Last week we were in Chicago at the annual AAG conference participating in an excellent session of talks on “Geographies of Production in Digital Economies of Low-Income Countries.” There were great presentations and conversations around the potential (and today’s empirical reality) of digital work in emerging markets, especially around micro work, mobile apps and internet, and innovation hubs.
We presented our preliminary results from studying the global app economy, which continues to grow in scale and economic value, with millions of app developers and estimated revenues of $87 billion in 2014. The fully digital nature of this new industry seems to offer potential economic opportunities for previously marginalized or excluded producers: because apps are built, distributed and consumed completely digitally, producers can be located almost anywhere and still sell to a vast global market. In addition, lower barriers to entry in terms of licensing costs, software development tools, and accessible knowledge resources for developers make it easier for low-resource developers to enter the market. Success stories such as Flappy Bird, a simple gaming app produced by an independent developer in Vietnam which became a global sensation (and reportedly earned $50,000/day in advertising revenue at its peak) serve as glamorous examples of what is possible.
Yet our research shows developer participation in the app economy is still highly skewed, with most of the value creation and value capture occurring in the industrialized countries. Using primary data on the location of 2,688 commercially successful app developers worldwide, we are mapping participation at the city and country level. While much of the unevenness simply reflects (and reinforces) the evolution of knowledge-intensive technology development and infrastructure, it is also the result of platform strategies by the two major platform firms — Apple and Google — whose governance policies shape participation and value capture.
Our analysis so far suggest three key ways in which these technologically space-less platforms are anchored in places and geographies. First, the location of successful developers shows that production is highly concentrated in the United States and East Asia, with signs of agglomeration in four major metropolitan areas. Second, the degree of participation is in some cases established at the country level, requiring agreement between nation-states and platform owners, and can result in de facto exclusion for those populations. And third, the nationalized structure of the app stores offers an advantage to local producers in smaller markets, but is insufficient to outweigh the winner-take-all dynamics and platform strategies that are increasingly favoring the larger and better-resourced developers.
