iPhone app moneyWill 2011 be the year “in-app payments” – or transactions that actually
take place within a mobile app – take off? Bango, a mobile billing and
analytics firm,  is forecasting revenue from
in-app payments will surge by 600% next year, buoyed partly by the
increased usage of tablets.

Of course, Bango has a vested interest in seeing the market for in-app
billing and payments explode, but the growth in mobile in-app
revenues could be a real boon to content publishers as well.

Free apps get more downloads 

With the exception of video games, most free versions of mobile apps get far more downloads than ones users have to pay for. There’s reluctance to spend – even if it’s just $2.99 – for a piece of content or an experience that may be subpar.

But give users a chance to test an app, and they’ll gladly pay for extra features afterward. This has proven true for the iPhone, and will likely be the same for tablet-based apps, as well.

By using in-app payments, publishers will be able to introduce their content/brand to a wide audience from the onset, and then monetize them afterward (the classic freemium model). 

In-app payments make custom mobile subscriptions easy

In-app payments will also let publishers create custom subscriptions.

Bango is also working with music and print publishers who are looking to develop revenue models beyond simple subscription-based paywalls. Here, the ability to charge per play, per video or even per-page, opens up many new possibilities.

Billing on a per video or per issue basis lets users decide which content is most valuable to them – which creates more opportunity for incremental revenue. A casual Cosmopolitan reader may not want to commit to a montly iPad or Samsung Galaxy Tab subscription for $5.99, but might be willing to pay 99 cents for a specific article or expose.

In-app payments let publishers gauge the content that sells best

Over time, tracking the performance of certain videos, articles or other content from a revenue standpoint can give publishers insight into the kinds of material they need to focus on producing.

For example, Esquire, could be devoting extra resources (money and manpower) to creating a flashy, interactive, quarterly “Gadget Guide.” Six months later, the publisher could discover that a simple gadget review article has actually been selling better. The in-app revenue stats could then lead to better allocation of resources and help boost profitability long-term. 

Bango predicts in-app payments will grow to be 30% of all app revenue generated next year. It will be interesting to see whether publishers are the ones fueling that growth.