107: Free with Benefits
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Welcome to Under the Radar, a show about independent iOS app development.
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I'm Mark O'Arment.
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And I'm David Smith.
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Under the Radar is never longer than 30 minutes, so let's get started.
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So today I wanted to talk about something that I'm sort of having to navigate with
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That seemed like an interesting discussion to have here and a topic that is kind of a
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perennial one, one that we've talked about many times around business and pricing and
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that sort of thing.
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And so for a little bit of background, so Workouts++ is an app that I released right
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around this time last year whose primary purpose is to create a fully customizable workout
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experience on the Apple Watch and then on the iPhone to provide a much more detailed
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analysis and display view of all of the workout data you've ever collected with an Apple
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Watch, wherever that came from, whether that's in Workouts++ or somewhere else.
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And it's an app that I made because of a few shortcomings or things that I didn't
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like about the system app, which is typically where a lot of my ideas come from, where there's
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an existing thing that doesn't quite work the way I like, so I wanted to make it better.
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I wanted to improve it.
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I had some ideas for how I liked it, and so that's why I started it.
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And it is an app that I use on a very regular basis, five or six times a week at least.
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And I use this app, and so it's very tailored to the way that I think and the way that I
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And I'm in the process now of finishing a pretty substantial update to it, which will
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be launching hopefully in about three weeks as you're listening to this, which is kind
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of bearing down on me now that I have about two weeks left of coding to get all the last
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But in about two weeks, I'm going to launch a big update for it.
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And so naturally, you start to think about what are you going to do with this new update?
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Are you going to make any changes?
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It's a good opportunity to kind of reflect on how the app has done and where it might
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go in the future.
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So in the initial version, the version that I launched last December, the app was paid.
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It was a $5 app.
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And my reasoning for that initially was coming from a place that it is a very focused sort
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of power user niche kind of a thing.
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Like A, you have to have an Apple Watch for it to be useful, period.
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So that's reducing my potential audience to down quite dramatically.
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I think for my analytics, for health-conscious people, right around maybe 10% of them have
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an Apple Watch.
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Or, of iPhone users, I mean, so that's pretty small.
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And then you need to want more than you get out of the built-in app.
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So it seemed like, well, there's not that many people who might use this.
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So maybe I'll make it paid.
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Maybe I'll take that approach.
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And also, it seemed like it was a fairly premium in the sense of it's trying to do more.
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It's allowing you, if you really care about this kind of stuff, you can tweak and adjust
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and do a lot of things.
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And so I was like, let's try that.
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And the short version is that it didn't do very well at all.
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I'm about to get into exactly how poorly it did.
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Before I do that, I always want to just sort of disclaimer things that anytime you hear
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people talk about sales numbers or things like that, it's always good to take with a
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grain of salt that the two types of numbers you tend to hear are when things go very poorly
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or when things go unusually and exceptionally good.
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So just something to keep in mind that results not typical.
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It's just instructive insofar as helping sort of couch where I'm going to go with this next.
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But in the first year of the app's life, the app made $16,000, which is not-- nothing just
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It's a good run for an iOS app in many ways.
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But as you would expect, it probably made 50% of that in the first month and has settled
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down dramatically since then to at this point, it's not uncommon to have a day where it's
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like zero or one sales is starting to become pretty common.
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And I think that's a pattern that is very common with a paid app and just with apps
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in general in the app store, that there's this pattern where you might get a little
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bit of interest up front and then it just falls off.
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And this app in particular, it's competing against such a wide variety of things that
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in retrospect, it's probably not unexpected that it's very hard to justify that someone
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would pay a substantial-- or at least a substantial in the app store sense amount of money for
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And so from that perspective, I kind of view it financially as a bit of a flop now.
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It's not something that I think is financially very viable at that point.
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And if anything, it's kind of silly that I continue to work on it except for the fact
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that I use it every single day and I really like it.
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And I have the benefit, I suppose, of by virtue of being self-employed and being able to make
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these kind of choices that don't necessarily make sense financially, I can just keep working
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on it because I like it, because I enjoy it, and I can support myself with my other apps.
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But that brings me to version two, where I think I've been toying with a variety of things.
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It seemed obvious that I should definitely make the app free in some ways, because I
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think that's just the app store where we find ourselves now.
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The paid apps are become-- you have to be doing something else, I think, for that to
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be a viable situation.
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Almost all of the app stores are free with something else.
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But when I made that decision, then it's like you start to get into, OK, should I have ads,
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should I have some kind of in-app purchase or subscription situation?
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And the more I thought about it for this app, the more I decided that maybe this would be
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an interesting opportunity to rather than go down the road of trying to work out some
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method to extract money from these customers, who are these potential customers even.
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The user base is incredibly small now, and any amount I get from them is still going
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to be somewhat immaterial unless I was able to grow the audience.
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So any of those scenarios that I came up with, like putting ads into it, it doesn't really
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work, because ads tend to work well in apps that you will go to on a regular basis, like
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several times a day that become a more habitual app.
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Whereas an app like this is something that you might open maybe once a day at best, probably
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more likely once a week on the iPhone side, just because that's the nature of how often
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do you really need to do deep dives into your past workout history.
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And I also just kind of thought, "You know, I don't really like the feeling of ads in
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I know they're an absolutely necessary situation, but they weren't my favorite."
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And then, so it's like, "Okay, so I do some kind of subscription, some kind of in-app
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purchase, some kind of situation where like, well, you get the first X, you can see the
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last week's worth of data, but you can't see more unless you pay, and you're putting up
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a lot of barriers and pain points in my app."
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And I decided that I think what I'm going to try instead is to kind of view the situation
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I have that by virtue of having diversified extensively in the past, that I am now in
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a position where I can view my existing business, that all my other apps, as a venture capitalist
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who is able to finance the development of apps that can just go out and see how big
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of an audience they can garner, and worry less about the immediate return and outcome
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and squeezing every penny out of the app in the near term as I can.
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And so I think I'm just going to make the app totally free.
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No in-app purchases, no ads, no barriers or pain points, nothing to try and create a point
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of hesitation, that if someone is potentially interested in this, they can go and get it
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Try the full experience, and the only kind of vague monetization-y kind of thing I'm
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going to do is have links to my other apps, which are related and potentially interesting
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to that person in the app, just as a "that seems like a reasonable best practice" kind
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of a thing, but not even really expecting to make much from that.
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But anyway, it's kind of this interesting model, because I've never launched an app
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that had no, or sort of an app like this, where I have no immediate financial benefit.
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It's entirely a goal or a play of seeing how big of an interest I could get in this app,
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when if I take away all the potential limiters, all the potential things that might get in
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the way of its growth, and then just see.
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And in a weird way, there's a very small chance that it goes anywhere.
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There's still a very, the most likely scenario is that even completely free, no barriers,
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no one downloads it or uses it in the long term.
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But I can potentially, rather than having a very high chance of having a very good chance
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of having a very small audience, I have a very small chance of having a potentially
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big audience.
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So, I don't know.
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Is that crazy?
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Probably not.
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It's just, it's hard to think about.
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It's hard for people like us who don't usually do future bets on growth and figure, and thinking
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like, "Maybe we'll make money on this someday in the future."
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That's not something that we as indie iOS developers usually do.
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And that is how a large part of the industry works, so it's probably worth considering
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As you kind of mentioned, you kind of said it was analogous to a VC kind of model.
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With the disclaimer that neither of us are venture capitalists, I think that's not a
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bad metaphor.
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In the VC world, they know if you just have a big audience, and more importantly, if you
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have growth that seems to be consistent or accelerating, there will be a way for that
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to be valuable.
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Even if it isn't immediately apparent, even if you defer that value until later, and sometimes,
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in many cases, getting that growth is so important and so valuable that they intentionally defer
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any kind of monetization just to leave the doors as wide open as possible for people
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And then they figure later down the road, this can be worth something to somebody, whether
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it's direct or whether it's then being sold to someone else, and then they figure out
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how to monetize it, or if it never needs to be directly monetized at all.
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There's lots of situations where something has value to the people who make it or who
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fund it, even if it never collects direct revenue.
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There's all sorts of side benefits things can have, or strategic benefits to some bigger
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It's not a bad idea, and it's also not a bad idea to say, "I don't even know what
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the outcome could be," but since it's already ... You've already made some money
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off of it, and that money has already dried up, basically.
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So it's like, on some level, it's like, "Well, what are your options here?"
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You ran through the challenges of this particular app, Workouts++.
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There's not a lot of places it can be easily monetized in ways that are likely to succeed,
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because it is mostly used on the watch.
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It's hardly ever launched on the phone.
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That's just going to be really, really hard to monetize it in a meaningful way.
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So I think you're kind of in a corner here that I don't really think you have a lot
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of other options, but that's not necessarily a bad thing, because it would be kind of freeing
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to just let go of the idea of direct monetization with this app and just see what happens.
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You have enough apps and enough experience out there that you know the kinds of user
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numbers that you can get when something has no boundaries, like when it's totally free
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or when it's free with an app purchase.
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You've seen those numbers, and you've seen what it gets when it's paid up front, too.
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I think you have enough experience and data to be able to make that kind of decision.
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Yeah, and I think something that is a weird thing to say, but I feel like the thing that
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makes me want to do this most is that I've never done it before.
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And something that I have found time and time again in the many, many years, what is it,
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almost nine years of being an iOS developer, is that the time that I've learned from the
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most or expanded my business the most have tended to be the things and the times when
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I'm doing something new, where I'm doing something that I haven't tried before.
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Because otherwise, I imagine—the problem I so often will fall into, I think, is that
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I am doing things the same way that I've done them before.
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And sometimes that's good.
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Like there's a good lesson to be learned, or there's a best practice that you can
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pull from something.
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But very often, I think that I get stuck on, "Well, I did this this way before, so let
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me do it that way again."
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And that is probably in the long term the death of my business.
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That if I keep trying to just do the same thing in the same way, even if it can be effective
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in the short term, I kind of get nervous.
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In this funny way, as soon as I had this idea that I was sitting there, I was like, "You
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know, what if I just make it totally free?"
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Even though the fact that in many ways that is foolish, there's a definite downside
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in a financial cost.
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I have a reasonable expectation that if I have a big update and I get a little press
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and do my little things, that I would have a nice couple of weeks of income.
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But it's the understanding that maybe it's better to not worry about that.
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And because I've never had that perspective, that's exciting and interesting to me in
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a funny way.
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And I think it reminds me of the importance of not being complacent with anything.
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To just always be looking for opportunities to try.
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In this case, it's a good thing to try because it's not doing anything for me now.
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I have this thing that maybe has a potential upside or potential interest somewhere down
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the road that's never going to be realized in its current state.
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So let's try it and see.
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And maybe there'll be a podcast in a couple of weeks or a couple of months where I'm
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like, "That was a terrible idea."
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And then I can change course or decide what I want to do at that point.
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But in a weird way, it's almost like whenever I encounter a place that's like, "I've
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never done that before," that makes me doubly and perhaps slightly irrationally interested
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in trying it.
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Just so that I can finally add that data point into my collection of other data points and
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be able to make a better decision for whatever my next app is, whatever that may be.
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Well, and there's other value here too.
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Like in direct value, you're getting these users and you mentioned earlier that some
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of them will buy your other app.
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So that's some value right there.
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You're going to get a certain number of people from any kind of press you get.
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More of them will stick around because there's no barriers to them sticking around.
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So then you'll have even more people looking at your other apps.
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You'll have some spillover press where people who see the press will look at your other
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So there's direct benefits there.
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Also, you are not talking about it on a podcast episode.
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You're probably going to talk about it again on at least one more podcast episode.
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We get paid to do these podcast episodes.
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So you're generating good topics for content for other ways you get paid.
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And then if new listeners come in because they wanted to hear how that turned out, maybe
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you write a blog post about it.
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And you don't have ads in your site, but then those people might come to the podcast
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where we have ads, which I'm about to do in a minute, and they might stick around.
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So then not only did you get paid for that episode where we talked about this, but then
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if they stick around, we can raise our rates down the road.
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And then that person has delivered you value down the road of increased money per podcast
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So there's a lot of network effect here that builds over time.
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Also, next time you have a new app to launch, you have a place you can promote that where
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there's more people listening.
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Both the podcast will have more listeners, and then you can even do an in-app promotion
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in Workouts++, which has this now massive free audience.
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And then you can sell another app.
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So there is a lot of network benefit here to you.
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Even if that one app itself does not directly make the money, it can cause this network
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effect to happen.
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I know this is not the current use of network effect.
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It can cause these side effects to happen that themselves can bring you value.
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Yeah, and I think what's liberating in a weird way about that is I think it's so easy to...
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And maybe it's certainly different.
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I appreciate that I'm in a privileged position to have other apps and other means of support
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that allow me to do things like this.
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It's probably fair to say just like, "Yep, I totally get the privileged position that
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That if this was my first app, this would probably not be a great idea.
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But because it isn't, because I do have this opportunity.
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It's interesting to...
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As you were saying, there's all of these other things that, these other potential avenues
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for benefit that I typically close myself off to because I get too short-sighted.
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And in a weird way, it's so easy for myself and generally I would say the more indie development
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community to look down our noses at the more MBA, business-y folks who probably honestly
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have a better understanding of all those auxiliary benefits that you were just talking about.
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All of these other effects and things that maybe they quantify, maybe they don't, but
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they have a better understanding of the fact that it's like, "Don't worry.
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Just worrying about the income I'm going to get from an app in the near term is almost
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certainly not taking into account the full picture or the full understanding of what
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possibly could be coming down the road."
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And so as independent developers, we might have to be shooting ourselves in the foot
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as a result because we're so focused on this or what's going to happen now.
00:18:54
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And maybe when you're starting out and you're trying to launch your first app, that initial
00:18:57
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burst of income and having a sustainable living and paying for medical insurance and all of
00:19:02
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that, yeah, it's much more important.
00:19:05
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But understanding that that's not the only way to live is probably—it's definitely
00:19:11
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better to have a bigger breadth of perspective and maybe try and learn from another world.
00:19:17
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Like I tend to—consciously and unconsciously, I look down on VC apps in a weird way.
00:19:26
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And any time I find myself being elitist or biased or whatever, having a prejudice against
00:19:35
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something like that, that's probably not a good thing.
00:19:39
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In general in life, being prejudiced just without basis is not good.
00:19:44
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So maybe it's good to stretch ourselves, good to think about these types of things
00:19:49
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and try and learn from the result.
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Thank you so much to Linode for supporting this show.
00:21:23
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So I wanted to talk a little bit about an example I have from this world that I'm developing
00:21:29
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is my podcast MP3 encoder called Forecast.
00:21:35
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I've gone through similar thoughts as you with like what I should do with monetizing
00:21:41
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And this is a specialized tool.
00:21:45
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It's a Mac podcast MP3 encoder that lets you make chapters and stuff in them.
00:21:50
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And so this is going to have a very small audience.
00:21:53
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I think I'd be lucky to have hundreds of people using it, certainly not more than that.
00:22:00
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And if you do some quick math, like how much do you have to charge money to make meaningful
00:22:05
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money when your customer base is that small?
00:22:08
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Like I did like, quick math, suppose I charge 50 bucks for the app, which is I think decent
00:22:13
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for like a Mac, a good Mac utility.
00:22:16
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So suppose it's 50 bucks.
00:22:17
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If I get 500 customers, which is way higher than I think I will get, especially if it
00:22:22
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costs 50 bucks, that's $25,000 gross.
00:22:26
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After taxes, that's more like $15,000, thanks New York.
00:22:29
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And so, you know, it's like I'm going to have to build up the infrastructure and provide
00:22:35
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the level of support that people would expect from a $50 app to only make at most maybe
00:22:42
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$15,000 over the lifetime of this app?
00:22:45
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That's a balance that like, what you have to put in place to support a $50 app properly
00:22:51
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to what customers would expect for that, it's not worth that to me to make that amount of
00:22:57
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Like I would want to be making more money if I was going to set that up at all.
00:23:00
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And if it's 50 bucks, like I think 500 customers is actually pretty optimistic.
00:23:05
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I think a way more likely number is 100 customers, in which case I'm making $3,000, which I can
00:23:12
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buy a MacBook Pro, but that's about it.
00:23:13
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I can buy most of a MacBook Pro.
00:23:15
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But like, this is not, we're not talking major money here.
00:23:20
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And so it wouldn't be worth the overhead to me of having to support having it be a paid
00:23:27
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So I started looking at like, you know, what are the other benefits of this app existing?
00:23:30
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I mean, and one of them, and you know, you mentioned like you use Workouts++.
00:23:35
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You like it.
00:23:36
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And so, you know, I use Forecast.
00:23:38
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A lot of my podcaster friends use it.
00:23:40
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Soon, once I release it, other people will be able to use it too.
00:23:44
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And it benefits us all simply by existing.
00:23:47
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Like the fact, just that I wrote it, that is a benefit to me because it saves me time
00:23:51
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every week and lets me make podcasts better.
00:23:52
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Like, and the podcasts make money.
00:23:55
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Even if I never make a dime from it, and even if it has, even if I never even distributed
00:23:59
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to anybody else, it already has been worth the time I put into making it just for the
00:24:03
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value it provides to me.
00:24:05
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And then also there's things like political goals.
00:24:07
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Like I, you know, like I believe that it would benefit podcasting as a whole if more people
00:24:13
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use tools like this.
00:24:16
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And I can advance certain goals I have.
00:24:18
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Like I think MP3 is the best format for distributing podcasts right now.
00:24:23
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And if people currently want to use chapters, they often use AAC.
00:24:27
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And so I think MP3 is better for that.
00:24:29
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So I can put up this tool to kind of advance that agenda.
00:24:32
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And I have this other app, Overcast, which has, you know, that does make money.
00:24:38
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►
And there are ways that a podcast encoder could benefit Overcast.
00:24:43
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So for instance, Overcast will always support every forecast feature.
00:24:48
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Like I, you know, I can make sure that like the way I do chapters in forecast will work
00:24:53
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►
in Overcast because I'm writing both sides.
00:24:55
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►
It's using the same library on both ends.
00:24:58
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I can make sure that always works properly.
00:25:00
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►
I can also build new features into Overcast that require some kind of metadata on the
00:25:07
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encoding side.
00:25:08
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►
And then I can add that to forecast.
00:25:10
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And I can have this, you know, at least the podcasts who use it, they can then use these
00:25:14
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►
features that I can integrate into Overcast.
00:25:17
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►
And so like there are options I have there.
00:25:20
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►
And there are lots of alternative business models I can use besides paid up front, obviously.
00:25:23
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►
There's like, you know, trials and, you know, NAGWARE and stuff like that.
00:25:28
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►
I don't really want to do that.
00:25:30
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►
There is one thing though that could be a direct benefit here is that forecast is used
00:25:36
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►
by podcast producers.
00:25:38
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►
I need to reach podcast listeners for Overcast.
00:25:41
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►
I need podcast producers to promote Overcast.
00:25:44
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►
So I could make it just like the deal is if you use forecast, you need to either buy some
00:25:51
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►
kind of like Goodwill policy or buy like forcibly embedding a promo unless you pay or something
00:25:58
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►
I could require users of forecast to promote Overcast in their shows.
00:26:03
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►
That's a little gross.
00:26:04
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►
I, you know, I don't like having it be a hard requirement, but I could just put like a little
00:26:07
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►
piece of text somewhere saying, hey, you know, please promote Overcast periodically in your
00:26:10
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►
shows if you like this, you know, and that, you know, not everybody would do that.
00:26:14
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►
Probably a very low percentage of the users would do it, but if any of them do it, that's
00:26:18
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still a benefit.
00:26:19
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►
So there are lots of ways that I can look at this and like it's very clear to me that
00:26:23
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►
I do not want this to be a paid up front app because it wouldn't bring in enough money
00:26:27
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►
to be worth the hassle and the support costs.
00:26:29
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►
But there's lots of other things I can do that the more people use it, the better these
00:26:33
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►
effects get.
00:26:34
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►
So it probably should be free.
00:26:36
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►
And I think as you're unpacking, sort of unpacking that what I see is it's exactly the same sort
00:26:42
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►
of situation that you were outlining for what I'm finding myself with, where it's the these
00:26:47
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►
auxiliary effects or network effects or whatever these like these sort of these vague kind
00:26:52
◼
►
of slightly amorphous but definite benefits that just having it out there as broadly as
00:26:59
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►
possible because taking advantage of the fact that it doesn't like cost us, we're not producing
00:27:04
◼
►
a physical object that we costs us money to produce like an extra copy.
00:27:08
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►
It's just we can just put the put it out there and it's as many people who's use it as possible,
00:27:12
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►
like there's no ongoing cost to us that that nest sort of almost necessarily accrues all
00:27:19
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►
these other little aside benefits that are wonderful.
00:27:23
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►
And especially because it's like it's not totally orthogonal to like your main business.
00:27:27
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►
Like if it were like you wrote this Mac, you wrote a to do list manager on for the Mac.
00:27:33
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►
Like, okay, that's a bit more complicated to have these kind of these beneficial overlaps.
00:27:39
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►
But like even just the fact of like podcast producers be knowing about overcast is a great
00:27:46
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►
And keeping in mind that people the people who buy the ads that are shown in overcast
00:27:51
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►
are podcast producers currently, right?
00:27:53
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►
Right, exactly.
00:27:54
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►
Like just making them aware of overcast and having it be a marketing tool like in a weird
00:28:02
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►
It's like whatever potential cost you are giving up whatever that few thousand dollars
00:28:06
◼
►
is and not have not trying to get money from it.
00:28:09
◼
►
It's like just viewing it as a strict marketing expense like the forecast is a elaborate advertisement.
00:28:16
◼
►
advertisement for overcast that is targeted at a very specific demographic, but turns
00:28:22
◼
►
out to be the demographic that you are trying to reach to buy ads in your app.
00:28:27
◼
►
Like it is such an interesting thing when you stop if you like when you like all these
00:28:31
◼
►
little benefits that can appear when you don't worry about the short term benefit of it like
00:28:38
◼
►
all these down the road like just it's hard to quantify.
00:28:41
◼
►
It's hard to know but I'm almost certainly the more people who know about overcast that's
00:28:47
◼
►
better than not so like making it free and just having the goal of it being you know
00:28:53
◼
►
that as many of as high a number of podcast producers as possible are using it, you know,
00:28:59
◼
►
that's awesome and especially because like I know which of the apps that I podcast that
00:29:04
◼
►
I listen to are using forecast because they have great like the way they have great chapters
00:29:11
◼
►
and the way the chapters work like it all works seamlessly in overcast and so that makes
00:29:15
◼
►
overcast look good like the more people who do that the better it would be so like seems
00:29:19
◼
►
like it's a win-win everywhere.
00:29:21
◼
►
Well, thanks everybody for listening.
00:29:23
◼
►
We're out of time this week.
00:29:24
◼
►
Make sure that you download Workouts++, buy it while it's still paid and then buy all
00:29:29
◼
►
David's other apps and then make sure you use forecast whenever you sit.
00:29:32
◼
►
In the meantime, please use overcast and please patronize our fine sponsors on the show.
00:29:37
◼
►
Thanks for listening everybody.
00:29:38
◼
►
Please like and subscribe and we'll talk to you next week.