Only ten percent of mobile applications now use a paid model, and the number keeps shrinking. In fact, popular messaging app WhatsApp just switched over to a freemium model on the iPhone after being paid for years.

Ninety percent of apps now use the freemium model because consumers have shown their willingness to accept in-app advertising in exchange for free content, according to new research from Flurry Analytics. With this in mind, the conversation needs to shift from whether or not in-app ads are appropriate to how to make these ads more interesting, relevant and efficient.

?The results imply that any app developer who is considering monetizing through paid downloads really needs to be confident that their app creates meaningful value for users and is differentiated from free apps performing a similar function,? said Mary Ellen Gordon, director of industry insights and analysis at Flurry Analytics, San Francisco.

?With so many apps available, that's an increasingly high bar to get over,? she said. ?If an app doesn't meet that threshold, then developers need to decide whether to monetize through in-app purchases, advertising or some combination.

?To make that decision, they really need to have a sound understanding of their audience including their willingness to pay for in-app purchases and the attractiveness of that audience to advertisers.?

Free is better
While apps were mostly paid in the early days of the market, consumers have shown that they are unwilling to pay for this content, per Flurry Analytics.

In 2010, 84 percent of apps used the freemium model while six percent charged 99 cents. After the percentage of apps charging 99 cents increased in 2011 and 2012, it has dropped back down to six percent this year with very few apps charging more than this.

The results suggest that consumers want free content more than they want to avoid ads or to have the highest quality content possible and that in-app ads are an important strategy for monetizing apps for developers.

Android vs. iOS
The research also shows that the average app price by platform is 6 cents for Android, 19 cents for iPhone and 50 cents for iPad.

This suggests that Android owners want app content to be free even more than iOS device users and that Android users are more tolerant of in-app advertising to subsidize the cost of developing apps.

The findings also underscore how iPad users are bigger spenders than owners of other devices.

While some app developers may have simply followed the herd when it came to deciding to offer their apps for free, Flurry Analytics research shows that more apps were tested with pricing strategies in mind beginning in 2012 and continuing to grow to this year.

This typically took the form of A/B testing where an app was once price for a period of time and then raised or lowered for a period of time to determine how many downloads take place at different price points.

The results show that there is an upward trend in the proportion of price-tested apps that went from paid to free, implying that many developers concluded that charging even 99 cents for an app significantly reduces demand.

Premium apps
Still, premium apps may not ever entirely disappear. Developers of some specialized apps could still be able to monetize their efforts via paid downloads while some game apps can generate significant revenue through in-app purchases.

?The most surprising finding was the magnitude of the difference in willingness to pay between Android, iPhone and iPad app users,? Ms. Gordon said. ?On the one hand, our results validate conventional wisdom and lots of survey data that suggests that iOS users are more affluent and willing to pay.

?On the other hand, the magnitude of the difference is still surprising, particularly given the increasing availability of higher-end Android devices,? she said.

?Many people thought the availability of those would create more similar user-bases and consumption patterns for iOS and Android users, but at least as far as paying for downloaded apps goes, that does not appear to be happening yet.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York