TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Marco Arment talked about the app economy on NPR’s Planet Money. I loved this comment:

When the market is that big of everybody that uses the Internet, any little differentiator can get you enough of a customer base to support yourself and a few other people.

Marco says that the ease of purchasing applications on iOS—and the number of users who do purchase applications—means that running a relatively small business is possible, which wasn’t really true on the web just a few years ago.

It seems obvious, but it’s a very big deal that a multitude of people can create businesses that do very niche things and be successful, without worrying about getting big. They can just focus on making their product better for their very specific customer base, and make enough money to support themselves comfortably.

I argued a year ago that this is important, too, because it allows a number of businesses doing similar things to co-exist. When a market’s economics force businesses to take a majority market share to survive—depend on getting big—they necessarily preclude other businesses from surviving in that market, too. This is true of most advertising-supported businesses, because making decent money from advertising requires significant scale. But for paid-for applications, you don’t need that scale. You just need a loyal group of customers who pay and tell other people about your application.

That allows a much more diverse and unique market to develop, because developers are (relatively) free to experiment. Markets that depend on advertising should become relatively homogeneous while markets where customers pay for the products should be relatively more diverse.