Apple Isn’t Earning Their 30%

Posted by on Jan 31, 2011 in Blog | Tags: , , , | 4 Comments

Much has been said over the last 2½ years about the App Store and places where Apple is failing third-party developers. Many things have been fixed, but unfortunately, many more have been neglected or only partially addressed. On January 22, 2011, the App Store surpassed 10 billion downloads. Let’s assume 1% of those are paid and Apple only takes the minimum 29¢ for each one. That’s still $29 million. Apple needs to do a lot more to earn their 30% cut.

There are problems on both the selling and buying sides of the store. Much more has been said about the problems for sellers, but I’ll run down the list anyway.

No analytics: Small developers don’t have unlimited budgets, so the money we spend on marketing must be spent wisely. This is impossible without feedback. We don’t know how many people are looking at our apps or where they came from. That makes it impossible to measure an ad’s effectiveness. AdMob offers a way to close this loop for ads run on their network, but it requires sending them complete sales data and a marker that they can use to build a detailed picture of the apps users are buying and running.

Little price flexibility: We can’t offer coupons or specials to loyal customers or upgrade pricing. Historically, major version upgrades are a big part of a small developer’s revenue. On the App Stores, new and recurring customers are treated the same.

No trials: Probably the #1 reason apps are so cheap on the iOS App Store is because it’s impossible for customers to try before they buy.

No contact with customers: We don’t know who our customers are and can’t contact them for any reason.

Reviews are a toxic, one-sided conversation: Customers can leave scathing reviews filled with untrue statements, and we’re powerless to respond. It’s allowing customers to picket our storefront.

Reviews and no control over release timing: Developers can (and are) rejected by Apple’s review team for ridiculous reasons. Even when an app is accepted, review can still take two weeks or more. For updates, this means a known and fixed bug remains in the field and causing problems long after it should.

Greatly reduced cash flow: Developers are paid by Apple at the end of each month for the previous month’s sales. At best, that’s a 30 day delay before receiving the cash. At worst, 60 days. For small developers, that makes paying employees and vendors much harder.

The problems don’t end there, though. As successful as the App Store has been, if the buying experience were improved, it could be much more so. Here’s an experiment for you to try.

Imagine you’re unhappy with your current weather app, whatever it may be. Go find the “best” alternative.

I tried doing this and quickly gave up because the buying experience when you don’t already know exactly what you want is awful.

Search is limited: search looks at only app titles and keywords. This is undoubtably because unscrupulous developers try to game the system, but it also means customers must rely on developers choosing meaningful names and keywords. It’s led to borderline spammy app titles. The result is that search queries are short and return either nothing or lots of results.

No way to sort or filter results: literally, no way. You can only browse the results, in the order Apple returns them, page by page. Off the top of my head, some obvious sorting options that would be useful: by rating (both all time and current version) and by price. Useful filters: price tiers, age, and category.

No useful ways to sort when browsing categories: The only choices when browsing a category are by name or release date.

The App Store has over 300,000 apps. Imagine trying to shop at Amazon if you couldn’t sort or filter. For the developer, what this essentially means is that you won’t make any money unless you “win the lottery:” Apple decides to feature your app and/or you make it into the top seller lists. Features are also of limited benefit: the category-specific What’s New and What’s Hot lists aren’t available on the device, which I’m willing to bet is where the vast majority of people shop.

No trials and no upgrade pricing: There is obviously overlap here. As a customer, I’m less willing to buy a more expensive app unless I have confidence it works. Similarly, I’m less willing to spend a bit more than I’d like for an app if I know the next major version will cost me just as much or more (on the desktop, I can justify it since the upgrade is often discounted).

I don’t expect that Apple will fix any of these problems. 10 billion downloads in 2½ years is a remarkable achievement. Apple is a hardware company; while the App Store is certainly profitable, as long as hardware sales stay strong, that’s what they really care about.

All I can do as a small developer is learn from past mistakes and not repeat them in the future. For me, that means no more mass-market, 99¢ apps and likely no more advertising. My future products will focus on niche markets, solving real problems instead of filling a few minutes of a bored customer’s time. These are the people that should be willing to tolerate the App Store’s limitations and eventually find my app, likely even searching Google on their computer and not exclusively shopping from the device.

Update Feb. 4: MacRumors reports that on the iPad, the App Store now offers filtering of search results. I hope something similar comes to the iPhone and iPod touch.

4 Comments

  1. Josh Brown
    February 4, 2011

    I agree with all of your points – Apple should absolutely deal with these issues, and you’re right: they probably won’t. I actually quoted one of the critical reviews of iFonts on Facebook and responded to it (I thought it was humorous :)). I realize this isn’t the same as being able to respond in the App Store, but posting your responses on a blog or website may help with addressing critical, inaccurate reviews.

  2. Josh Brown
    February 4, 2011

    I just realized you could also post your responses to negative reviews in the app’s description, since the description can be changed at any time. This provides a developer with the ability to respond in the App Store, though it’s certainly still far from ideal.

    • Steve Madsen
      February 4, 2011

      For legitimate complaints, that’s true, although I wonder if it is wise to acknowledge shortcomings in such a prominent place. Allowing a response right in the review has great benefit to a developer. It gives us the opportunity to demonstrate responsiveness and cool-headedness in the face of criticism.

      The petty, substance-free reviews aren’t reviews at all and while Apple provides a way to flag them for removal, I’ve done so in the past and nothing is ever done about it. I’ve heard the same from several other developers.

  3. Custom Software
    March 18, 2011

    Apple has always done things “their own way” and changing that is near to impossible. I have worked with apple in the past and they are nothing if not eccentric and it is their way or no way. The only way to get rid of the new “Tax” that apple has put on developers is to boycot and go to a different distribution method. As a small developer that may not be an option and again, Apple knows that. Has anyone got the money to start a competing service that will help all of us be successful?