Windows Phone Marketplace Is Riding High On Free Content

Last week, Microsoft (NSDQ: MSFT) revealed on the anniversary of the Windows Phone Marketplace that the app storefront now has some 40,000 apps in its catalog. Some numbers out today reveal that there are 1,650 free and 1,300 paid applications being added every month, with the most app activity appearing to be in the U.S.

According to a new report from the app analytics firm Distimo, among the 300 most downloaded applications in the Marketplace in the U.S., there were 101,000 free downloads and 20,000 downloads of paid apps, with games proving to be the most popular in both categories.

The popularity of games holds true for how the Marketplace is used worldwide: of the top 10 free apps, all but four are games; of the top 10 paid apps, all of them are games. (Those full tables are below.)

The numbers of free to paid downloads on in the Marketplace work out to about 16.5 percent of all downloads being paid.

While that is a huge leap in a year, it is still a far way off the download volumes in the most-popular storefront of them all, the App Store from Apple (NSDQ: AAPL). Distimo says the App Store for the iPhone has 43 times more free apps downloaded in its top 300; and there are 16 times more paid apps downloaded. Those lower volumes are not too surprising, considering that Windows Phone 7 accounts for less than five percent (and by one estimate from Gartner only 1.6 percent) of all smartphones currently being sold in markets like the U.S., according to most analysts.

Apple’s proportion of paid to free apps downloaded works out to around around seven percent being paid on the App Store.

When Windows Phone 7 Marketplace was first launched, it was notable that it had a larger proportion of paid apps than the other app leading app stores, and seeing that currently the number of free compared to paid new apps are relatively close (1,650 to 1,300) that trend appears to be continuing. But has that translated into more download revenues for developers?

Apparently not: Distimo notes that within those paid app downloads, about 80 percent of them offer free trials to users, meaning that only four thousand are actually generating revenue in the US Windows Phone 7 Marketplace — resulting in a much lower percentage: only 3.3 percent of downloads are paid apps on the Windows Phone Marketplace. (And as a reader pointed out, that may be based only at the immediate point of sale: some of those trial apps may well convert to paid downloads, too, although Distimo doesn’t provide figures for those in its report.)

As attractive as those trials may be — in the Nokia (NYSE: NOK) Lumia 800 device I have been trying out for the past couple of weeks, I’m sure those trials have gotten me to download more apps that I would have normally done — developers will ultimately need to figure out how to convert more of those trials, or at least figure out ways of monetizing users in other ways.

The top-ten lists of top paid and free apps in Windows Phone: