There is no "trouble." The App Store solves a distribution problem, not a marketing problem.
What developers really want to do is stimulate demand. If you believe the App Store is your marketing channel then the only way to do that is to cut prices and try to get that top spot. That's what everyone is doing.
Instead developers should be looking for ways to market their app outside the App Store. They should be driving people to the store, rather than hoping the people already browsing will just happen to buy their app.
I have a problem with Apple taking 30% because the store is far too polluted now. I feel it should be scaled back to 20% due to the amount of marketing and press expenses people (read: indie developers) must now incur. I have no problem engaging in marketing activities, it's just expensive.
Also, I just had a huge argument with Apple in which they did not budge to correct a massive bug that has ultimately affected our sales:
- app was approved but would not go on sale till our bank contracts were approved. (+2 extra weeks)
- once contracts were approved, app was listed as being 2 weeks old, rather than showing a release date that was true to it's availability on the store. it's first day on the store, it was listed near the end of page 1.
- within a week, our app is now on the 2nd page. not normal for this section. should have had ~3 weeks of Page 1 exposure.
- customer's impression of the app is now distorted, they think it's 3 weeks old with only a few comments and possible not worth the download... as oppose to a brand new app that's accurately dated.
For 4 months I've bootstrapped this company and our first (premium) app has now had it's sales potential chopped at the knees. Here's where I get real mad:
I talked with multiple representatives about this glaring problem with no luck. Nobody will fix the date. I'm sick of their lack of transparency and unclear requirements around their publishing system. I've sent in screenshots and plenty of proof where their system has failed, and they are in complete denial. Supposedly they'll pass my complaint...
I'm tempted to write a long blog about it because I'm that furious about their stubbornness over this issue. Give me my 10% back, and the 7 weeks you stalled processing my bank contracts...
You're problem with Apple was that you saw your 'deal' with Apple beign: 'We make an app,' 'You promote & distribute it. If it sells, we split it 30/70.'
Now you feel conned because you didn't get the implied exposure. You didn't get a fair shot at grabbing a couple of those who 'happened to be browsing,' get the appropriate number of comments, etc.
You imply that your deal with Apple is: 'We do the product & price it. You do the promotion & distribution.'
BTW, I think you are correct & this is your deal with them. But I think this puts you on the same side as the letter writer & on the opposite side to jfarmer.
I think the App Store is mostly about distribution, with the only marketing benefit being the usual ones that come with being a distributor, i.e., it's in the interests of the distributor to promote the products its distributing.
But in that framework everyone prices their apps according to the distributor's whims. In this case that means all prices tend to zero.
The only way to break out of this cycle, as I see it, is to take the marketing portion into your own hands and draw in people from outside the App Store.
I think is important to look at the macro question: If you are looking at the market as a whole (all the apps that get bought) will most of the discovery/purchase decision have taken place within the confines of the app store (where Apple rules) or outside of it (from word of mouth to TV ads).
I think you might agree that most (or at least a significant portion) of apps will get most of their 'promotion' within the confines of the app store. This is both because of the distribution monopoly & because of the market mindset. Consumers are often buying 'apps' not 'app X' or even 'app that does X.' There will continue to be a big number of App store browsers making decisions based only on the things they encounter in this environment. Therefore, the app store is the no. 1 promotional channel as well as the only distribution channel.
Since Apple is the main influence on this, the letter makes sense. If you think that this environment is problematic on the whole, Dear Steve is your answer.
I guess I agree with you from an individual perspective. I do not know enough about this market to have a real opinion. But it seems rational to say to developers: "Do not go after the main part of the market (let's keep calling it the ringtone app market). The way Apple has set up the market, there is a tendency towards the ringtone apps. If you do not want to sell them, you still have other options. Base your strategy on those option."
But I guess my point is that the advice you are giving is 'be unconventional' which is not something you can expect everyone to do. It's like telling online merchants not to base their e-commerce strategy on Adwords/SEO or telling a supermarket not to go after middle income families. That might be good advice, but it's niche advice.
It's funny how few people realize you can change the release date of your app, right on the pricing page. You can't make it later than the actual release, of course.
And, each time you release an update, you can do the same, once it's approved.
It's funny that I had it set to Dec. 3rd and the app still showed up at Nov. 20th. After repeatedly telling Apple this, they refused to fix the problem.
I disagree, I think you are incorrect to seperate "marketing from distribution." First, you mean differentiate between 'promotion' & distribution.'
Anyway, the app store is not simply a distribution channel. It's a market. A price driven one. Sure it's not in a vacuum. You can promote outside of it. But it is a pretty self contained market.
Of course, there is nothing wrong with a price driven market.
Yeah, just read up on the Marketing Mix, and that clarifies things.
When I say "marketing" I mean "pricing and promotion." Really, I mean any activity designed to increase demand, either by moving up the demand curve (pricing) or by shifting it to the right (promotion).
Distribution does not increase demand -- it matches demand with product (at least in my mental model).
So, yeah, "marketing vs. distribution" was not the best dichotomy since most people take distribution to be a subset of marketing.
Anyhow, details aside, I agree that the App Store is a market, but it's a market in the same way that Borders is a market. There are rules for increasing demand intra-Borders, but it's necessarily constrained.
I can't believe the iPhone app marketplace as such is purely price driven. People dropped around $400 on these devices and pay between $70-$100/month for the right to use them.
It's only the confluence of factors within the App Store itself that is driving down prices.
I can't believe the iPhone app marketplace as such is purely price driven. People dropped around $400 on these devices and pay between $70-$100/month for the right to use them.
that kind of reasoning can get you into trouble. People pay $1k+ on PCs & $60 a month to mostly use the web, yet most will not pay anything for access to apps, tools & content.
Around 2000 the web would have been significantly enhanced as a tool with access to a few paid content sites (Britannica, etc.), but few subscribed.
It is tempting to think of price/demand curves as a cold value proposition with users clearly getting more utility from a quality app then a Starbucks coffee. But mindsets move independently of this. Once consumers get comfortable with the notion that web apps are free or that iphone apps cost $.99, it's very hard to break.
BTW, along with that graph I would like to see if there is any correlation between development costs & app price.
I read the blog post that was cited in this article yesterday.
I mean no offense (particularly if the author hangs out here on HN), but it sounded an awful lot like whining to me. Why does it come as any surprise that consumers are flocking to the cheaper alternatives? And of course, given that application developers are competing with one another, price is one of the key ways they are going to do that. This is classic supply and demand at work.
Maybe this is just because I look at it from the perspective of a web application developer, and think to myself, "If ONLY there was an easy way to charge people a low price like $0.99 to use my app instead of having to rely on Google Ads for revenue..."
All of this said, it does sound like Apple could make some changes to the iTunes app store experience to help application developers better showcase the experience of higher priced apps.
Another interesting idea would be for Apple to facilitate a way for application developers to create charges from within the app itself. So maybe you could download the app itself for free, but the app could charge you for premium features, or pennies for certain kinds of usage, etc.
The App Store is doing the right thing -- putting the apps that make them the most money in a place where they have the opportunity to make even more money.
That's fine and expected.
The mistake developers are making is relying on the App Store to solve their marketing problem, when it only really solves the distribution problem.
If you're trying to stimulate demand in that environment your only option is to lower your price (see, e.g., 3-for-2 sales at Borders). What developers should be doing is looking for marketing channels outside the App Store that drive people to the App Store with the intent of buying their app.
My wife -- who barely understands what HTML is -- found this on CNN and sent me the link. There's nothing like negative mainstream media coverage to get a company's attention...
The real problem with the App Store is not that apps are 99 cents. Its not that apps are sorted by price.
It is that the customer is fundamentally APPLE'S CUSTOMER and not YOUR CUSTOMER. No matter what the exact arrangement is, only those vendors who catch a lucky break from Apple are going to do well.
This is the same lesson everyone should have learned from the casual game industry: the portals make out like bandits. A very few megahits make obscene amounts of money. Every other content producer gets shafted, because they are systematically tying themselves into a hit-driven, rapid-obsolescence, no-value-added business model.
This serves the portals great: churn and burn apps get them lots of repeated transactions and incentivize their best customers to come back every day to see whats new. This is terrible for developers because you get like a two-week period to make back your development expenses and then, boom, residual sales asymptotically approach zero.
(Its sort of like being in the music business, incidentally, except the residuals die off even faster.)
Compare the sales graph for any App Store app, I don't care what the quality is, to the sales graph for a software company with its own website. (Sorry for the self-preening but since most people don't publish them I don't know of any except my own: http://www.bingocardcreator.com/stats/sales-by-month ) Don't focus on the numbers, focus on the shape of a curve.
If your curve is "Peaks in 48 hours and then falls off a cliff", you'll have no revenues to sustain a post-launch marketing campaign or ongoing improvement to the app, which are major sources of revenue. You won't get the gradual march upward, instead, you are immediately thrown back into the meatgrinder to make another churn and burn app.
An additional salutary benefit of the own-your-own-app-and-your-own-customers: you're not dependent on Apple's good graces and business fortunes to continue to make a living on their platform, and when you come out with version 2.0 or RelatedApp 1.0 you can use your existing customers as both a source of marginal revenue and a source of springboard marketing.
(Hypothetically assuming that my next app was also pitched to elementary schoolteachers, where exactly would one go about getting a list of 1,200 elementary schoolteachers with a demonstrable interest in software which helps them out? Oh, yeah... "select * from customers;". Any of you have blogs? Oh you do! How lovely.)
This is only trouble from the point of view of developers. From a user's point of view, I would like all apps to be free! Why wouldn't the App Store gravitate to a model like the internet, where there is tons of cool stuff for free, and my software hardly ever nags me for a dollar. That might be too bad for developers hoping to make money with applications that aren't really groundbreaking, but it might be good for users. There's certainly no shortage of cool free games on the internet.
I was in the #iphonedev irc room last night, and before they told me to leave and buy a book because I was asking too many dumb questions, they were talking about pricing strategies. They seemed to think that anything above .99 is all the same so you might as well charge 4.99. This guy even provided "evidence": http://bang2d.com/?p=47
The comments on that blog post are something else. "I would buy Starcraft on the iPhone for $9.99 in a heartbeat." Yeah I would too but it will never happen because starcraft for the computer is still over 10 dollars.
What developers really want to do is stimulate demand. If you believe the App Store is your marketing channel then the only way to do that is to cut prices and try to get that top spot. That's what everyone is doing.
Instead developers should be looking for ways to market their app outside the App Store. They should be driving people to the store, rather than hoping the people already browsing will just happen to buy their app.
I wrote about this, here: http://20bits.com/articles/the-099-app-store/