Publishers have their doubts about the App Store reinforced by tales from other app developers
Six years after the launch of the App Store, developers are wondering if the good times are over, and what can be done to reverse this
For the past year or longer, publishers have rather quietly been starting to wonder what was wrong with their apps – they just are not selling as they thought they would. Whether replica or native, inside the Newsstand or outside it, sales results have been disappointing. Making them feel even worse, the story line has continued to be that developers of other kinds of apps are doing well, with Apple paying out over $15 billion to developers since the App Store first opened.
But now developers are beginning to open up about their sales, and their own doubts about the future of the App Store. Marco Arment, the developer of Instapaper and the original publisher of The Magazine digital magazine a ppm yesterday posted his own thoughts on the subject in a blog post titled App Rot. Arment describes the app environment, at least as seen on his own iPad, as “alarmingly stagnant.”
Apple opened up its App Store just over six years ago, in July of 2008. Many people forget that when the original iPhone first launched, while it contained “apps” all those apps were either Apple’s own apps, or in the case of Maps, from Google. The original iPhone did not support 3rd party apps, one of the criticisms of the phone at the time. It didn’t matter because things like Visual Voicemail, Safari and Google Maps made the first iPhone a vastly superior, if expensive, smartphone.
The launch of the App Store is really when mobile, and later tablet publishing began. iOS 2, launched that July, brought the App Store and with it the opportunity for publishers to get their content onto mobile devices.
Back in the first few years of the App Store, a newly launched app would appear in the list of new apps right at the top, and could expect to sit there for about a week. Discoverability didn’t seem like a problem because, assuming you owned an iPhone or, in 2010, an iPad, you were on the look out for new apps and sure to see the newest releases.
It has always been the case that the week one releases an app is when most of the sales might occur. But with only a few newspapers or magazines at first available, chances were good that a publisher’s app would have some legs. Today, however, with over 10,000 apps inside the Newsstand alone, discoverability is a major problem. Part of the blame goes to Apple’s mismanagement of their own store. Inside the Newsstand categories are unmanaged, and have been for almost a year. Categories start off with “New” but are, in fact, only alphabetical lists of apps. But also there are maturity issues: of the last 20 digital publications to be launched into the News category of the Newsstand, only six of the apps are for English language publications – a sign that the rest of the world is catching up, but a real pain for anyone in the U.S. trying to find something to read.
Developers of game, productivity or other kinds of apps are dealing with the same issues, but until recently have been less vocal about their troubles. Jared Sinclair, writing on his blog, charts the success of his new app Unread for iPhone and finds that almost all his sales came in the first week, not unusual for apps today.
Sinclair says he has probably netted out with $21K for his efforts, of about $1,750 per week of work spent on his apps.
“Considering the enormous amount of effort I have put into these apps over the past year, that’s a depressing figure,” Sinclair wrote. “I try not to think about the salary I could earn if I worked for another company, with my skills and qualifications. It’s also a solid piece of evidence that shows that paid-up-front app sales are not a sustainable way to make money on the App Store.”
Publishers have seen all this for a while now.
Last July, in an interview with Joe Zeff, the owner of Joe Zeff Design (JZD), Zeff said his feelings about apps and the App Store had changed significantly.
“In 2010, I believed you could create a digital product and make money by selling it,” Zeff said. “I’ve learned, three years later, that that’s not the best way to monetize an app.”
“I’ve learned that there are many business models that can be applied to application development that are much more effective than deriving revenue from one consumer sale after another. That might include sponsorships. That might include using apps to promote other revenue generators. That might include developing apps that build a brand.”
As a result, JZD is targeting corporate clients, companies that want to uses apps for corporate communications or consumer marketing, rather than as a new revenue line.
“But that is one big takeaway – that selling apps to consumers is a very challenging task,” Zeff told me. “Selling applications to marketers makes a lot more sense. Marketers are already allocating funds to deliver a message. Tablets, and applications that are built to leverage the capabilities of those tablets, to a fast growing audience, are an incredibly effective way for marketers to deliver those messages.”
(For the entire interview, read Talking Digital.)
A number of vendors, such as Mag+, are shifting away from solely selling to magazine publishers, to targeting corporate clients. The publishing market has always been smaller, but the idea that a publisher is going to make serious revenue from their digital editions is becoming less likely. Mag+ now lists as its areas of expertise Magazines, Sales Support, Training Tools, Event Guides, Catalogs and Presentations. No doubt the company would claim that these were always areas they could serve, but diversifying is now a necessity in a world where publishers are struggling so badly.
Marco Arment has some recommendations for how to fix the App Store and he starts with getting rid of the Top lists, those lists that reinforce sales among a small group of apps. But Arment admits “that won’t solve the biggest problem.”
“The app market is becoming a mature, developed industry, with vastly increased commoditization compared to its early days. Competition is ubiquitous, relentless, and often shameless, even in categories that were previously under-the-radar niches. Standing out requires more effort than ever, yet profits are harder to come by than ever.”
Arment goes so far as to predict that his newest app, Overcast, will be less successful than Instapaper was. I think there are probably reasons for this beyond the condition of the App Store (such as the market for podcasts versus the market for web reading), but I understand his point. Even a great app, and his has received nothing but praise from those who have installed the app, has a tough time today.
I’ve recommended that if Apple won’t manage the Newsstand they should allow someone else to do so. One way to do this might be to allow affiliate sales. An example of this would be something like Magvault.
Another idea is to break the Newsstand up, get rid of the folder, and just let publications return to the App Store, in general. I have serious doubts about this simply because all apps that can be found inside the Newsstand can be found in categories outside the Newsstand. The Newsstand is probably helpful, the same way the iBooks Store is.
Another idea might be to eliminate magazine and newspaper apps altogether – at least as far as the App Store is concerned. One could instead sell licenses. A publisher would create an app that works on an iPad, for instance, and be able to offer that app through all sorts of retail outlets including their own website. This would encourage the rise of alternative stores. Then, when the reader installs the app, they then buy their single issues and subscriptions just as they always have, with Apple getting their cut. Rather than the App Store having an exclusive on iOS apps, it would simply have an exclusive on in-app sales – and if an app was free then Apple doesn’t have to deal with any of this.
There are a ton of problems I can envision with this scheme that involve development issues, but Apple allows all sorts of bogus, scamming app inside the App Store now, including porn, so why not stop being the gatekeeper and let that fall on the developers, publishers, retailers and customer themselves. If a customer wants a copy of Hustler on their iPad let them do it, Apple simply doesn’t need to be the one offering the app (does Hustler still exist?).