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Flip This App: Secondary Mobile App Market Quietly Taking Off

samzenpus posted about 2 years ago | from the second-hand-lines dept.

Businesses 39

alphadogg writes "The practice of flipping is probably most familiar to the general public from reality TV shows like 'Flip This House' on A&E. The idea is to buy a house for a lowish price, fix it up a bit, and then sell it on to a buyer, hopefully at a profit. Now, the secondary market for Android and iOS apps is beginning to see the same pattern. App creators without the time or inclination to service or monetize their apps can simply sell them off for a flat, up-front sum of money. Buyers can then either tweak them as they like or not, and either attempt to monetize them themselves or re-sell the apps to still another party. 'Probably 80% of people who want to get involved in mobile either don't know how to code an app or don't know an app developer,' says the founder of one app trading site. 'So there's this massive demand, but kind of a little bit of a barrier to entry.'"

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Add unneeded permissions to it. (1)

SternisheFan (2529412) | about 2 years ago | (#41648899)

Now that you've purchased this app, add all forms of unneeded 'permissions' to it that will unneccessarily invade the user's privacy. Then... Profit!

Coming soon - secondary app "bubble" (5, Funny)

Andy Prough (2730467) | about 2 years ago | (#41648909)

Flipping apps, investing in secondary apps? Soon there will be app-backed derivatives, and Wall Street will melt down over bursting of the global secondary-app bubble.

Bubble? (3, Funny)

Anonymous Coward | about 2 years ago | (#41648985)

I wouldn't worry yet: it's when you start seeing "Hello World" going for thousands of dollars.

Re:Bubble? (2)

KZigurs (638781) | about 2 years ago | (#41650299)

Give it 6 months, Microsoft might just get desperate enough...

Missing the commissions (4, Insightful)

vlm (69642) | about 2 years ago | (#41648993)

Now, the secondary market for Android and iOS apps is beginning to see the same pattern.

I'd disagree in that the housing bubble needed a FIRE economy sector based primarily on earning sales commissions and ignoring the underlying value, which this second hand app market doesn't have.

So with a house, regardless if its a good investment or not, a whole bunch of parasites adsorbed commissions each time a property changed hands: Real estate agents on each side, mortgage broker/bank, house inspector, title insurance, credit reporting agency, advertiser/PR firms, moving company if any, house stager if any, etc etc. You can end up with quite a bubble that way because everyone wants prices to go up regardless of value... no one has a responsibility or interest in holding the price to the value.

With this, you've got, what, maybe two lawyers more or less fixed hourly fee to handle the contract issues to trade iFart apps? I'm not seeing anyone with a motivation to raise prices other than the usual suspects (sellers, clueless investors, etc).

Furthermore I'm not seeing strawberry pickers buying these things on 105% margin looking for capital gains. And the app market is not "too big to fail" so the govt will bail out the big players and leave the small fish to fry.

I'm just not seeing "bubble" here.

Re:Missing the commissions (1)

jbolden (176878) | about 2 years ago | (#41649031)

All those various parties are just a frictional costs. The play the same role as broker fees its just that they are being broken out individually for you. High broker frees reduce the value of assets because they reduce liquidity, they don't increase it.

Re:Missing the commissions (1)

Anonymous Coward | about 2 years ago | (#41649069)

The strawberry pickers normally don't show up until the late stages, just before the bubble pops.

The other stuff you mentioned, it's not necessary to cause a bubble, although it may be sufficient. The Tulip Bubble didn't have all these things and it was still a bubble.

Really, the only thing needed to cause a bubble is "momentum style" investing, where people see an asset rising in price, assume it will continue to rise, and try to get in on it. Studies have shown that this is pretty much the default investment style for humans, significantly outnumbering the "value style."

Re:Missing the commissions (2, Informative)

tomhath (637240) | about 2 years ago | (#41649265)

The housing bubble started back in the 90's because banks were required to make a certain percent of their loans to low income borrowers. In return the government agreed to take over those loans when (not if) they want bad. It took a few years for the inevitable scenario to play out, but here we are.

This "secondary market" looks more like a press release from someone trying to flip an app trading site.

Re:Missing the commissions (5, Informative)

capedgirardeau (531367) | about 2 years ago | (#41649443)

Nice right wing talking points there.

There is no evidence that "Community Reinvestment Act" loans ( the loans you are talking out your rear end about about without knowing what you are talking about ) are generally considered decent loans without a major percentage being defaulted on.

Instead it is commercial loans that are often underwater and being walked away from as regular business decisions (see: strategic defaults, it is always ok when businesses do it) and home equity loans, not CRA loans that were a major factor in the 2008 melt down.

For a good set of references on the actual facts see:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Alleged_relation_to_2008_financial_crisis [wikipedia.org]

Re:Missing the commissions (1)

Anonymous Coward | about 2 years ago | (#41649613)

How can you honestly expect us to believe that the poor are not to blame for the market bubble forming for securitised debt that was traded between sophisticated financial institutions?

Re:Missing the commissions (-1)

Anonymous Coward | about 2 years ago | (#41649811)

You meant to say "nice right wing LIES here".

Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties.--Ben Bernanke, November 25, 2008

If there was anybody who had something to gain if the lies about the CRA were true, it would be Ben and the banksters he's charged with protecting from accountability. However, the right wing never lets facts get in the way of their agenda, including blaming people (the poor) for causing an economic crisis when they had next to no resources available to do so.

Re:Missing the commissions (1)

Anonymous Coward | about 2 years ago | (#41651577)

Actually, CRA loans were indeed part of the problem, but a small part. The housing bubble was mostly caused because the central banks of the world kept interest rates much too low for much too long. The blame lies at the feet of the Fed, the ECB, and the central banks of the major exporters (China, Japan, most of OPEC).

The current rates, which are still too low, are building up an even greater problem which will surface very soon.

Re:Missing the commissions (1)

Anonymous Coward | about 2 years ago | (#41649727)

Yep repealing glass-steagall had nothing to do with it... Nice strawman, too bad you can't claim it as your own but been repeated ad-naseum on faux news improved edition with more bobble talking heads.

http://en.wikipedia.org/wiki/Glass–Steagall_Act#Glass.E2.80.93Steagall_.E2.80.9Crepeal.E2.80.9D_and_the_financial_crisis

Re:Missing the commissions (0)

Anonymous Coward | about 2 years ago | (#41659415)

It's amazing that there are so many partisan hacks on here that a post like this, which is completely wrong, gets modded to +5 informative.

Tell people what they want to hear, and they'll love you. Shame on anyone who still believes the lie that the CRA forced banks to make bad loans.

Re:Missing the commissions (1)

DerekLyons (302214) | about 2 years ago | (#41649409)

I'm just not seeing "bubble" here.

That's because nobody mentioned a bubble - it's straw man (with regards to this topic) of your own creation.
 
Not to mention, while uneducated may associate flipping with the recent bubble - it's been going on for a long time. Flippers make their money wherever prices are rising and that can be very localized. A friend of the family basically retired in his 40's after spending a decade flipping in and around Orlando FL as it grew after the construction of Disney World. My uncle made a nice sum flipping as portions of Jacksonville FL gentrified. A good chunk of my father-in-law's pile came from flipping here on the Kitsap Peninsula in the 80's as NSB Bangor grew and carriers started being home ported at PSNS.

Re:Missing the commissions (3, Interesting)

vlm (69642) | about 2 years ago | (#41649947)

may associate flipping with the recent bubble - it's been going on for a long time. Flippers make their money wherever prices are rising

Although they have the same name, there is little relationship between old style home remodelers and the HGTV viewer inspired flipping.

One (older) type of flipping involves actually knowing what you're doing basically being your own GC and also putting up your own financing money, the other is TV infomercial fodder like "You painted your living room beige, house value just went up $75000"

That's because nobody mentioned a bubble

Using the new definition of flipping, any flipping is a bubble activity. Using the older "real" definition OK theoretically possible.

Re:Missing the commissions (0)

DerekLyons (302214) | about 2 years ago | (#41651777)

One (older) type of flipping involves actually knowing what you're doing basically being your own GC and also putting up your own financing money, the other is TV infomercial fodder like "You painted your living room beige, house value just went up $75000"

That, again, is a creation of your own mind.
 

Using my own narrow minded and idiosyncratic definition of flipping, any flipping is a bubble activity.

There, fixed that for you.

Re:Missing the commissions (1)

Hognoxious (631665) | about 2 years ago | (#41655329)

a whole bunch of parasites adsorbed commissions each time a property changed hands: Real estate agents on each side, mortgage broker/bank, house inspector, title insurance, credit reporting agency, advertiser/PR firms, moving company if any, house stager if any, etc etc.

They may gain from increases but that doesn't mean they're able to cause them. I'd like know what mechanism they use to cause prices to go up. See, I thought it was caused by demand exceeding supply.

Perhaps they were holding guns to people's heads and forcing them to buy. Maybe demolishing a few homes while the owners were away. You'd think that would have been on the news though.

Nice (0)

Anonymous Coward | about 2 years ago | (#41648995)

Best business idea I've come across in a while. Kudos to the guy who came up with it.

Let's get these comments on the right track (0, Troll)

Anonymous Coward | about 2 years ago | (#41649051)

Hail Obama. Republicans suck. Religion is a farce. Come on, where is the Slashdot I've come to know - are we actually discussing the article?

Re:Let's get these comments on the right track (1)

SternisheFan (2529412) | about 2 years ago | (#41649257)

Hail Obama. Republicans suck. Religion is a farce. Come on, where is the Slashdot I've come to know - are we actually discussing the article?

Refreshing, 'aint it?

Re:Let's get these comments on the right track (1)

Hognoxious (631665) | about 2 years ago | (#41655415)

Refreshing, 'aint it?

You really drank the Kool-Aid.

This is the worst of all possible deals *ever*! (1)

Anonymous Coward | about 2 years ago | (#41649401)

It is a company, sitting between clients and makers. that makes money off of *copies*, without doing any work *at all* on their own (copying does not require work). A scheme that only works, as long as you can bullshit people into believing one could "own" data, even though they see proof that you can't, in the form of file sharing, every single day.

Just that usually, the developer at least gets a *percentage* of the fraudulent "sales". But here, he only gets money once, while they are making money 'till the end of the Universe itself.

Also, you can bet you ass, that when you write a sequel to *your* game, they will sue you for copyright infringement or something like that.

So in essence, this is even worse than the Content Mafia fraud scheme.

Never ever do this! EVER!

Re:This is the worst of all possible deals *ever*! (0)

Anonymous Coward | about 2 years ago | (#41649493)

I must agree that it's usually the insertion of a useless middleman into the chain. However, that doesn't always mean the developer is the one getting scammed. It could be the developer is scamming the middleman.

Or it could be a geniune symbiosis. The middleman acts as a financier, paying you upfront for the chance at expected future profits.

So really, what you object to is the concept of loans?

Not a good deal (5, Insightful)

Bogtha (906264) | about 2 years ago | (#41649531)

Probably 80% of people who want to get involved in mobile either don't know how to code an app or don't know an app developer

There's two main problems with this. Firstly, a lot of app developers write shitty code. I've worked on some projects that I've inherited from fairly large, well-known app developers, and even they are pretty terrible. Secondly, these people buying the apps won't be able to make substantial changes because they can't code. So where does that leave them? Putting a new lick of paint on, doing some promo work, then trying to resell? There's not going to be much money in that.

The comparison with real estate is not apt. The people who buy houses, develop them, then sell them on have two things working in their favour. Firstly, they know how to actually improve a house. As the summary indicates, the people targeted by these app trading sites aren't in this position. Secondly, the demand for real estate is growing, yet supply remains the same. You can buy real estate, hang onto it for years, then sell at a profit without doing anything. That is not true of the app market. Every day there's more and more competition with apps. If you buy an app, hang onto it and don't do anything to develop it further, it will lose more and more value and eventually be worthless.

If I were to liken the app trading market to anything, it would be sites like Flippa. These are overwhelmingly made up of auto-generated sites populated by crap to sell onto shady SEO guys - just about the lowest value there is. Good luck applying that to a market where the barrier to entry is a review process that is notoriously finicky about quality.

Re:Not a good deal (0)

Anonymous Coward | about 2 years ago | (#41654027)

> The comparison with real estate is not apt.
You just don't get it.

That was a Debian joke. Got it? This is going into recursion...

80% of people .... (3, Interesting)

GNUALMAFUERTE (697061) | about 2 years ago | (#41649615)

'Probably 80% of people who want to get involved in mobile either don't know how to code an app or don't know an app developer,'

Well, 80% of people who want to get involved in brain surgery don't know how to operate on the brain or don't know a brain surgeon.

If you know jack shit about development,don't get into development, you freak.

Re:80% of people .... (4, Informative)

Octorian (14086) | about 2 years ago | (#41649829)

Except somehow, scores of people have become convinced that there is a difference between "mobile app development" and "computer programming." Thus, every Tom, Dick, Harry, Web Designer, and Marketing Douchbag is now convinced that they want to and can become a "mobile app developer" even if they never learned (and have no aptitude for, or even interest in) actual programming.

Re:80% of people .... (2)

BasilBrush (643681) | about 2 years ago | (#41652753)

There is a difference. A big difference. Programming isn't the only part of developing. There's coming up with the concept, designing the UI, doing the artwork, creating the sounds, setting up the business, doing the marketing. etc. Usually programmers aren't very good at those things and need to outsource at least some of them.

There's no reason why someone who is skilled in some or all of those other things couldn't equally outsource the programming.

Re:80% of people .... (2)

GNUALMAFUERTE (697061) | about 2 years ago | (#41653619)

Except in most companies that have actually succeeded in the industry, the founder was a technical dude. Maybe not the main engineer, but at least somewhat technical. Apple, Google, Microsoft, SUN, Autodesk, Oracle: Regardless of your opinion on this companies, or they founders, you have to agree they where all techies, and they worked themselves on their first product, and it was this product that made the companies huge (Woz built the Apple 1, Page and Brin developed the google engine, Gates and Allen developed their basic interpreter, SUN's founders all came from Stanford and Berkeley, John Walker developed AutoCAD, and Larry Ellison developed Oracle for the CIA. There is a reason why I can't name so many examples of IT companies founded by non-techies: The giants of the industry all started in garages, with their later CEOs building their first product by hand.

Re:80% of people .... (1)

BasilBrush (643681) | about 2 years ago | (#41656521)

I agree. But we're talking about developing a phone app here, not creating the next tech giant.

There's an app buyer born every minute (2)

xxxJonBoyxxx (565205) | about 2 years ago | (#41649645)

I get about 2 or 3 of these in my inbox every day.

Location: United States
Asking Price: Between $500 Thousand and $1 Million
Summary: Simple is superior! Such is the case with this app. Featured in Forbes, having over 1 million PAID downloads, generating over $1,000,000 in sales and boasting a 5 star average rating with over 21,000...

I'll bet this works like this:
1) Company A writes an app
2) App goes out in store as freebie
3) App starts generating some money thanks to advertising via Company B
4) Company A goes up for sale, somebody writes big check to Company B for Company A
5) Company B rebrands a copy of Company A's app, spins up Company C and uses the same advertising campaign it used to prop up Company A's app to prop up Company C's app
6) Goto 2

$1 million dollar flashlight app. (2)

cherry-blossom (1863326) | about 2 years ago | (#41649871)

There might be a few decent apps that go up for sale on apptopia, but most are ust rehased versions of apps that already exist.

Apptopia: Home of the $1 million dollar flashlight app.
http://www.apptopia.com/listings/flashlight-by-i4software [apptopia.com]

Re:$1 million dollar flashlight app. (1)

cherry-blossom (1863326) | about 2 years ago | (#41649907)

*just rehashed

Return on investment in 1-2 years. (2)

cherry-blossom (1863326) | about 2 years ago | (#41650027)

A friend just bought a package of iOS apps directly from a developer. The things he was looking for were:
Verifiable income.
Payback on investment in 1-2 years based on the current revenue.

If the app he is buying is generating $1k/month of verifiable revenue he would be looking to pay between $10-24k for the app.

There are too many clone apps and free apps out there to justify a payback time any longer than 1-2 years.

reply (-1)

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The Jump 221 Trilogy (0)

Anonymous Coward | about 2 years ago | (#41656155)

This is beginning to sound like the Jump 221 Trilogy by David Louis Edelman. The main character, Natch, after leaving school buys a small program and begins his bio/logic business around the program. It was a fun trilogy and the idea of nano-computers in us to make us better computational beings. (It's a lot more involved than that).

http://www.amazon.com/Infoquake-Trilogy-David-Louis-Edelman/dp/1844166457/ref=sr_1_fkmr1_1?ie=UTF8&qid=1350301111&sr=8-1-fkmr1&keywords=the+jump+221+trilogy

More like "Flip this CRAP" (1)

coinreturn (617535) | about 2 years ago | (#41656591)

Most of the apps for sale have almost no revenue. I had to put the $$ slider all the way down to $200/month to get ANYTHING to show up. Most show amazing amounts like $6/month.

This actually happened on Shark Tank (1)

Randym (25779) | about 2 years ago | (#41666083)

Buyers can then either tweak them as they like or not, and either attempt to monetize them themselves or re-sell the apps to still another party.

I happened to catch the original showing. [go.com] An entrepreneur was marketing an app he had acquired the rights to that sequestered calls from certain numbers. The original app was authored by "a policeman" who used it to get calls from informers. The new owner -- Neal Desai -- tried to get buy-in from the Sharks so he could market it as a "cheater's app". One of the Sharks said she was more interested in it as a privacy app. Neal ended up getting buy-in from two other investors for $200,000! Now there's a flip!

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