Mobile Apps in the Economy

The Rise of Mobile Apps is an ongoing series by Raelyn Thompson, focused on the integration of mobile technology into our everyday lives. Read Part One, Part Two, Part Three and Part Four here.

With this growth in the use of mobile technology, mobile apps have certainly played a part in a growing micro-economy. If one looks past the strange bird games and flatulence programs, there is something significant forming: a bustling “app economy” that is creating new fortunes for entrepreneurs and changing the way business happens.

Facebook has created nearly a quarter million jobs and has spent over $15 billion in wages and benefits in 2011 through their apps feature. However, these two numbers not only account for direct employment of app developers, but also for products and services purchased by app firms, which in turn creates more jobs in other sectors.

With more than 750 million active users around the world, Facebook is today’s most prominent social utility to connect with diverse audiences, including friends, family, co-workers, constituents and consumers. In May 2007, the Facebook platform enabled anyone to build social apps of Facebook and the web. 2.5 million websites have integrated with Facebook. Anyone can build an app on Facebook and begin earning revenue. If the app becomes popular, a developer may hire additional developers to add new features. The more popular an app becomes, the more revenue that can be plugged into other economies.

The jobs created in the app economy stimulate the creation of additional jobs in other sectors in two ways. First, jobs are created at businesses that supply app developers. Second, jobs are created as a result of household spending based on the income earned by employees at both app developers and the businesses that supply app developers. One of the major ideals of the U.S. economy is that those who earn money pour their finances back into other products and services. The value of direct and indirect employment generated through the Facebook App Economy is based on the wages and benefits paid to these employees, which go into supplies, services, and more products. App firms are real companies with everything from accountants to janitors. So far, these innovations have been able to thrive because Facebook and other tech firms have been able to provide a platform that allows app developers to directly provide consumers with access to new technologies and services.

Facebook certainly is not the only institution that affects the job market. With the rise in mobile banking, NFC chip manufacturers will gain more and more business. According to Forrester Research, manufacturers expect to ship at least 40 million NFC-enabled devices in 2011 globally. Mobile purchasing is convenient, and phones with NFC chips inside can help attract and keep customers. More customers mean more employees. The most amazing aspect of this app economy is the fact that four years ago, it had barely started to exist.

Are you afraid that the app bubble will burst like the dot-com era of the late nineties? Worry not. We'll explain how the app industry is sustainable in our next and final installment of The Rise of Mobile Apps. Check back soon!