LiveRail Lets iPhone Developers Put Commercials In Apps, Get Paid

Since the launch of Apple’s App Store, developers have faced an ongoing dillema: “For Free, or Not For Free”? Putting a price on an application to generate some revenue obviously adds a significant barrier to entry, especially when there are so many free apps available. But it also adds a level of credibility – many people assume that because free apps aren’t earning money, the developers probably haven’t put much effort into them.

Today sees the launch of LiveRail for the iPhone, an advertising platform that could help change this paradigm entirely by allowing free applications to still monetize effectively. LiveRail allows iPhone application developers to embed brief video advertisements into their applications, which play immediately after launching an app (developers get paid on a CPM basis). CEO Mark Trefgame says that the platform is plug-and-play, allowing developers to implement it with a minimal amount of effort and only a few lines of code.

The technology behind the application is impressive – this isn’t just a single video that’s embedded into the application. Whenever you launch a supported app, LiveRail will attempt to contact its servers, and will stream a new ad at a bitrate dependent on your connection speed (if you’re on Edge it will download an especially small file that totals only around 60k). If LiveRail is unable to reach the server, it will just play the last ad to be cached. Developers can tag their applications to help target the ads. And in future releases the platform will support location services, so an ad could be displayed depending on what stores are nearby (imagine seeing an ad informing you that Chipotle is just down the street).

Initially, developers will likely be faced with annoyed reviews if they begin introducing these ads, but as users realize that they’re getting free apps that would have otherwise been sold at a premium, the outcry should settle down (though there would probably be serious backlash if someone tried to put ads in a paid app). And they’d better get used to it: LiveRail appears to be first to market with their video ads, but can expect competitors like AdMob to introduce similar ads in the near future.

We should also keep an eye on Apple’s response to these new ad platforms – Apple takes a cut of all premium applications sold through its store, but it absorbs the bandwidth and hosting costs for free applications, charging the developers nothing. If these ads make the one-time payment model obsolete and more applications switch to “Free”, Apple may wind up changing this structure (or even ban ‘intrusive’ advertising entirely).