Apple Store and iTunes Store

General
1

I am starting here yet another discussion about the Mac App Store, and the iTunes Store, as a follow up of posts in https://forum.xojo.com/1955-commercial-software-licence because this is not in the topic of the OP there.

[quote=13609:@Dave S]All Apple wants from you is 30%
[/quote]

Like any retailer. Cosmetics, clothes, furniture usually have a gross margin of 50% an nobody thinks of it.

[quote=16483:@Martin Gallo]I am just now running in to another potential cost - the $99/year cost of becoming an Apple Developer. This is apparently what provides your certificates and profiles that make it possible to sell in the MacStore OR the iTunesStore.
[/quote]

Yes, you have to rent your retail shelf space $99 a year. Compared among other aspects to $20 a month hosting+$15 a year domain rental of your own domain.

You got to realize that the Apple Store brings you home the cream of the crop of worldwide Mac customers without zilch in marketing or back-office engineering, local annoyances, foreign money exchange and transfers, credit card processing, customer support (refunds). Just to compare a few aspects of all that with a do-it-yourself endeavor, how much would it cost to :

  • Open shop in over 100 countries with different set of laws, moneys and banking system
  • Create local web sites in over 100 languages : .fr, …de, .co.uk, cn, who knows ?
  • Support the engineering needed for all these web sites
  • Support customers in all these countries

That’s only the tip of the iceberg. Those here who have sold software over web sites for a while will tell you that even with a small one site operation, it is far from being as simple as hosting companies would like you to believe.

Precisely because I started back in the days before Internet with Compuserve and SWREG, I can tell you that MAS is a unique opportunity for all Mac developers. All you got to worry about is putting together the best app you can, and put it on the MAS or iTunes store. Then Apple takes care of all the sales burden. You get your money and run with it. All investment, day to day operation and marketing is done by Apple. I’ll say thats a pretty good deal.

In terms of volume, I was surprised. Although in over 20 years of online presence I had grown sites that are constantly on top of searches and have a respectable circulation, the MAS brings in about five time the amount of business on average. My sites are in English and up to now mainly sell to US and UK customers. The MAS non-english sales account for over a third of total sales. I would have never been able to achieve that.

The MAS brings in new customers. It does not lower the number of sales on my sites. So the 30% share of Apple is entirely painless: without Apple, I would have never had the business anyway. As for what the mere $99 a year represent in the earnings total amount, let us say that it never count pennies I leave on a table corner.

One has a very simple choice with Mac OS X apps : sell on a confidential basis through a web site to chance customers painfully enticed through shareware archives abused by major free software pimps who could not care less about you, or go with the biggest app retailer on earth and collect. With iOS apps the scrawny option of your own corner shop does not exist, as iTune is the only venue for any program. Fact of the matter being that thanks to Apple, some dozens of millions computers in form of phones sold a year with a bunch of apps, which would have never existed otherwise. As for the iPad, with nearly 50% of the total tablet market which itself represents 50% of personal computing, it accounts for a whopping 25% of the global computing market. Compared to 8% Mac OS X market share, Apple created here an unprecedented opportunity.

As an additional consideration, I should point out that Microsoft does the same with its Windows Store, with far inferior results, in spite of its overwhelming market dominance, and the fact that selling Xojo made apps requires a separate web site to carry out the sales, and a $599 a year Verisign certificate.

I’ll say so far, I never encountered such as sweet deal as the MAS :slight_smile:

Oh, but it does : you become part of a searchable catalog called the App store, which seats on every Mac OS X desktop. In the days of paper, one would pay much more than $99 a year to have a small corner in a catalog.

Of course, that in no way means you do not have to carry out your own promotion.

2

I essentially agree with you, Michel. My biggest complaint about the MAS (what is the iTunes Store?) is not the 30% commission nor the $99/yr, but rather the fact that they allow customers/trolls to hijack our apps with no opportunity of reply nor rebuttal from us. The customer(?) can make any claim, true or not, in the reviews and potential users see it as fact. I have no problem with legit reviews, but I do have a problem with those who post lies about my app with no chance for me to correct.

3

The iTunes Store is the App Store for iOS apps. With some luck, we shall talk about that when Xojo iOS will stop being vaporware, hopefully before next year…

I got in trouble in another thread for the strong words I used against anonymous, ignorant and dumb customers who flame a program because it exceeds their feeble intelligence. I really think that the rating system is the best way to bring the worst reviews, as it is mostly used by frustrated individual with little ethics reinforced by the total lack of responsibility. A professional reviewer will get more information before adding bad points to a review : a limited mind in the shades of anonymity can write whatever puke without any control. It is highly unfair.

The problem is not limited to the MAS, though : the Basic 4 Android forums are full of reports about how users in the Google Play Store bad mouth apps the same. So the forums of the Windows Store see a lot of authors complaining about bitter reviews.

Seems wherever anonymity goes, bad behavior follows :frowning:

4

Michel, please don’t quote me out of context - gives the wrong impression. What I said was:

Funny.

Amazon used to badmouth Apple over the 30% cut they take … without mentioning that Amazon was taking a bigger cut themselves (and was forced to reduce their cut to 30% afterwards) :wink:

The 30% is NOT for marketing - Apple doesn’t advertise your app.

The 30% is for access to the market place, having the developers registered/checked, having the apps checked (so that users can sleep easy), for copy-protecting and managing your app installations, for download transfers, and for having a place where users can leave reviews etc.

If you sell just a few copies then that is actually very cheap - you are certainly not making Apple any money.

If you are selling millions then you might think it a bit much - but you are subsidizing all those “not so fortunate” developers, and without Apple you might not have gotten anything at all.

I once “sold” some free software on my website (gave it away) which was unexpectedly popular. Two days later I got a $120 bill from my ISP for using more than my allowed transfer quota. Stopped THAT pretty quickly.

Problem is the “free lunch” mentality on the web that some people here are displaying. Lets take that to its logical conclusion: “you should really give away your software for free! The price is way too high anyway, nobody is going to buy it at that price, and anyway I can find a cracked version soon anyway”.

There, all the moaning already done. :wink:

But hey, feel free to sell the software via your own website - you’ll get 100%.

5

P.S. I still don’t think that having your app on shelf-space (that you paid for) is advertising.

Marriam Webster says: Advertisement: a published statement informing the public of a matter of general interest

Apple doesn’t make any statements about your app (unless it is “app of the week”) ergo no advertisement.

6

I’m really happy for Michel with MAS success. And I agree with 99.99% of what he said. Here’s some rebuttal though, but it’s not really rebuttal. Michel said “MAS is a unique opportunity for all Mac developers” but I think he’s just being over-zealous. I take exception with “all”.

I sell to semi-pro, pro, and amateur musicians. I already have a presence but even then the MI market is almost self-supporting. I don’t need the advertisement to find users that don’t know about my products, they find me. It’s specialized.

So, as it is, selling through MAS lets Apple compete with… ME. I’m giving Apple 30% of what I easily could have myself if I just do the specialized advertising - and I know WHERE to sell and where my market hangs out - that was necessary.

But I’m not anti-reseller. Reselling can serve the purpose of gaining credibility and the sense that “someone ELSE is talking about you.” That can be worth 30%. But then the problem still arises - Apple is big enough where I’m almost inviting them to take 30% of my sales. What if I do this, with my big program, and all of a sudden my direct sales drop 80% and MAS takes off? Run the numbers - I lose money. The only way I make money is if Apple does better than I can - but they probably can’t. They aren’t targeting anyone, really, especially not how specialized my market is.

A reseller I want is one that can do something I can’t, but yet isn’t going to compete with me. Usually that winds up being a smaller distributor that has some type of special reach.

Also, I still distribute physically, through mail. My products are downloadable too, but it’s temporary, only serving to bridge the time gap between sales point and physical reception of the product. That’s the best of both worlds - immediate use and physical handling. Physical handling increases credibility and trust. Downloadable software just exacerbates devaluement of software. I want to be BETTER, not simply a virtual hack.

Also, Apple has me use THEIR copy-protection. What if I don’t want it? And what avenue do I have when they get hacked? They say. “Oops!”. Lotsa good that does.

Also, what about support? What if someone finds a bug? Right now I can instantly send the user a fix. With any MAS sale I can’t, my hands are tied. There goes part of my one-to-one relationship to my customer.

Lastly, I dread the stupid set of rules I have to do with MAS apps. My app does some things that would drive Apple bonkers. And I’m putting in countless hours to please some pancake-eater (sorry, just watched Fargo again) - I mean cubicle-dweller and tryign to fit into his square-shaped world.

Still, I really agree with Michel. I’m glad you posted it. I STILL am going MAS at some point, but since you kind of made a global assertion, I just wanted to be reasonable and mention it’s not for everyone. It’s very problematic for certain peoples, like myself. I’m not writing this to represent me, but to perhaps help people understand the bigger picture.

7

Once you go MAS, you never go back :wink:

8

[quote=89268:@Markus Winter]P.S. I still don’t think that having your app on shelf-space (that you paid for) is advertising.

Marriam Webster says: Advertisement: a published statement informing the public of a matter of general interest

Apple doesn’t make any statements about your app (unless it is “app of the week”) ergo no advertisement.[/quote]

I did not quite say advertising, but marketing. It is a bit different. As for Marriam Webster, one could wonder if the distinguished minds who produce a dictionary have any practical knowledge about business. Hence their authority should about words could be taken with a grain of salt when it comes to operation reality.

Selling by download is in itself a new reality of mail order business, and if analogies can be found with past models, it has it’s new specificities which may not be correctly reflected by dictionaries definitions.

In the heydays of disk and CD distribution, one would advertise in Computer Shopper, PC Magazine or other MacWorld in the form of a most of the time passport photo size description of the program, together with an 800 number and if possible an address to write to. Some mail order retailers would sell catalog presence : to have your program presented to the x thousands customers of that catalog, you would pay advertisement fees. If Marriam Webster calls that anything else, it does not change the fact that advertising programs for mail order business had pretty limited options. Granted, in terms of terminology, a catalog is not advertisement per se, as it is more akin to a glass window placement than to a promotional placard. So the exact term would be merchandising. It remains in the promotional budget line.

Today computer magazines are either deliquescent or defunct, and real promotion takes place electronically. The old fashion advertisement never quite got it together, as banners mostly go unnoticed, popups rightfully get blocked, and surfers try to exercise their right not to be harassed by stupid snake oil merchants at every click. Google charges limbs for true advertisement : clickable post stamp size text messages that users have grown trained to ignore. Paper ads have become out of reach, as small size adds are no longer available. What remains is web site presence. Getting a listing in MacUpdate is mostly free, but the amount of business generated is probably less than what a post-it at the local church would create. Having a shareware version of the app is probably a good way to find customers, if the app is good enough to pass the evaluation process. But to insure a wide distribution is a burden difficult to support : submitting an app to every shareware pimp takes time and efforts. Finally, there are the bundles, where you sell the app for close to a penny each, in the hope that gazillions of customers will buy. In the process you may sell numerous copies not gazillions mind you to users who may consider your precious program no more than a gaget they had for pennies and hardly worth more.

The MAS have you pay for catalog presence, the $99 a year fee. For that price, you have your little sidewalk corner with a few pictures, a description you write yourself (a marked improvement over the paper catalogs), and instant buy button. Customers will find you through categories, or keyword search. I dare say that is a statement of general interest for the public of Mac OS X users. If you really want to spend good promotional money, you can off course buy premium placement in Featured. Just like full page ads are available in magazines.

I think Apple does market your app by merely providing advertising space, albeit small, in the MAS web site. They provide shelf space for the public to discover your app and the “download” button is 100% merchandising, just like a vending machine is for Coke. Marriam Webster may have their conception about what advertising is ; business reality has been calling ‘promotion’ the varied modern means of pushing goods for a while, and that includes far more than old fashion placards.

9

You can have these removed - as we’ve done so in the past. in iTunes connect, there’s an option somewhere for this.

10

True, I made a very general assertion although not all my products are in the MAS. I have been selling special fonts for schools since 1998 and teachers as well as schools find my site by themselves. It is enough of a special niche market that customers find me through keywords and word of mouth. I did place some in the MAS, but sales are extremely limited as compared to my regular business. A lot of it is done on CD as well, with instant download for immediate installation (carried out by a Web App on 1701).

I also sell MICR fonts which are extremely far from being brown products, and they do not need the MAS at all. But I used the technology for Check Writer and Check Printer, which are general public apps, and sell on the MAS but not on my own site.

My original post was more a testimonial of what I thought the MAS did for developers, and why to me the $99 annual fee is ridiculously low, and the 30% cut quite legitimate, as compared to retail margins in other industries. And I did not mention other software distribution : books and records distributors regularly demand 60% from publishers for condescending to take products, plus require returns of unsold items !

11

The gaming industry is this perverse also. The publisher takes 65%, leaving 35% for the developer. This of course was before MAS, and the only way you’d get your game into gaming sites was via a publisher.

It was a very disappointing experience, the publisher was meant to promote the game for 2 weeks on their site. However technical difficulties meant that it kept disappearing from their site completely. Lots of calling, e-mails and such, would get the game back onto the site, but not the promotion. The amount of money we earned in return wasn’t enough to justify 18 months of development time, and left us quite angry really because they took the bulk of the cash and left us powerless to earn from our hard work.

12

Right, when I use distributors its 50% 60%, and this is Music Industry (MI). Apple’s 30% and $100 yearly is very low. However, remember that you are very likely will have to reduce your MSRP, so factoring in that - plus the sales loss you take by them not buying direct - the 30% can actually be much higher in real terms.

Sam, only self-promotion works. Depending on others only leads to failure, I see that in my industry over, and over, and over again. I know 50+ guys with the same story as you just told. I know you said “the only way” but I refuse to think that there isn’t a way to get public exposure by being creative in marketing. But I understand I don’t know your situation. Still, there’s always a way.

Other the other hand…

Yes, I understand that my situation is unique. I heartily agree with Michel and Sam that in situations where the customer is less defined, MAS should not be ignored, yet embraced. Sam and Michel’s sales figures tell the whole story!

13

My experience with MSRP is such : upon launch, I tend to reduce the price to measure the potential. Then, as sales increase, I raise the price until I see a small decline, and then get back a little, then it becomes my regular price. Contrary to many, I have no app under $5.99, most are at $14.99, and some are at $19.99 (exact MSRP on both MAS and my site). Because I develop without factoring my time cost, I do not have a cost per unit to factor in my profit. Then I tend to consider every sale price the result of pure offer and demand, where for hard industrial goods, or software with a lot packaging the cost of production would play a much more important role.

Once again, it would be awfully difficult to reach most of the customers who buy in the MAS through direct marketing. If they bought at all. So I consider all cuts in gross sales as intrinsic to added business I would have never got direct. Then they are not sales loss per se, as charging full price is by hypothesis impossible through that channel. That said, when business is five folds what I was able to generate direct, it very largely offsets any Apple cut and MSRP reduction.

You are right, there are other venues, and those have been largely explored through my experience with Association of Software Professionals http://asp-software.org which used to be Association of Shareware Professionals. Today Windows software sales depend in majority to the model :

  • Free evaluation software
  • In app instant purchase

In a way, software pioneers paved the way for Adobe, Microsoft and other whales.

It has the perverse effect to develop for users a culture of free software, and paying is bad. Which incidentally forced the whales in question to reduce their MSRP, sometimes drastically. In a way, free download killed the shelves market that Microsoft possessed, and they cut the branch they where sitting on by being greedy and using the same strategies as the small guys to snatch their small marbles.

Today the evaluation software model no longer called shareware because of image issues is the only way to mass market for a lot of small guys. It works, though. But it requires a lot of work, to make sure the evaluation version is present and up to date in all major archives CNet, Tucows, ZDnet, Softpedia, Shareware.com and others. It is also a far west market where everything goes on. Four years ago my Barcode Wizard I have been selling since 1999 got counterfeited by another company who decided to tout its Barcode Wizard ™ ! Not only is it a crowded market, it is a not well behaved one. Add to that rampant piracy where the smallest program gets cracked, and I would say the heavy coefficient of friction is often heavy to bear.

For Windows programs, it is the only venue. The Windows Store, as I said before, is an anecdotal outlet. For Mac, posting evaluation versions on MacUpdate, Softonic, Bodega and MyApp could be a good idea, complimentary to the MAS, but probably extremely far from having the same potential. At least, for ‘regular’ programs. No doubt that games would probably have another dynamic, even with a much shorter life span and heavier piracy.

I don’t know what big guys envision for the future. What I know is that I tend to hate Microsoft for at the same time providing development tools, and taking any occasion to pull the carpet under countless little guys under the pretext of perfecting their Windows, or their Office Suite. “A good idea ? Let us steal it !” seems to be their moto :frowning: