In less than a year, ESPN iPhone apps have been downloaded more than 4.5 million times—more than 2.2 2.7 million of the free ESPN (NYSE: DIS) ScoreCenter alone since its June debut. Most of the downloads are for ad-supported versions but twice in the past couple of weeks the Disney sports franchise has added pay apps aimed at a niche of a niche: ESPN Radio, which went live over the weekend for $2.99, and ESPN Fantasy Football, for $4.99. For now the number of pay apps outweighs the free four to three—more of each are coming—but John Zehr, ESPN SVP of Digital Video & Mobile Productions, knows better than to build a new revenue stream on the notion that pay downloads will exceed free. He’s trying to convert up to 10 percent of the potential ESPN audience for a particular app, already aware that “if things are available for free, there’s a pretty big audience of people who won’t pay for anything.”

The potential group is already narrow. For instance, ESPN doesn’t divulge its fantasy football numbers but Zehr estimates that 20 percent of his audience have an iPhone or an iTouch. The free ESPN Fantasy Football Draft Kit was downloaded more than 350,000 times after its Aug. 1 launch. The ESPN Fantasy Football iPhone app is a companion for people playing in free ESPN Fantasy Football. “You hear anything from 2-10 percent of people will pay.”

—Scenes from an MVNO: Zehr has been at ESPN since the days of the sports paging service the network offered to fans who wanted real-time scores. He survived the ESPN MVNO, which didn’t work as a business model but was ahead of its time when it came to a user interface for accessing sports info on a phone. The MVP app on Verizon now is a direct descendant and is headed to BlackBerry this fall. The iPhone apps take advantage of multi-touch but also have a sensibility informed by what ESPN did then—and by that same understanding of fans that was behind the pager. Says Zehr, “One thing we probably didn’t anticipate was how dramatically the device platforms were going to change and how the power of the carriers (we became one) and the device manufacturers would shift a little bit.”

—Lessons from ScoreCenter: But this time ESPN hasn’t boxed itself into charging for sports scores. Its most downloaded app is ScoreCenter, an ad-supported app developed for use in every country that has iPhones to fill “the basic need in all those markets for people just to get scores.” They wanted it to be as simple and ubiquitous as the embedded stocks and weather iPhone apps, a combination of utility and ease. It’s available in more than 75 countries and supports six languages. One result was a decision not to put a lot of text in the app; for that, users click on headlines and move to the mobile website. Given the sports fan obsession with scores, Zehr was concerned about how the app might affect use of its mobile browser version. “I thought ScoreCenter was going to be cannibalistic of iPhone-optimized mobile site. It was all additive.” On the other hand, he also learned that some people who use iPhones never go to the browser but stick with “there’s an app for that.” The app also provides ways to expose users to the optimized site.

—Exploring subscriptions: ESPN is looking at ways to take advantage of the changes in the iPhone OS that allow subscriptions. But, says Zehr, “In order to sustain a recurring charge, you have to provide recurring value.” It’s the difference between a console game bought for a flat price and a game a user expects to evolve. One possibility would be an iPhone version of ESPN Insider, the $40 a year plan that includes the print and online edition of ESPN The Magazine, and online features behind a paywall. “Bringing that content to iPhone makes a lot of sense and that’s something we’ll be looking at.” Other variations could include offering alerts for pay. Zehr is a fan of the New York Times iPhone app and likes the idea of providing more access to content through a reader-style app; that could work with subscriptions.

—What’s next?: Look for an NBA Fantasy Draft Kit and and a paid app, probably at the same $4.99 and the NFL app, to manage in the in-season experience. other fantasy apps. Also, a preview app around the World Cup in December.

—Android?: “We’re still looking at it. It’s still pretty early; we don’t see a ton of units out there.” Zehr thinks that may change as other carriers come on board. “It’s certainly created a lot of buzz. In the case of both Android and BlackBerry, they don’t quite have the iPhone-app-store type of marketplace just yet, so they’re playing a bit of catch up with getting that experience that makes it just real easy to find, discover and download an app. As they get better, we’ll be spending more time just looking at it”

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ESPN has four pay apps in play now—the two launched this month, ESPN Spelling Bee and ESPN Zoom Deluxe:

—ESPN Spelling Bee, which has been offered free and is now $3.99, features Trey Wingo conducting a spelling bee for players; it’s been downloaded nearly 70,000 with 14 percent, or about 9,800 hundred, of those paid. At the sale price of $3.99 that would be about $39,000 in revenue.

—ESPN Zoom started as the free ESPN Cameraman game in last October and has been downloaded nearly 2 million times in several variations.  Six percent of the downloads since the pay version of the photo game was introduced have been paid at $2.99.

—ESPN Radio, which went live over the weekend, includes streaming access to more than a dozen ESPN Radio stations, show podcasts, on-demand access to SportsCenter—and, likely the #1 reason it’s doing well so fast, live play-by-play of college football games carried by ESPN.

—No download numbers yet for ESPN Fantasy Football or ESPN Radio but some iTunes stats stick out: Fantasy Football is the #1 paid sports app and #18 in all paid apps, the only such sports app at present. Just-launched ESPN Radio is already the #2 app in paid sports.

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