Posts tagged app store
Posts tagged app store
Apple’s policy of taking a 30% cut from every in-app transaction in iOS apps was recently thrust into the spotlight due to its effect on BeamItDown Software and their iFlow Reader app. Some, like John Gruber and Ben Brooks, seem to have no sympathy for the plight of companies and services that can’t afford to continue doing business on the app store. That’s the nature of the game, says John — “tough noogies.”
The problem is, this isn’t a small fee. It not 5% or 10%. It’s 30%, almost a third of all revenue. Not profit, revenue. And this isn’t an independent store that needs to make a lot on each transaction. With an economy of scale like the App Store, Apple could make significant profit with a fee of only a few percent.
On the other hand, many of the apps in the App Store are from small independent companies, which can’t afford 30% with every single transaction. The problem is that it’s 30% across-the-board, regardless of the type of app, the type of subscription, etc. 30% may make sense for some apps, but certainly not for all, like those that distribute others’ content and therefore don’t have as much control over the pricing. Otherwise, the kind of apps that can afford to be on the App Store will continue to be restricted, with eBook sellers, music subscriptions services, and others being excluded unless they can cut a deal with Apple.
This is not the environment Apple should want to create for developers and companies. It doesn’t promote trust, nor does it encourage companies to make the App Store their primary market.
BeamItDown Software recently announced that their iOS eBook app iFlow Reader will be discontinued, and the company will be shutting down. The stated reason for this is Apple’s policy, implemented this year, that in-app purchases must go through their system, with a 30% fee (which is more than eBook sellers can generally afford to give up). Ben Brooks thinks the effect on BeamItDown Software and iFlow Reader is justified by an evolving market:
It sucks that iFlow can’t figure out an alternative, but it’s not Apple’s job to help iFlow run their business.
That’s true, but it is Apple’s job to support the app ecosystem they’ve created. That doesn’t mean they’re required to cater to every app’s specific model, but changing a policy, when it negatively affects some app publishers so directly, is inconsiderate and anticompetitive (especially since any eBook seller is a direct competitor to Apple, due to iBooks).
To add insult to injury, Ben thinks that iFlow screwed themselves by investing solely in Apple’s platform:
So iFlow, Apple didn’t screw you — you screwed yourselves. Linking your success to being able to sell one app in one market screwed you and it can and will happen to others.
It’s true that it’s a often bad idea to put all your eggs in one basket. This is especially true with networks, like Twitter. But with iOS and the App Store, Apple wants people to make it their exclusive market. Apple wants people to be building and selling only for iOS (and Mac OS X). Is The Daily “screwing itself” by relying entirely on Apple’s platform? Oh right — they’ve got a special deal with Apple. Is that what it’ll take to succeed on the App Store? Or at least, to feel safe that your business model is sustainable? Maybe that’s what Apple wants.
But it’s certainly not fair, and it doesn’t set a very good precedent for future companies deciding where to focus. If Apple wants their closed App Stores to be the best sources of software and services (and it seems they do), developers need to be assured that their business model won’t be pulled out from under them. It’s certainly Apple’s right, but it’s not necessary, and it doesn’t promote innovation, risk-taking, or exclusivity on their platform, or trust among developers (and users).
Furthermore, since Apple requires that the App Store price be equal to or lower than outside prices, even if developers rely on multiple platforms and multiple markets, this still puts them in a situation where, if they choose to remain on Apple’s platform, they need to raise prices outside the store as well. Apple’s policy doesn’t just require companies that can’t currently afford 30% to shift their App Store strategy, but their entire pricing strategy. Whatever the fairness of this, it’s undoubtedly bad for the users.1
This may be one of the first casualties of Apple’s draconian policy, but it won’t be the last. A nonnegotiable 30% cut on all in-app purchases is bad for developers, bad for competition, and worst of all, bad for users.
When this policy was first announced, John Gruber wrote, “if this subscription policy knocks a bunch of good apps out of the store, sure, that’ll be bad for iOS users.” This is only one, but as Ben predicts, it “will happen to others.” ↩
I agree that many developers would benefit from having their apps in the Mac App Store, but it isn’t always that easy, and they hardly “lose nothing.” For example, I recently conducted an interview with Marketcircle CEO AJ (it will be up on TUAW next week). He noted that two of his marquee apps, Daylite and Billings Pro, rely heavily on background sync that occurs without interference from the user, which violates Apple’s rules for the store. Additionally, there are licensing issues that further complicate things for AJ and other developers. I’m sure he’s not the only one who’d happily sell software that can’t be distributed through the Mac App Store just yet.
It’s true that there are a lot of reasons why developers can’t or won’t make their apps available through the Mac App Store, many of them out of their control.1 He adds that the advantages of the Mac App Store include improving the download and installation of software. These are two of the most important first steps (or obstacles) to getting new users. The other one is discovery, which is another issue the Mac App Store attempts to solve.
As I wrote in my original post, “Many of these apps would be (or perhaps have already been) rejected, many are still in beta, and there are various other reasons why some of them would not be allowed in the Mac App Store, or why they have not been submitted (like no longer being developed, or ideological objections).” ↩
I noticed an interesting thing about the Mac App Store: many of the best apps are not available through it, especially free ones. While it’s only been a few days, I would have expected more developers to submit their apps. From my quick perusal, it seems to be dominated by expensive or new software. To test the Mac App Store’s selection of already-established software, I decided to see which of the apps from my list of essential Mac software were available (this was done by searching the title of each app). The results of what’s available are not good for the App Store (I’ve included Bodega for comparison):
Ryan Block of gdgt.com poses the question of whether the upcoming Mac App Store will have enough software to sustain its relevance for long. He argues that software is increasingly in the cloud, and there isn’t that much software that consumers need to purchase (with the exception of productivity software). Most of the essential Mac apps are either free, or would violate Apple’s strict App Store policies. “The boxed software business didn’t die because of app stores, it died because of an overabundance of great programs that are free, open, or otherwise subsidized that are available through other web or internet services,” he writes. Furthermore, desktop apps are, on average, considerably more expensive than mobile apps, and the consumer software landscape that exists today is nothing like that of mobile apps in 2008 (where distribution was an issue).
If we look at the Mac App Store not as the only, end-all source of Mac software but just as a simple, polished and very good source, the issues he brings up, while certainly being important, will play only a peripheral role in the ultimate success of the Mac App Store. The market that the store will target is the same one as the iTunes App Store — simple and fun apps that just seem to work. All the best free (and even open source) apps will likely be included, as while it’s not part of the profit system, a wide selection of free apps is crucial to a healthy app store ecosystem (VLC, one of the most widely used open source applications, is now available on both the iPhone and the iPad). The kind of apps that will be rejected, the ones that are focused on customizing the system instead of the functionality of the app itself — “the kind of software that gets down and dirty in fixing, changing, or extending stuff in ways Apple doesn’t” — aren’t for the target consumer market. The Mac App Store will be targeted at the mainstream audience whom isn’t interested in getting “down and dirty,” not those of us like Ryan Block (and myself), who won’t depend on the store for getting all of our software. The success of the App Store will be in its mainstream appeal, not in its appeal to power users and others with more specific preferences.
The Mac App Store will also likely be filled with simple, single purpose apps, like many of those for the iPhone, iPad and iPod Touch. This would negate the traditional price difference between desktop and mobile software, as the same way the iTunes App Store is dominated by low-priced apps, the Mac App Store could have many small, widget-like apps for under $5 — “a new class of micro-apps.” Just as the iPhone app store motivated a new generation of developers, the Mac App Store could have the same effect.
Bodega — a Mac App Store that’s been around for over a year — is proof already that there is enough software to sustain a Mac App Store. Bodega does allow a lot of software that Apple will reject, but even discounting those apps there’s a healthy selection. And Bodega is independent — the Mac App Store will already have the advantage of Apple’s considerable influence. One needs look no further than Sparrow to see that paid desktop software is still being developed (the developers have said they will eventually have a free, ad-supported version alongside a paid version).
There’s also games, which should not be discounted. They could easily become a driving force behind the success of the Mac App Store (especially financial success). Steam for Mac proves there’s a significant market for games on the Mac.
The Mac App Store won’t host every great Mac app, but if it aspires to be not the only source but merely one of the best, it should provide a great central source for reliable and consistent Mac software — for many people, the only source needed. And for the rest of us, a place to look with a certain level of quality guaranteed, but not a substitute for the traditional channels of software discovery and distribution that exist already.
