Under the Radar

00:00:00 ◼   ► Welcome to Under the Radar, a show about independent iOS app development.

00:00:03 ◼   ► I'm Mark O'Arment.

00:00:05 ◼   ► And I'm David Smith.

00:00:06 ◼   ► Under the Radar is never longer than 30 minutes, so let's get started.

00:00:10 ◼   ► So I am in the process of wrapping up development on my next app.

00:00:15 ◼   ► You?

00:00:16 ◼   ► Yes.

00:00:16 ◼   ► Yes, another one.

00:00:17 ◼   ► It's truly shocking and a revelation that I'd be working on a new app.

00:00:22 ◼   ► But I am.

00:00:23 ◼   ► And I'm at the point now where the app is mostly finished.

00:00:28 ◼   ► It's like functionally complete.

00:00:31 ◼   ► I'm getting ready to start sort of more broad testing

00:00:33 ◼   ► and that kind of thing.

00:00:34 ◼   ► And it's an app that's geared in sort of

00:00:36 ◼   ► in the health and fitness area

00:00:37 ◼   ► that I've been doing recently

00:00:39 ◼   ► to sort of join the ranks of pedometer plus plus

00:00:41 ◼   ► and C plus plus.

00:00:42 ◼   ► This one's about displaying the activity

00:00:46 ◼   ► and fitness data collected by Apple watches

00:00:49 ◼   ► in hopefully a more useful way.

00:00:51 ◼   ► So I'm through with the part that I have a lot of comfort with in terms of sitting down

00:00:56 ◼   ► and just building an app, like the actual opening Xcode and coding.

00:01:00 ◼   ► That part I always feel good about.

00:01:02 ◼   ► But now I'm hitting a more challenging part of it, at least for me, that I thought would

00:01:07 ◼   ► be interesting to talk about, and that's the process of working out the business model

00:01:11 ◼   ► that I'm going to ultimately launch the app with.

00:01:15 ◼   ► And maybe some people would think that it would be a better idea to have the business

00:01:18 ◼   ► model in mind before I make the app, but that's just not the way I work. I have an idea, I

00:01:24 ◼   ► start building it, a few weeks later I have the app, that's just how my process works.

00:01:29 ◼   ► So now I hit the point that I have to decide what am I going to do with this. And you'd

00:01:36 ◼   ► think at this point, like, I've been doing this for long enough and I've launched enough

00:01:39 ◼   ► apps that I would just immediately know what it is I'm going to do. But the awkward reality

00:01:45 ◼   ► is I looked at it and I'm like, "I don't really know what I want to do for this app."

00:01:49 ◼   ► I could make it do so many different things. The number of options available to app developers

00:01:55 ◼   ► these days is kind of wild in terms of it's not just like the old days where you could

00:02:01 ◼   ► have a paid app or a free app, or push it free with ads, and then they introduced in-app

00:02:05 ◼   ► purchase. And originally, in-app purchases were only in paid apps, and so you could have

00:02:08 ◼   ► extra, what they call "pay-me-em" apps, and then they added in-app purchase for free apps.

00:02:14 ◼   ► We can do that now."

00:02:16 ◼   ► And there's recently been a whole big wave of fitness apps being purchased by big companies.

00:02:21 ◼   ► And so that's even like this other kind of vague, not like a business plan, but this

00:02:24 ◼   ► sort of like a concept of people are making fitness apps and eventually being purchased

00:02:28 ◼   ► by bigger companies and making their money that way.

00:02:31 ◼   ► And so that leaves me in kind of a crazy thing.

00:02:33 ◼   ► And so what I wanted to do this week is to sort of think out loud and get your thoughts,

00:02:40 ◼   ► about how to proceed and kind of the considerations and the thoughts that go into this. Because

00:02:47 ◼   ► I imagine anybody who is making an app, a product, something like that, you have to

00:02:51 ◼   ► go through this kind of mentality, this thought process, to think, you know, what's ultimately

00:02:56 ◼   ► going to be best for you. And the answer is probably different for everybody. So thinking,

00:03:00 ◼   ► you know, rather than just giving an answer, explaining how I'm going to hopefully end

00:03:05 ◼   ► up with an answer is probably more helpful.

00:03:08 ◼   ► - So for me, I think that one of the ways to look at this,

00:03:11 ◼   ► first off, is if you have any previous apps

00:03:15 ◼   ► that you've made, especially anything you've made

00:03:17 ◼   ► in recent years, since the economy always changes

00:03:19 ◼   ► in the app store, any parallels you could draw

00:03:22 ◼   ► from other apps of what might be the best pricing model

00:03:26 ◼   ► for a similar app that you've made and how that's done.

00:03:30 ◼   ► - Sure, and probably the closest app to this is,

00:03:33 ◼   ► of all my apps, it's certainly gonna be Podometer++

00:03:37 ◼   ► Sleep++, which are fitness apps.

00:03:39 ◼   ► And probably in many ways, Sleep++ is the,

00:03:43 ◼   ► actually, I guess, Pedometer++ in the early days

00:03:45 ◼   ► had the same thing where, because it's an app

00:03:47 ◼   ► that's tied to a particular platform,

00:03:50 ◼   ► like when Pedometer++ launched,

00:03:53 ◼   ► it was tied to the iPhone 5S.

00:03:54 ◼   ► And if you didn't have a 5S, it was worthless to you.

00:03:57 ◼   ► And then, you know, with Sleep++,

00:03:59 ◼   ► if you don't have an Apple Watch, it's useless to you.

00:04:01 ◼   ► And this new app, if you don't have an Apple Watch,

00:04:03 ◼   ► it's not really gonna be able to show you anything useful.

00:04:05 ◼   ► So those are probably like the closest to the way I do it now.

00:04:09 ◼   ► And those are both free with ads and an in-app purchase

00:04:14 ◼   ► to remove the ads.

00:04:15 ◼   ► And in the case of Pedometer++, the in-app purchase

00:04:17 ◼   ► is structured as a consumable tip jar type of thing.

00:04:21 ◼   ► And in Sleep++, it's just like a one-time regular,

00:04:24 ◼   ► like an in-app purchase to remove ads

00:04:27 ◼   ► with a nice little message saying, thank you so much.

00:04:29 ◼   ► - And Pedometer++ does not have ads at all, right?

00:04:32 ◼   ► - It does.

00:04:33 ◼   ► - Oh, okay.

00:04:34 ◼   ► And it didn't initially launch with them. Initially, it just launched with the tip jar.

00:04:39 ◼   ► But that, I introduced ads after a while because the tip jar, while conceptually I liked, from

00:04:48 ◼   ► a performance perspective, didn't do that as well. At least until I added ads to it.

00:04:54 ◼   ► And once I added ads, like once there was both the carrot, like "hey, support me, this

00:04:59 ◼   ► is great," and the stick of "I'm going to show ads in the app unless you pay," like

00:05:03 ◼   ► the combination of those two led to a much more robust adoption of the tip jar. And so

00:05:09 ◼   ► I added ads and it's been working much better since then. Because otherwise I'd find sort

00:05:13 ◼   ► of the, I launch it, or I launch a big update and I'll get this kind of like this little

00:05:17 ◼   ► wave of goodwill and then it drops to almost nothing. And so that didn't really work in

00:05:23 ◼   ► the long run.

00:05:24 ◼   ► That makes sense. So now it seems like the most logical conclusion then, if you say that

00:05:30 ◼   ► the new app is most similar to Penometer++ and apps like this, and the Penometer++ and

00:05:36 ◼   ► Sleep++ both have this kind of ads with paid options to remove them models, and they both

00:05:42 ◼   ► work pretty well. It seems on the surface that would be the best choice. But with iAd

00:05:48 ◼   ► shutting down this summer, then obviously that throws a wrench into everything, right?

00:05:52 ◼   ► Exactly, yeah. Like, I look at this and it's more complicated, both because of that and

00:05:57 ◼   ► And also because in a weird way I also want diversity in my income stream, and so having

00:06:05 ◼   ► everything be the same model sometimes makes me wonder if that's problematic.

00:06:10 ◼   ► If all of my money is coming from ads, it's sort of in the same way that, fair enough,

00:06:13 ◼   ► I can move to another advertising platform.

00:06:16 ◼   ► But if there was some App Store policy change, for example, that changed the types of advertising

00:06:22 ◼   ► that were allowed, and it essentially meant that advertising rates collapsed. If all my

00:06:29 ◼   ► income is coming from advertising, then it's probably problematic. Or if the types of ads

00:06:36 ◼   ► that are available become more and more skeezy and crummy, then I can—and my entire business

00:06:44 ◼   ► is based on that, that's not a great position either. And so I end up with this weird thing

00:06:49 ◼   ► of it's like, there's a lot of things that I could do. And when I was taking a step back

00:06:54 ◼   ► and thinking about preparing for this episode, I kept kind of coming back to it, it's like,

00:06:58 ◼   ► ultimately I have to decide. And this is like, really, I think that you can build a business

00:07:02 ◼   ► model to do one of four things. You can either maximize the money that you get now, you can

00:07:09 ◼   ► maximize the reliability of income you'll get later, you can maximize the overall money

00:07:17 ◼   ► the app will ever receive in its lifetime, or you can try and maximize your user base.

00:07:24 ◼   ► Which one of those things will vary dramatically will then decide which business model makes

00:07:29 ◼   ► the most sense for you.

00:07:31 ◼   ► Because if I want the most money now, well I should probably do like a paid app.

00:07:35 ◼   ► Just like charge money up front, hope for a little bit of press when the app launches,

00:07:39 ◼   ► you know, kind of get a big push, have a couple of days with nice big sales, and then it'll

00:07:46 ◼   ► likely fall off pretty dramatically. At least that's my experience, is that you end up with

00:07:50 ◼   ► this very steep drop-off afterwards. But in that first couple—in that first week or

00:07:56 ◼   ► so, you can actually make quite a lot more than you would probably be able to make from

00:08:00 ◼   ► any of the other models. And so you can make it now. And if I want reliable income, something

00:08:05 ◼   ► like advertising is great, because there's no—there isn't kind of like this one-time

00:08:11 ◼   ► purchase nature to it, where people just keep—every time they open the app, I make a fraction

00:08:17 ◼   ► of a penny, and so if people keep using the app, there continues to be money coming in.

00:08:24 ◼   ► Overall revenue is probably going to be some combination of them, where it's like, "I'm

00:08:28 ◼   ► going to do everything.

00:08:29 ◼   ► I'm going to have ads, I'm going to have in-app purchases to remove ads, I may have

00:08:33 ◼   ► in-app purchases to do features."

00:08:36 ◼   ► Do everything you could possibly do to try and maximize things, and then if I wanted

00:08:40 ◼   ► to just maximize the user base, well, then you kind of take the VC model and say, you

00:08:45 ◼   ► know, just make it free, and hope that you'll work something out down the road. Like, if

00:08:50 ◼   ► once you have hundreds of thousands of customers using the app all the time, then hey, that's

00:08:55 ◼   ► got to be worth something to someone, right?

00:08:57 ◼   ► Yeah, I mean, so I think, so with Overcat, I obviously chose the, pretty much the latter

00:09:03 ◼   ► option, which, pretty much, make it free. At first I had like, you know, free with unlock

00:09:08 ◼   ► to get all features. Now it's pretty much everything's free and you pay if you feel

00:09:15 ◼   ► like it, which is almost like everything's free. And the reason I did that was because

00:09:21 ◼   ► I wanted to maximize the user base, really. I have political goals with how I feel about

00:09:26 ◼   ► how podcasting apps should and shouldn't be designed. And I want to keep podcasting

00:09:31 ◼   ► open and reduce the influence of proprietary gatekeepers and everything. And so for me,

00:09:38 ◼   ► it was important to maximize the user base first

00:09:40 ◼   ► and then figure out money with that in mind.

00:09:43 ◼   ► Not necessarily later, because I didn't delay making money,

00:09:46 ◼   ► but just figure out a way to make money

00:09:49 ◼   ► while also giving away as much as possible for free.

00:09:51 ◼   ► And so that's the model I chose.

00:09:55 ◼   ► That though, that was in the context

00:09:57 ◼   ► of this entire ecosystem that had these other factors

00:10:00 ◼   ► that I was playing to.

00:10:02 ◼   ► In your situation here with this app,

00:10:05 ◼   ► With every app, certain models will work better than others.

00:10:08 ◼   ► And it depends so much on what the app is,

00:10:11 ◼   ► what the competition is, how your market timing is,

00:10:14 ◼   ► what the market is itself.

00:10:17 ◼   ► So something like Pedometer++,

00:10:19 ◼   ► was that initially a paid app

00:10:21 ◼   ► or was it always free up front?

00:10:22 ◼   ► - It's always free.

00:10:23 ◼   ► And especially, it was free because it required an iPhone 5S

00:10:28 ◼   ► and there was no way that I could require you to have one

00:10:31 ◼   ► before you purchased it.

00:10:32 ◼   ► And so I made it free because I was afraid

00:10:35 ◼   ► that there would be lots of people who would pay for it

00:10:38 ◼   ► and then immediately discover that it's worthless

00:10:42 ◼   ► and go and get a refund or leave a one star review.

00:10:44 ◼   ► And so it just never seemed like

00:10:46 ◼   ► paid would be a viable option.

00:10:48 ◼   ► - Right, and so therefore, the same thing applies to this,

00:10:51 ◼   ► then, 'cause this requires an Apple Watch.

00:10:52 ◼   ► So, you know, it's, or does it officially require it

00:10:55 ◼   ► or does it, you know, basically, it basically requires it,

00:10:57 ◼   ► right? - It basically requires,

00:10:58 ◼   ► it would be fairly useless without one.

00:11:00 ◼   ► - Right, exactly.

00:11:01 ◼   ► So it seems like paid is right out the window,

00:11:04 ◼   ► which is unfortunate because actually,

00:11:06 ◼   ► something like this where you're saying

00:11:07 ◼   ► it's taking advantage of something new,

00:11:11 ◼   ► it's something that is a small market,

00:11:13 ◼   ► there's probably gonna be very little competition out there,

00:11:16 ◼   ► at least at first, so that kind of condition

00:11:19 ◼   ► usually is a really good fit for paid,

00:11:21 ◼   ► where you have people who are gonna be motivated to get it

00:11:25 ◼   ► and very little competition really,

00:11:26 ◼   ► and especially it being new.

00:11:29 ◼   ► That combination usually means go paid up front.

00:11:33 ◼   ► Because you kinda have to be free up front

00:11:35 ◼   ► because we don't have real trials,

00:11:37 ◼   ► and this would be a great case for a trial,

00:11:40 ◼   ► but those don't exist, so instead,

00:11:43 ◼   ► you have to be free somewhat.

00:11:44 ◼   ► So the only question now is whether you lock some features,

00:11:48 ◼   ► whether you use ads or whether you just don't think

00:11:50 ◼   ► about money with this app and use it for other purposes,

00:11:52 ◼   ► like promoting your other stuff

00:11:53 ◼   ► or giving back to the world or whatever.

00:11:57 ◼   ► So going through those one by one, I guess,

00:12:00 ◼   ► free with unlock is tricky.

00:12:02 ◼   ► Certain apps, there just really isn't a good place

00:12:05 ◼   ► to put that locking barrier.

00:12:07 ◼   ► So like one of the examples, I know,

00:12:09 ◼   ► I think James Thompson talked about this a while ago

00:12:11 ◼   ► with Peacalc, is, you know, where do you,

00:12:14 ◼   ► if you have a calculator that you wanna be free up front

00:12:17 ◼   ► with a paid purchase to unlock something,

00:12:19 ◼   ► what do you unlock?

00:12:20 ◼   ► Like the nine button?

00:12:22 ◼   ► Like it's hard, it's like certain apps are just hard

00:12:25 ◼   ► figure out where to place that barrier in a way that the app isn't totally useless

00:12:30 ◼   ► without it, but that enough people will hit that barrier and be motivated to pay. And

00:12:35 ◼   ► certain apps, the answer is just this doesn't fit well and there isn't a good place for

00:12:39 ◼   ► it. And certain apps, you know, there are plenty of places for it and the question is

00:12:43 ◼   ► where do you put it? And so in this case, do you think there's a good spot to have

00:12:48 ◼   ► a paid unlock? Like there's a good feature or set of features or limit that can be removed

00:12:53 ◼   ► where enough people will hit that and want to pay, but they won't hit you because it's

00:12:59 ◼   ► so annoying every time they hit it.

00:13:01 ◼   ► The only one that comes to mind for an app like this is to do some kind of artificial

00:13:07 ◼   ► limit on the amount of data that it will display. So you'd have something, you know, it's sort

00:13:14 ◼   ► of like, in the same way like pedometer++, like it shows you historical data, it would

00:13:18 ◼   ► be like, "You can only see the current week." "Unlock to see all" kind of a thing is the

00:13:25 ◼   ► only thing that I could sort of see, because partitioning the feature set or the functionality

00:13:29 ◼   ► in other ways, it feels so contrived. It feels much more like the, yeah, you can do multiplication,

00:13:37 ◼   ► but you can't do division. It completely kind of removes the point of the app if you start

00:13:45 ◼   ► partitioning the features. And so the only thing I could ever really, I could ever kind

00:13:48 ◼   ► of imagine is to say like, "Hey, I'm only going to show you this amount of data. You

00:13:51 ◼   ► know, if you scroll beyond that, there'll be a little box that says, 'Hey, would you

00:13:54 ◼   ► like to see the rest of your data? You know, I'm holding it hostage for two dollars at

00:13:59 ◼   ► the bottom.'"

00:14:00 ◼   ► Yeah, and that's so tricky to do while also balancing like the user's will to pay you,

00:14:05 ◼   ► because it's so easy to just appear really stingy or annoying or cheap with what you

00:14:10 ◼   ► give them for free and what you don't. And if they don't feel good about your app,

00:14:15 ◼   ► they usually won't pay to get past that barrier. Some people still will and they will

00:14:19 ◼   ► hate you for it. I've done that before with some apps like, some apps were like,

00:14:23 ◼   ► "I really needed it to get my job done and they offered a free trial and I kept hitting

00:14:29 ◼   ► walls and I just, eventually I did pay in a lot of these cases and I, but I just felt

00:14:34 ◼   ► terrible. I felt like I hated them for it." And that kind of soured me on the whole company

00:14:38 ◼   ► on their future products or my experience with the app

00:14:42 ◼   ► or my willingness to recommend it to others.

00:14:44 ◼   ► So it's always a hard balance

00:14:45 ◼   ► whenever you have these barriers.

00:14:47 ◼   ► But that being said, if you have an app

00:14:50 ◼   ► where a barrier like this makes sense

00:14:53 ◼   ► and where you can find a good place for it

00:14:55 ◼   ► and you implement that well,

00:14:57 ◼   ► it usually is a really good way to make a reasonable living.

00:15:00 ◼   ► Like you can usually get decent income that way

00:15:04 ◼   ► without a lot of the problems of things like ads

00:15:07 ◼   ► or paid up front.

00:15:08 ◼   ► So usually that is great when it works,

00:15:11 ◼   ► but it is really hard to make it work.

00:15:13 ◼   ► - Yeah, and I think one thing that I always struggle with,

00:15:15 ◼   ► and I'm trying to think of this,

00:15:17 ◼   ► it's like, what am I communicating to my customer?

00:15:20 ◼   ► Because the hardest part, I think,

00:15:23 ◼   ► that you have to get over,

00:15:24 ◼   ► and a little bit I think you were alluding to it

00:15:25 ◼   ► for it makes you feel bad,

00:15:27 ◼   ► is when you say this part of the app is free,

00:15:32 ◼   ► like the initial part,

00:15:34 ◼   ► and typically it's like the core part,

00:15:36 ◼   ► like the main purpose of the app is free,

00:15:38 ◼   ► and then there's these extra things that are like cost more.

00:15:43 ◼   ► Like the weird thing that you have to keep in mind

00:15:47 ◼   ► is in some ways what you're communicating to your customer

00:15:49 ◼   ► is like the core part of the app is free

00:15:51 ◼   ► or in some ways you could like, it's not a great word

00:15:53 ◼   ► but it's more helpful for this analogy,

00:15:56 ◼   ► is like this part of the app is worthless.

00:15:59 ◼   ► And this other part somehow I'm saying is worthful

00:16:04 ◼   ► but if you look at those as a customer

00:16:08 ◼   ► they may look functionally identical, right?

00:16:11 ◼   ► You're saying like, the ability to do this X, Y, and Z

00:16:16 ◼   ► shouldn't cost you anything.

00:16:17 ◼   ► And I'm telling you that it shouldn't cost you anything

00:16:19 ◼   ► to do these things because I just gave you an app

00:16:22 ◼   ► that you downloaded for free that does those things.

00:16:24 ◼   ► So I've communicated to you, this is worthless.

00:16:28 ◼   ► But this other thing that is essentially probably

00:16:31 ◼   ► very similar to the other thing,

00:16:33 ◼   ► and is in many ways a contrived barrier,

00:16:37 ◼   ► like somehow should be valuable.

00:16:39 ◼   ► And like there's a dissidence there

00:16:40 ◼   ► that I feel like is where it gets really hard.

00:16:42 ◼   ► Like you can only really make the case

00:16:44 ◼   ► for unlocking something when the thing that you're paying

00:16:48 ◼   ► is like paying for feels different

00:16:52 ◼   ► and like completely orthogonal to the thing that you,

00:16:57 ◼   ► the core part of the thing that you gave away for free.

00:16:59 ◼   ► You know, so often you'll have something

00:17:01 ◼   ► where there's a physical cost associated with it.

00:17:04 ◼   ► like you're paying for storage or for a sink,

00:17:07 ◼   ► you know, to access sink or something where

00:17:11 ◼   ► it's not the thing that I gave you for free,

00:17:13 ◼   ► just, you know, like, it's something totally different

00:17:17 ◼   ► in a tangible way.

00:17:19 ◼   ► Because when you do that, I think maybe that's where

00:17:20 ◼   ► you can get around that feeling of like,

00:17:22 ◼   ► I feel bad about this, because I feel like

00:17:24 ◼   ► they're just kind of, you know, like being cheap

00:17:28 ◼   ► by, you know, creating this artificial limit.

00:17:31 ◼   ► It's tough too because when you put up a limit like that,

00:17:34 ◼   ► people will hit it and they will try to rationalize

00:17:38 ◼   ► not going past it.

00:17:39 ◼   ► So if you put up a limit and you say,

00:17:41 ◼   ► well, you can only see the last week of data or whatever,

00:17:44 ◼   ► you know, whatever limit you put up,

00:17:45 ◼   ► people are gonna hit that and they're first going to think,

00:17:48 ◼   ► well, I guess I don't need that, right?

00:17:50 ◼   ► Like they're gonna try to convince themselves

00:17:52 ◼   ► they don't need that because they don't really wanna pay.

00:17:55 ◼   ► So they're gonna try to say, well, you know what,

00:17:56 ◼   ► I can get along fine without that.

00:17:58 ◼   ► And even if they would enjoy the app more with that,

00:18:01 ◼   ► even if they would get their $2 or whatever

00:18:03 ◼   ► worth of enjoyment or value out of having gone

00:18:07 ◼   ► past that barrier, they will try very hard

00:18:09 ◼   ► to convince themselves, even if it's subconscious,

00:18:11 ◼   ► not to go past that barrier.

00:18:13 ◼   ► And so you'll have so many people who really could

00:18:16 ◼   ► use the app, who really could enjoy it a lot more

00:18:18 ◼   ► if they would pay the two bucks,

00:18:20 ◼   ► but who have convinced themselves they don't need to

00:18:22 ◼   ► because they would rather not.

00:18:24 ◼   ► And that's the issue I faced with Overcast.

00:18:26 ◼   ► That's one of the reasons I went patronage eventually.

00:18:28 ◼   ► It's just very hard, but I don't know.

00:18:29 ◼   ► And then we have a lot more better options,

00:18:32 ◼   ► or different options at least, including ads.

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00:20:17 ◼   ► So there's also ad supported apps.

00:20:19 ◼   ► To me, it sounds like it'd be a decent idea

00:20:22 ◼   ► 'cause it sounds like you get money

00:20:25 ◼   ► when the app is being used.

00:20:27 ◼   ► And no one has to decide whether to pay you or not,

00:20:30 ◼   ► because the ad is paying you automatically, effectively,

00:20:32 ◼   ► if they use the app.

00:20:34 ◼   ► And they can maybe pay to remove it or something,

00:20:35 ◼   ► and that's a separate discussion, which I'm sure we'll have,

00:20:38 ◼   ► but at the heart of it, you kind of automatically

00:20:40 ◼   ► just get money slowly with usage.

00:20:44 ◼   ► Of course, there's downsides in practice,

00:20:46 ◼   ► things like privacy concerns, annoyance concerns,

00:20:50 ◼   ► image concerns, what do you think about apps with ads?

00:20:53 ◼   ► Yeah, it's an uncomfortable-- if you may have noticed,

00:20:59 ◼   ► that was an uncomfortable intake of breath.

00:21:02 ◼   ► Because I don't like using apps that have ads in them,

00:21:07 ◼   ► but I make a substantial amount of my revenue from ads.

00:21:13 ◼   ► And there's a little bit of cognitive dissidence about that.

00:21:16 ◼   ► It's ultimately the pragmatic part

00:21:18 ◼   ► of this is the practical way to make revenue.

00:21:21 ◼   ► But the reality is, my app is never made better by having an ad in it.

00:21:28 ◼   ► It's not like, "Oh, wow, people will love it when they can see ads for Game of War or

00:21:37 ◼   ► Clash of Clans or whatever the latest free-to-play game is," which is essentially what most mobile

00:21:45 ◼   ► ads seem to be these days.

00:21:46 ◼   ► They're for one of those games, or they're for a big brand like Audible or Google or

00:21:50 ◼   ► or something like that.

00:21:52 ◼   ► And so putting those into my apps

00:21:55 ◼   ► always feels a little bit not great.

00:21:58 ◼   ► But the reality is, like you said, it works well,

00:22:04 ◼   ► and I like conceptually the fact that

00:22:08 ◼   ► I'm getting paid for use in a way that,

00:22:12 ◼   ► it's a really nice virtuous cycle.

00:22:14 ◼   ► I wanna make an app that's really engaging,

00:22:16 ◼   ► and you want to keep opening up and looking at, you know, if I'm showing you, you know,

00:22:21 ◼   ► help and fitness data, like, hopefully it's motivating. Hopefully it's something that

00:22:24 ◼   ► you want to go and check on a regular basis. And so aligning a business model with that,

00:22:29 ◼   ► where it is something that the more you use it, the more money I make, like, is great.

00:22:34 ◼   ► And in some ways, it makes me think of the way that, like, I almost kind of wish that

00:22:39 ◼   ► that there was a mechanism kind of like what musicians

00:22:44 ◼   ► have with streaming services.

00:22:47 ◼   ► Oh, you don't want that.

00:22:48 ◼   ► Not necessarily.

00:22:49 ◼   ► Well, conceptually I do.

00:22:50 ◼   ► I don't necessarily-- it breaks down in certain ways,

00:22:53 ◼   ► obviously, like all these things do.

00:22:54 ◼   ► But conceptually--

00:22:55 ◼   ► Just add a bunch of zeros to the number, basically.

00:22:57 ◼   ► Then we want that version of it.

00:22:59 ◼   ► That version.

00:22:59 ◼   ► That version would be so great, right?

00:23:01 ◼   ► But conceptually, every time someone listens to the song,

00:23:04 ◼   ► they get a bit of money.

00:23:05 ◼   ► And if every time someone opens my app, I got a bit of money,

00:23:08 ◼   ► that would be great.

00:23:10 ◼   ► Like if such a thing sort of existed,

00:23:12 ◼   ► like if there was like, rather than Apple Music,

00:23:14 ◼   ► there was like Apple App,

00:23:16 ◼   ► and people paid a certain amount of money

00:23:18 ◼   ► and it was distributed around people

00:23:19 ◼   ► based on what they used or something, right?

00:23:21 ◼   ► Like you could imagine a system

00:23:22 ◼   ► that would sort of work in that way.

00:23:23 ◼   ► Like it's hugely problematic,

00:23:25 ◼   ► and I'm not really advocating for that,

00:23:27 ◼   ► but like conceptually, a version,

00:23:30 ◼   ► it would be like the business model that ads create,

00:23:33 ◼   ► but without the potential for kind of like not desirable

00:23:37 ◼   ► Yeah aesthetics in my apps. So like that would be great that doesn't exist. And so you end up with ads and

00:23:45 ◼   ► You ultimately I like I end up like most likely than not that's ultimately what I'll probably have to do is

00:23:50 ◼   ► I look at it and it's like, you know

00:23:52 ◼   ► If I have ads in this app

00:23:54 ◼   ► I will if it's successful if it's just downloaded wildly then I will likely you know

00:24:00 ◼   ► make a reasonable amount of semi reliable income from it and

00:24:03 ◼   ► And if it's sticky and people really like it

00:24:06 ◼   ► and keep coming back to it,

00:24:07 ◼   ► my revenue will continue to, if not grow,

00:24:10 ◼   ► at least stay stable in the long term, which is great.

00:24:13 ◼   ► See our episode about work-life balance that we just did

00:24:16 ◼   ► where I talked about the more you can make your income

00:24:20 ◼   ► kind of passive and not related to what you're doing,

00:24:23 ◼   ► the better.

00:24:24 ◼   ► And so ads are great for that

00:24:26 ◼   ► 'cause it's all based on work you've done in the past

00:24:29 ◼   ► continuing to pay you in the future.

00:24:31 ◼   ► I just wish it didn't make me feel so kind of like,

00:24:34 ◼   ► hmm, whenever I do it.

00:24:36 ◼   ► - Yeah, and it seems like with ads,

00:24:39 ◼   ► you could do something crazy like direct sales of ads,

00:24:42 ◼   ► but that's a lot of work.

00:24:44 ◼   ► It's the best for privacy maximization, really,

00:24:46 ◼   ► and it might be the classiest, but that's a ton of work.

00:24:49 ◼   ► And as you go down the rabbit hole,

00:24:51 ◼   ► I'm like, well, I could join a network,

00:24:53 ◼   ► and a small app network if that existed,

00:24:56 ◼   ► which I don't even know if it does.

00:24:58 ◼   ► But assuming that existed,

00:24:59 ◼   ► then we pool resources, selling ads is a little bit easier,

00:25:03 ◼   ► maybe I don't have to do it anymore,

00:25:04 ◼   ► or I can share a salesperson with somebody else.

00:25:07 ◼   ► And as you get further down, it's like,

00:25:08 ◼   ► well, all these things are a lot of work,

00:25:10 ◼   ► until you get down to the, well, I can just plug in

00:25:13 ◼   ► a module from a big ad provider,

00:25:16 ◼   ► where I might not have even dealt with a human at all

00:25:20 ◼   ► to be part of this thing, you're getting who knows what ads

00:25:23 ◼   ► from who knows where, and they're doing who knows what

00:25:25 ◼   ► with your customer's privacy and data.

00:25:28 ◼   ► But that's also the easiest for you.

00:25:30 ◼   ► And so with ads, the incentives are all towards

00:25:35 ◼   ► getting creepier and creepier because the easiest ways

00:25:38 ◼   ► to get into ads and the most accessible ways

00:25:40 ◼   ► to get into ads happen to also be the worst

00:25:43 ◼   ► about privacy and customer data in most cases.

00:25:45 ◼   ► Whereas anything better than that tends to take more work

00:25:49 ◼   ► than what most people can really devote to it.

00:25:51 ◼   ► - Exactly, and in my first ever foray into ads,

00:25:56 ◼   ► I did actually sell them direct.

00:25:57 ◼   ► This was way back early days at the App Store because ad networks didn't exist, and I would

00:26:04 ◼   ► sell ads to other app developers for very small amounts of money.

00:26:11 ◼   ► But that was the best you could do back then.

00:26:13 ◼   ► But now, yeah, you install iAd for the next couple of months, or AdMob from Google, or

00:26:21 ◼   ► any of the million things.

00:26:22 ◼   ► Like see our previous episode about ads, where there's so many networks and all kinds of

00:26:25 ◼   ► of things, and you just kind of put it in and, in theory,

00:26:30 ◼   ► and then money will start flowing, and that's great.

00:26:34 ◼   ► In some ways, this is an area, though,

00:26:35 ◼   ► like speaking of the last version of business model,

00:26:38 ◼   ► that probably doesn't really fit from what I do,

00:26:40 ◼   ► but is interesting nevertheless, is I am kind of envious

00:26:43 ◼   ► of venture-funded companies in this regard,

00:26:47 ◼   ► because they don't have a business model.

00:26:49 ◼   ► They don't need--

00:26:49 ◼   ► - Well, they have a different business model.

00:26:51 ◼   ► Their business model is get really huge

00:26:53 ◼   ► and worry about it later,

00:26:55 ◼   ► even though that usually means probably get bought

00:26:57 ◼   ► before we have to worry about it.

00:26:58 ◼   ► - Exactly.

00:26:59 ◼   ► - Which is a business model, just different from what we do.

00:27:01 ◼   ► - Yeah, and I look at that and I'm like,

00:27:02 ◼   ► in some ways that's actually kind of cool,

00:27:04 ◼   ► to be able to just say, you know what,

00:27:05 ◼   ► I'm just gonna focus on making something cool

00:27:08 ◼   ► and getting as many people as I can to use it.

00:27:11 ◼   ► And I don't need to worry about the financial part of that.

00:27:15 ◼   ► And in some ways, that's kind of interesting.

00:27:18 ◼   ► I definitely had the thought for something like this,

00:27:20 ◼   ► of saying, you know what, what if I just went,

00:27:23 ◼   ► took that tack and hope, you know, it's like,

00:27:26 ◼   ► MyFitnessPal got bought by Under Armour,

00:27:29 ◼   ► RunKeeper got bought by Asics.

00:27:31 ◼   ► At some point, if I was able to make a wildly successful

00:27:36 ◼   ► health and fitness app that could be picked up

00:27:39 ◼   ► by some other company for, you know,

00:27:41 ◼   ► and it's probably in some ways more money

00:27:43 ◼   ► than I could ever make from running AdMob ads

00:27:47 ◼   ► in an application.

00:27:48 ◼   ► Like, that sounds kind of interesting.

00:27:50 ◼   ► It's like the risk dynamic on that,

00:27:52 ◼   ► just like goes through the roof where it's like,

00:27:54 ◼   ► or I could end up with having made this cool thing

00:27:57 ◼   ► that ends up making me no money ever.

00:28:00 ◼   ► And that's kind of terrifying as well.

00:28:02 ◼   ► - Yeah, right.

00:28:03 ◼   ► All right, well, what do you think you're gonna do?

00:28:05 ◼   ► Have you come to any conclusions

00:28:07 ◼   ► or are you still gonna think about it?

00:28:09 ◼   ► - I'm still gonna think about it.

00:28:11 ◼   ► I'm probably gonna do,

00:28:12 ◼   ► like I think my default is gonna be ads.

00:28:15 ◼   ► Like I don't think paid works.

00:28:16 ◼   ► I don't think unlocking features really works.

00:28:19 ◼   ► Like I don't like the thought of.

00:28:20 ◼   ► - Right, and to clarify,

00:28:21 ◼   ► really works for this app on both of those.

00:28:23 ◼   ► - For this app, yeah, exactly.

00:28:24 ◼   ► The whole point of this discussion is like,

00:28:26 ◼   ► whether it works in this particular case,

00:28:28 ◼   ► and the reason we're going through it step by step

00:28:30 ◼   ► is that every app is different.

00:28:32 ◼   ► This is why this may or may not make sense for this app.

00:28:35 ◼   ► Ads are the easy thing.

00:28:38 ◼   ► I don't feel great about them,

00:28:39 ◼   ► but I think they are sort of the obvious

00:28:41 ◼   ► and straightforward choice.

00:28:42 ◼   ► I'll almost certainly have an option to remove the ads,

00:28:47 ◼   ► just in terms of that's often just, it makes me feel better.

00:28:50 ◼   ► Maybe it's like it's just like cleansing my conscience a little bit about not having

00:28:53 ◼   ► ads to say like, "If you don't like them, that's fine.

00:28:56 ◼   ► Then it's just a paid app and you can give me money and they'll go away."

00:29:00 ◼   ► And if I'm feeling particularly daring or a little bit reckless and wild, then maybe

00:29:04 ◼   ► I'd just make it free.

00:29:06 ◼   ► But being a one-person shop who pays my mortgage with the revenue from my apps, not having

00:29:12 ◼   ► any revenue does not seem particularly wise.

00:29:14 ◼   ► Yeah.

00:29:15 ◼   ► All right.

00:29:16 ◼   ► Well, that's all the time we have for today.

00:29:18 ◼   ► Thanks a lot to our sponsor, Hover, and we will talk to everybody next week.

00:29:22 ◼   ► Bye.

00:29:22 ◼   ► [BLANK_AUDIO]