The App economy? whatever the number, it is bigger than you think. here is why

AdMob published a report and GigaOm indicates that the App economy could be as big as 2.5 billion dollars a year [big story on techmeme today]. I would not be surprised. Very quickly after its launched Steve Jobs was declaring that the App store was generating about 1 million dollars in sales a day . A few other estimates were indicating back in march about 1 billion dollars in sales revenue and since iPhone/iPod touch sales have grown wild driving bigger revenues to applications. But that is only the beginning of a bigger story.

Because one thing is sure the paid app economy is only one part of the App economy. You have at least 3 additional lines of revenues to add to this one

• The iPhone ad business. in App advertising is still at its very beginning but adMob and others are already monetizing many estates of free apps. It is hard not to see them. most of the time they drive traffic to the app store for other apps. But sometime you see plain advertisers like Nike. Another big name in in App advertising is...Google of course
• The lead gen business: lots of free apps generate business online, paid songs via iTunes found in Pandora or Last.Fm. or even Apps you buy via Appsfire Some of this lead generation business is partly owned by Apple and partly by linkshare and tradedoubler.
• The free-to-paid app business. Many apps are free in the app store. But that does not mean that the usage is for free. Take an example of Withings which is a free app to track your weight from a wifi connected scale. You have to own Withings to be able to use this app. 
• The paid-to-paid business. An example is text-expander (actually an app i wanted to create myself for the iphone about a year ago) that was released today: it is pretty much useless if you have not bought the software on your computer. An app bought = an software bought. Same thing goes with 1password
• The free to offline paid business. Take an app like Pizza hut or Macdonalds. Vastly popular. They are here to drive business to their offline point of sales. 
• We have to mention it too: The cydia business (for jailbroken iphone). Today Cydia is supposed to generate something like 250k USD a year. i think it will grow over time

All those revenue lines are part of the App economy. They all have one thing is common though (except partly the lead gen business): those are businesses Apple don't cut anything on. But they are important to take into account when you try to understand the size and importance of the App economy. I purposely put aside the iPhone app creation business: a lot of companies start to make some nice money around creating apps. It can start to 2/5k per apps to 100ks for sophisticated apps.

There is no real way to evaluate the size of all of those pie-parts. But one thing is certain the App economy is huge. Will become even bigger with Android and other platforms. Those who doubt it should open their eyes because the next wave of growth on the web is here.