. Some tools allow you to bundle these components with your application, but others may require a separate download from their site, which can complicate your installation process.

A more traditional approach to application development is to use a programming language such as C++, Pascal, or Java. This method requires a higher level of technical skill, and your application will not be as readily platform independent, although platform independence is still achievable. There are many development tools available, such as Visual Studio, C++Builder, and CodeWarrior. The advantage with traditional development is that you can make smaller applications that are less dependent on other software or components. If you are targeting a single platform and have the technical resources, this is a very good option for building desktop applications.

With traditional development there are many frameworks and code libraries available to help speed your development time. Frameworks provide a structure to build on while hiding much of the complexities of the operating system. Libraries add additional functionality and simplify common tasks such as parsing XML files or manipulating images. Frameworks and libraries are great for reducing your work, but take care in choosing them because they typically add significant size and may require additional run-time components. Also pay careful attention to code quality, especially when using open-source or third party offerings. Some popular frameworks include MFC and .NET (Visual Studio) and VCL (C++Builder). SourceForge is an excellent source for obtaining open-source frameworks and code libraries.

Installers are a very important part of building desktop applications. It is the first thing your users see, so it is important that it looks professional and works properly. There are many good tools available, such as InstallShield, Advanced Installer and NSIS. Most tools produce a self-running executable and some can also produce MSI files which use the Windows Installer technology. A typical installation program has a wizard to walk the user through the installation steps. The wizard starts with a Welcome screen which typically displays a description of the application and a EULA (end user license agreement). Next, optional items are presented, the installation begins, and a progress bar is shown.  Your application should also include an uninstall option, typically located under Control Panel – Add/Remove Programs. All of the major installation tools provide these functions automatically.

Software developers are always looking for ways to monetize their offerings, and because the current trend is to distribute applications for free, it can be difficult to generate revenue from your products. W3i’s InstallIQ technology can help you earn revenue from your distribution by offering additional products during your installation process. Implementation is simple—InstallIQ manages the wizard process and runs your installation along with any optional products the user has also selected. To use the InstallIQ wrapper, you need a silent version of your installer, which most install tools can do with a simple command-line switch so there is no extra work involved.

Building desktop applications can be a daunting task, but there are many tools and resources available to help with this effort. You must plan carefully and assess your needs to ensure that you choose the right tools and platforms. When you are ready to distribute, the W3i Application Network, featuring InstallIQ technology, is a great way to recoup your development costs, especially if you are offering your application for free.

Bill Zitomer, Software Development Team Lead, W3i, LLC
Bill uses his over twenty years experience to build W3i’s core desktop products as well as back-end technologies.

Online media player provides monetization and marketing opportunities for artists and record labels

St. Cloud, MN, June 5, 2009 – W3i, a provider of marketing solutions that increase revenue, distribution and engagement for Windows applications and plug-ins, and RightsFlow, a provider of music licensing and royalty services, announced today the creation of an integrated music marketing platform designed to help artists and labels monetize free music downloads through media support.

“W3i has developed solutions to enable the distribution of free content for over nine years,” comments Robert Weber, Vice President of Business Development at W3i. “Our proprietary technology, Install IQ, and W3i’s Application Network can help downloadable content providers increase their revenue as well as ensure speed-to-market while utilizing minimal artist resources.”

As traditional music business models continue to change, artists and labels are looking for innovative sources of revenue in the digital space. “We are very excited to offer record labels and artists access to the W3i Media Player,” stated Alex Holz, Director of Client Relations for RightsFlow. “This system helps artists and labels reach music lovers searching for free music, while still generating revenue from their recordings.”

The media-supported initiative involves reaching fans searching for free music and offering DRM-free downloads of unreleased and difficult-to-find digital tracks. The initial rollout features 100 tracks across Rock, Pop, Jazz, Hip-Hop, Latin, Alternative, and Country music genres, including artists such as Say When, Carey Ott, Michael Olatuja, and Drunken Barn Dance.

“We are pleased to work with W3i and RightsFlow on this exciting program,” said Gary Taylor, manager of Carey Ott and co-manager of The New Congress. “Finding creative ways to market and monetize music is especially important for D.I.Y. artists, and earning revenue while rewarding fans with free music is an unmatched deal.”

Install IQ was the first installation system certified in the TRUSTe Trusted Download program, and users have demonstrated high satisfaction in online surveys.

About W3i:
W3i increases revenue, distribution and engagement for Windows applications and plug-ins. W3i uses a network approach combining the demand for free and trial downloads monetized by the distribution of useful downloads when the consumer is in the download mindset. W3i’s Application Network uses Install IQ, W3i’s proprietary Windows installer, the first installer to be certified in the TRUSTe Trusted Download Program. Tested and optimized on over 250 million installs–currently 7.1 million installs monthly and growing, W3i will prove to be a valued distribution partner in growing your application business. To learn more, visit W3i’s Application Network.

About RightsFlow:
RightsFlow offers Mechanical Licensing & Royalty Solutions for labels, distributors, and online music services. We specialize in obtaining bulk mechanical, DPD, and ringtone licenses including streaming, tethered, and limited downloads rights. Our proprietary “FLOW” system allows us to license, account, and pay royalties directly to the Harry Fox Agency (HFA) and the thousands of publishers not represented by HFA. Today, RightsFlow services over 1,500 labels for mechanical and DPD licensing. Some of the many clients we service include marquee companies such as imeem, E1 Entertainment, Muzak, EMI Music, Active International, Tapulous, CD Baby, IODA, Audible Magic, YouLicense, Constellation Wines (Blackstone), X5 Music Group, Zebralution and Disc Makers, among others. For more information on RightsFlow’s services and management team, visit www.rightsflow.com.

Media Contact for W3i:
Deborah Manthei +1.320.257.7571 / deborah.manthei@W3i.com

Media Contact for RightsFlow:
Gideon Kalischer, +1-212-937-6955 / gideon.kalischer@rightsflow.com

W3i’s Download Network featuring Install IQ is a Finalist in Most Innovative Service/Business Model category.

St. Cloud, Minnesota – June 2, 2009 – W3i, LLC, provider of marketing solutions that increase revenue, distribution, and engagement for Windows applications and plug-ins, was named a Finalist today in the Most Innovative Service/Business Model category for the 2009 Comp TIA SoftwareCEO Software Innovation Awards.

The finalist designation was presented for W3i’s Download Network, a leading consumer software platform. Using a network approach, W3i’s Download Network pays partners to generate traffic, installs interactive consumer applications, and delivers active users to W3i’s clients.

The Computing Technology Industry Association (CompTIA) is the leading trade association for the world’s information technology (IT) industry. The SoftwareCEO Software Innovation Awards recognize innovative software products and new business models in eight different categories. Award winners will be announced at the CompTIA special online award ceremony on June 18, 2009.

SoftwareCEO Software Innovation Awards finalists by category are judged for:

Scope – What business problem or opportunity does the software innovation address? What is the size of the problem/opportunity?

Impact – What practical results, such as sales, users or profits, has the innovation had on a software product or on the software industry? The innovation must be new and have both a current and future impact.

Novel – How does the innovation break with traditional ideas or processes?

“W3i is honored to become a Finalist especially in the area of innovation. We know W3i’s Download Network can be a key distribution and monetization strategy for publishers and advertisers of Windows and browser applications. To date, we have installed over 250 million applications, and we are just getting started,” comments Andy Johnson, CEO of W3i. “Congratulations to the W3i team for becoming a finalist in the 2009 SoftwareCEO Software Innovation Awards.”

Entries are judged by a select panel of industry experts, including analysts, consultants, writers and trade press, and subject-matter experts. A list of the esteemed panel can be found here: http://www.softwareceo.com/leadership/awards_judging.aspx.

Details about the 2009 SoftwareCEO Software Innovation Awards and the list of Finalists in all categories are available at http://www.softwareceo.com/leadership/2009/awards_finalists.aspx.

“Software innovation is more than just ideas; it’s the ability to develop those ideas and make them work in the market,” said Mark Fogle, publisher of SoftwareCEO. “The annual SoftwareCEO Innovation Awards recognize products, ideas and business models that break with conventional software ideas and processes to introduce product offerings and business models that are key to our industry’s future growth and vitality.

About W3i:
W3i increases revenue, distribution and engagement for Windows applications and plug-ins. W3i uses a network approach combining the demand for free and trial downloads monetized by the distribution of useful downloads when the consumer is in the download mindset. W3i’s Download Network uses Install IQ, W3i’s proprietary Windows installer, the first installer to be certified in the TRUSTe Trusted Download Program. Tested and optimized on over 250 million installs–currently 7.1 million installs monthly and growing, W3i will prove to be a valued distribution partner in growing your application business. To learn more, visit W3i’s Download Network.

W3i Contact:
Deborah Manthei
Director of Marketing Communications
W3i
320-257-7571
deborah.manthei@W3i.com
mrcsg2jkyv

About SoftwareCEO.com
SoftwareCEO is a resource-packed electronic newsletter and web portal built by software executives for software executives. It is Page One for software industry information and education on topics such as software marketing, sales, business, financing, and services. For more information, visit http://www.softwareceo.com/.

About CompTIA
CompTIA is the voice of the world’s information technology (IT) industry. Its members are the companies at the forefront of innovation; and the professionals responsible for maximizing the benefits organizations receive from their investments in technology. CompTIA is dedicated to advancing industry growth through its educational programs, market research, networking events, professional certifications, and public policy advocacy. For more information, please visit www.comptia.org.

CompTIA Contact:
Steven Ostrowski
Director, Corporate Communications
CompTIA
Phone: 630-678-8468
Email: sostrowski@comptia.org

7th annual Stevie® Awards will be presented on June 22 in New York City

St. Cloud, Minnesota – May 20, 2009 – W3i, LLC, provider of marketing solutions that increase revenue, distribution, and engagement for Windows applications and plug-ins, was named a finalist today in the New Product or Services of the Year – Computer Services category in The 2009 American Business Awards.

The finalist designation was presented for W3i’s Download Network, a leading consumer software platform.  Using a network approach, W3i’s Download Network pays partners to generate traffic, installs interactive consumer applications, and delivers active users to W3i’s clients. 

The American Business Awards is the nation’s premier business awards program. All organizations operating in the U.S.A. are eligible to submit entries to the ABAs – public and private, for-profit and non-profit, large and small. 

Stevie Award winners will be announced during the annual gala on Monday, June 22 at the Marriott Marquis Hotel in New York City.  Six hundred executives from across the U.S.A. are expected to attend.  The ceremonies will be broadcast on radio nationwide by the Business TalkRadio Network and hosted by Cheryl Casone of Fox Business Network.

More than 2,600 entries from companies of all sizes and in virtually every industry were submitted for consideration in more than 40 categories, including Most Innovative Company, Best Management Team, Best New Product or Service, Best Corporate Social Responsibility Program, Best Corporate Environmental Responsibility Program.  W3i will be competing in the New Product or Services of the Year – Computer Services category for Interactive Marketing.

“It took years for W3i’s team to fine-tune the proprietary technology for Install IQ, the installer that drives the success of W3i’s Download Network.  To date we have installed over 250 million applications.  My congratulations to the team for becoming a finalist in the 2009 ABAs,” comments Andy Johnson, CEO, W3i. 

Members of the Awards’ Board of Distinguished Judges & Advisors and their staffs will select Stevie Award winners from among finalists in final judging that will continue through June 3.   Finalists were chosen by business professionals nationwide during preliminary judging in April through early May.

“Despite very tough economic conditions, many organizations and individuals continue to perform well,” said Michael Gallagher, founder and president of The Stevie Awards.  “The results of the 2009 ABAs thus far are a testament to the resilience, creativity, and hard work of American organizations, executives, and workers.”

Details about The American Business Awards and the list of finalists in all categories are available at www.stevieawards.com/aba. 

About W3i
W3i increases revenue, distribution, and engagement for Windows applications and plug-ins. W3i uses a network approach combining the demand for free and trial downloads monetized by the distribution of useful downloads when the consumer is in the download mindset.  W3i’s Download Network uses Install IQ, W3i’s proprietary Windows installer, the first installer to be certified in the TRUSTe Trusted Download Program.  Tested and optimized on over 250 million installs–currently 7.1 million installs monthly and growing, W3i will prove to be a valued distribution partner in growing your application business. To learn more, visit W3i’s Download Network.

About The Stevie Awards
Stevie Awards are conferred in four programs: The American Business Awards, The International Business Awards, The Stevie Awards for Women in Business, and the Stevie Awards for Sales & Customer Service.  Honoring companies of all types and sizes and the people behind them, the Stevies recognize outstanding performances in the workplace worldwide.  Learn more about The Stevie Awards at www.stevieawards.com.

Supporting sponsors of The 2009 American Business Awards include High Performance Technologies Inc., John Hancock, Lifelock, RCN Corporation, Softpro, and Ultimate Software.  Media sponsor is the Business TalkRadio Network.  Localization partner of the 2009 Stevie Awards is Lionbridge.

Contact:
Deborah Manthei
320-257-7571
deborah.manthei@W3i.com

The Company
MicroSmarts, LLC, located in Oak Brook, IL, produces software that protects consumer privacy and enhances computer performance. 

The Challenge
MicroSmarts, developers of software that protects consumer privacy, came to W3i in 2007 with an earnings problem inhibiting them from increasing the marketing of their PC performance software and expanding their business with the development of additional software products.

The Solution
MicroSmarts joined the W3i Download Network (WDN) in 4th Quarter 2006.
WDN is a network of companies with downloads either looking for
increased distribution or increased revenue.  Microsmarts submitted the free version of SpeedItUp software, which speeds up and enhances computer systems.  After passing W3i’s extensive QC review, an executable file was created using W3i’s proprietary, Install IQ Windows installer system.  MicroSmarts used its consumer demand for the free version of its SpeedItUp software to drive traffic through the ad-supported installer system.  Revenue was generated from W3i’s network of software clients, Yahoo!, Weatherbug, the Real Network, etc., willing to pay for the distribution of their software.  SpeedItUp users downloaded value-added software in addition to their free SpeedItUp software; and MicroSmarts was paid for enabling the increased distribution of value-added software supplied by the W3i’s network of partners.

The Results
Results were immediate; in the first full month SpeedItUp earned $14,084 and monthly revenue has continued to grow with optimization improvements.  MicroSmarts earnings totaled $309,507 over one year with W3i’s Download Network.  SpeedItUp was also able to add to its revenue by offering free users the paid version of their software.  MicroSmarts now has additional cash to infuse into its business to allow its continued growth.

Find Out More
To learn more about W3i’s Download Network and how you can increase revenue and distribution for your downloads, Contact Us.

St. Cloud, Minnesota, February 13, 2009 – The freemium business model can increase your bottom line.  In 1865 when King Gillette started giving his safety razor away for free, creating demand for his high-margin, disposable blades, the freemium business model was born.  Without using the freemium business model, Gillette would not have built his empire, and it is now a commonly used business model especially in the marketing of digital content. 

The freemium business model has many names—try-before-you-buy, shareware, tiered service, trial—to name a few.  Basically, it means giving something of value away for free, supported by revenue earned from the sale of an upgrade or complimentary product.  This is a very common business model in the software industry.  Software marketers promote a free version of their software supported by the premium, paid version.  The trick is to create the right mix of features, offering enough utility to the free user to create credibility, and promoting highly attractive features that will persuade the free user to become a paid subscriber.  

To create profit, the financial model looks like this:  the lifetime value of paying customers must be greater than the cost of acquiring and supporting both free and paying customers.  Reported conversion rates to the premium version vary by product, but range from .05 and 5%; the average being 2%.

There are several reasons why you should consider a freemium business model.  Here are some of them:

1. When done right, quality trials build loyalty and trust.
2. Reduces risk by giving the user a chance to experience the value of the software.
3. Expedites a large customer base, increasing network effects and efficiencies resulting in:
   • more brand awareness
   • collective intelligence
   • faster product adoption
   • a more defensible business model, and
   • more efficient marketing, as costs are spread out over a larger base.
4. The cost of distribution and the support of digital content are never lower, allowing this model to increase in popularity.

There are also several reasons why this model has its limitations:

1. People value what they pay for and will make more effort to discover how it will benefit them.
2. It is difficult to cover the acquisition and support costs if only 2% of those installing your software are actually paying for the product.

There are other “free” models that you might consider:

1. Give a “desired” product away for free when a customer commits to a long-term subscription with you.  The mobile business uses this extensively when they give a cell phone away for free if a user signs up for a long-term contract.
2. Ad-supported free – Many magazines are free or highly discounted because of the revenue-generated from their ads.
3. Giving a product away for free while charging for a complimentary, high-margin product.  King Gillette had this down to a science.  Also consider that every time you go into a theater the cost of the ticket is subsidized by the profit the theater makes when you purchase popcorn and other high-margin snack items.

Whichever business model you choose to pursue, W3i can piggyback with your offer to layer on an additional revenue or distribution stream.  Through W3i’s Download Network you have the ability to increase distribution and revenue for your downloadable content.  By using W3i’s proprietary Windows Installation System, Install IQ, you can increase distribution for your download by being one of the value-added software offered during the installation process.  Or you can increase your revenue by using the demand for your download to be combined with other value-added software offers during the installation; and you are monetized when the user selects your software as well as the additional software.  You can then earn money on 98% of users that would otherwise get away.  Software offered through Install IQ converted by as much as 60%.  Contact W3i to learn more. 

Josh Fiedler is the Business Development Lead at W3i Holdings.  As a leader in innovative ways to increase revenue and traffic for downloads, he focuses mainly on downloadable games and utility software.

About W3i:
W3i delivers proven, integrated desktop and browser marketing solutions.  With solutions tested and optimized on over 200 million installs–currently 4.2 million installs monthly, W3i can increase revenue and traffic for downloadable software, applications and digital content or provide a receptive consumer base for customized, targeted distribution programs.  W3i’s solutions utilize Install IQ, a proprietary Windows installation system and download manager developed by W3i.  Install IQ is the first installation system to be certified in the TRUSTe Trusted Download Program.  To learn more about W3i, visit www.W3i.com. 

Press Contact:
Deborah Manthei
W3i Holdings, LLC
deborah.manthei@W3i.com
320-257-7571

In a recent article in the Wall Street Journal entitled, “The Economics of Giving It Away,” Chris Anderson, editor in chief of Wired magazine, states that “Free may be the best price, but it can’t be the only one.” 

Twitter, Pandora, Pogo, Facebook, and YouTube have all built an enormous user base using the free or freemium model.  Now they are all working on the problem of how to raise enough cash to cover their overhead.

South Park even had a show about this issue.  Have you ever heard of the Underpants Gnomes? Their business plan is – Phase 1:  Collect Underpants; Phase 2:  ???; Phase 3:  PROFIT!  In other words, collect a lot of users and hope to make a profit, but having no idea where the profit is going to come from. 

W3i can fill in the Phase 2 of the Underpants Gnomes business model.  Give your downloads away for free by joining W3i’s Download Network.  Since 2000, W3i has installed over 200 million downloads for free, supported by its Download Network, generating cash for software companies.  Several companies with free software models have partnered with W3i to increase their revenue—Digsby, Anchor Free, and startup, Bewiki.

This is how it works.  Companies join W3i’s Download Network for two reasons:  to increase revenue or to increase distribution.  Companies with demand for their downloads use W3i’s proprietary Windows Installer, Install IQ, to offer their users valued-added software from companies like Yahoo!, AWS Convergence Technologies (WeatherBug), and Winferno, who have revenue-generating business models and are looking for distribution.  The user downloads your software, as well as the value-added software that they select, creating revenue to support your acquisition or operational costs. 

So go ahead and give away your free software, but be smart about it and join W3i’s Download Network.  To learn more, contact W3i.

Rob Weber, Vice President of Business Development and Co-Founder, W3i
Rob is an Internet marketing pioneer with over nine, profitable years building proven business models that increase revenue and distribution for downloads.