Developing Perspective

#221: Circular Revenue.


00:00:00   Hello and welcome to Developing Perspective.

00:00:02   Developing Perspective is a podcast discussing news of note in iOS development, Apple and

00:00:06   the like.

00:00:07   I'm your host, David Smith.

00:00:08   I'm an independent iOS developer based in Herndon, Virginia.

00:00:10   This is show number 221.

00:00:12   Today is Friday, May 29th.

00:00:14   Developing Perspective was never longer than 15 minutes, so let's get started.

00:00:18   Okay, so the main topic that I had planned to talk about today is an extension of my

00:00:24   start to finish app series.

00:00:26   It's unfortunately still stuck in review.

00:00:29   It's not the app that I was talking about making, it's another app that I kind of threw

00:00:32   together as part of a kind of like behind the scenes thing I was working on and it has

00:00:37   now been in review for 11 days and so I was hoping to talk about it today but I am not.

00:00:43   So instead I'm going to talk a little bit about things I'm expecting for WWDC, some

00:00:46   things to kind of get ready for that as well as a topic that I've been trying to find a

00:00:51   place to sneak in and so I will be sneaking it in.

00:00:54   Alright, so WWDC is now I guess about 9 days away, something like that, 9-10 days from

00:01:02   now, which is pretty exciting.

00:01:04   I always love going to WWDC.

00:01:05   This will be I think my 7th consecutive year of being fortunate enough to go, and so that's

00:01:11   pretty exciting.

00:01:12   And to be able to have seen the development community around iOS and Mac and Apple develop

00:01:18   and change over that period, that's pretty cool.

00:01:22   The thing that I'm most excited about though,

00:01:24   beyond meeting lots of people,

00:01:26   getting to see a lot of friends and colleagues,

00:01:29   listeners, all kinds of people like that,

00:01:31   Apple engineers, like there's all kinds of people

00:01:32   that you get to meet at W2DC.

00:01:34   But beyond that, the thing that I'm most looking forward to

00:01:37   is that we will definitely have Watch Native applications.

00:01:41   Jeff Williams at the code conference,

00:01:43   one of the Apple executives announced that,

00:01:45   yes, we are definitely getting that next week,

00:01:49   or not next week, at W2DC.

00:01:52   And that's always exciting to me,

00:01:53   'cause they're certainly,

00:01:55   whenever they do those types of moves,

00:01:56   they're trying to set expectations,

00:01:58   make sure people aren't surprised

00:02:00   or aren't overwhelmed by what happens

00:02:05   when they actually do their announcements.

00:02:10   And so I'm excited to hear that.

00:02:11   Mostly I'm excited to hear that,

00:02:12   because I think it'll allow us to finally make,

00:02:14   watch apps that are really good,

00:02:17   like properly, genuinely awesome.

00:02:21   I spent a lot of time over the last six months working on WatchKit, and you can get a lot

00:02:25   done with it, but none of those applications really have the ability to be genuinely truly

00:02:32   good in the way that there's just some of the things that come out of the latency in

00:02:37   real life use, the latency between when you tap a button and it acts on it, it feels awkward.

00:02:46   And mostly, I think honestly, it feels awkward because you're comparing it to your phone,

00:02:49   which is ridiculously fast now,

00:02:52   and can do tremendous things.

00:02:53   The capabilities of like an iPhone 6 or 6 Plus

00:02:57   is really, really powerful.

00:02:59   And so when you go to a device

00:03:01   that feels different than that,

00:03:02   it is more frustrating.

00:03:04   In the same way that I'm sure if we pulled out

00:03:05   a first gen iPhone or an iPhone 3G or something like that,

00:03:09   it would feel weird and awkward.

00:03:12   And eventually you may get used to it,

00:03:13   but it's tricky if you're going back and forth

00:03:16   to something more capable.

00:03:17   And so I'm really excited that we're gonna have

00:03:18   native watch apps.

00:03:20   It's going to be really interesting, certainly during WWDC, because I'll probably need to

00:03:25   install iOS 9 Beta 1, or whatever they call it, during the week, because I'm going to

00:03:33   be wanting to test and try out and work with all the new stuff, which will be interesting,

00:03:39   both in terms of I'll have to probably update an iPhone as well as my watch to that.

00:03:44   installing beta first betas is always a little bit dangerous so I would

00:03:49   definitely be bringing a backup phone for the week should something go horribly

00:03:53   wrong but it's also kind of exciting to be able to go out and play and like

00:03:56   build stuff and you hope presumably take the applications I've built and update

00:04:00   them to that and things that I'm most curious about though on native apps and

00:04:05   this is coming a lot from my experience in watch kit is how they're gonna handle

00:04:10   moving data around between the watch and the phone.

00:04:14   I think that is the area that currently,

00:04:17   especially in general in extensions,

00:04:19   is getting feels a little bit awkward and hacked,

00:04:23   and would be something that I think iOS 9

00:04:25   will probably address more strongly.

00:04:29   Things like when we're sending Darwin notifications

00:04:31   back and forth as ways of updating the state,

00:04:34   something's gone horribly wrong,

00:04:35   because that feature is not intended to be doing

00:04:38   what it is that it's doing.

00:04:39   I don't think that's what it was built for.

00:04:41   That's not, I don't think, what Apple intended.

00:04:43   It's a very old API.

00:04:45   And so the fact that it works is kind of cool,

00:04:48   but probably isn't good.

00:04:50   And so that's something I expect to see in iOS 9.

00:04:52   And as she's talking about in iOS 9,

00:04:54   I thought I had yesterday watching the Google I/O keynote

00:04:57   where they talk about how Android M is going to be

00:05:00   a bit more of a maintenance release, a bit more cleanup.

00:05:04   A lot of what their focus seemed to be

00:05:07   seemed to be talking about bug fixing

00:05:09   and making things more stable.

00:05:11   And we've fixed thousands and thousands of bugs.

00:05:14   And seeing them do that,

00:05:16   well, I don't think that can obviously,

00:05:18   that can influence what Apple is going to be presenting

00:05:21   in 10 days because obviously they've been working on that

00:05:24   for years or for at least a year, if not more.

00:05:26   What it does, I think, is give them some nice marketing

00:05:29   cover in terms of if iOS 9 is more of a maintenance release,

00:05:33   is more of a we're doing lots of plumbing changes and lots

00:05:37   of fixing things and trying to make a lot of quality of life

00:05:40   improvements to the platform rather than introducing

00:05:43   massive and radical overhauls of things.

00:05:46   Because it's like Android's doing the same thing.

00:05:49   Like it might just be that's the cycle

00:05:51   that we've kind of hit the point in maturity

00:05:53   where that's what makes sense to do this year.

00:05:55   And as a developer, that makes me excited.

00:05:57   If they do a lot of these little plumbing changes and fixes

00:06:00   and things that make the platform more stable,

00:06:03   easier to develop with, and just in general,

00:06:07   better for everybody, that sounds great.

00:06:09   I'm sure they're gonna have some cool, fun,

00:06:10   and exciting things, they always do.

00:06:13   And I've gotta say, one of the things

00:06:15   that I enjoy most about my job is that feeling

00:06:18   of sitting in a WWDC keynote room,

00:06:22   waiting for them to just come out

00:06:26   and who knows what's gonna happen.

00:06:28   It's like last year we had Swift,

00:06:29   kind of just like out of nowhere.

00:06:30   It's like, here's a new programming language.

00:06:32   And who knows what the series is, you know?

00:06:34   It's like, you just never know what they're going to announce

00:06:37   and where that's gonna go.

00:06:38   And so it's kind of fun to go and do that.

00:06:41   And I look forward to it.

00:06:42   And I also look forward to,

00:06:43   like I think I've mentioned over the last couple of episodes

00:06:46   that I always love meeting people when I'm out there.

00:06:49   So if you would like to meet me,

00:06:51   by all means, try and find me, reach out to me, whatever.

00:06:54   Coordinating things ahead of time

00:06:55   is always a bit awkward at WDC week

00:06:57   because plans tend to be very fluid.

00:06:59   But nevertheless, if I see you, you see me, by all means say hi.

00:07:04   I said if you're wearing any of the Developing Perspective

00:07:06   shirts over the last couple of years,

00:07:08   I will definitely try and seek you out if at all possible.

00:07:11   And otherwise, I look forward to seeing you there.

00:07:14   So the main topic, though, or the other topic

00:07:16   that I wanted to talk about today

00:07:17   is something that's a thought that's

00:07:19   been kind of mulling around in my brain for a while,

00:07:22   that I didn't ever have thought of a great venue for it.

00:07:26   And because the thing that I was playing through today

00:07:28   still in review, I thought, well, I'll just dive into it.

00:07:33   This is a great opportunity, not like as a filler, but as something that exists, a topic

00:07:36   that kind of stands on its own.

00:07:39   And really what it's about is the current state of mobile advertising.

00:07:46   So I'm making a non-insubstantial amount of my revenue for my business from advertising.

00:07:51   A lot of my apps are free with ads, often with free with ads plus in-app purchase.

00:07:56   you know, do any purchase, the ads go away type of a thing.

00:07:59   Like it's a fairly standard model that I think you see in a lot of applications.

00:08:03   And it's a model that I found to be relatively effective that, you know,

00:08:09   being charging for something up front can work and I'm glad that some of my apps do it.

00:08:13   But it also closes off your applications to a large swath of users.

00:08:18   And so it can be awkward.

00:08:20   And especially also the thing that I like about advertising is that it is, in my experience,

00:08:25   tends to have better longevity.

00:08:29   Insofar as I don't have to worry about the questions of upgrade

00:08:34   pricing and those types of things, I didn't just put--

00:08:40   my incentive is just to keep people in the application

00:08:42   and keep them using it, keep it useful to them.

00:08:45   And I don't have to have these weird discussions in my head

00:08:47   about, well, do I need to somehow do a paid upgrade?

00:08:50   Because if they bought up front and I

00:08:51   have no other venue of getting revenue from them,

00:08:53   then they're just like, that's awkward.

00:08:56   And I like that the in-app purchase model,

00:08:59   the advertising model has,

00:09:01   in some ways is a subscription.

00:09:02   It's just a subscription that the user isn't paying for,

00:09:05   which I don't want to get into all the, you know,

00:09:07   there's all, it's nuanced and complicated,

00:09:09   but in general, I like that feeling.

00:09:12   But something that I've noticed about

00:09:14   home-built advertising recently is it seems like

00:09:17   it is increasingly becoming a,

00:09:20   like a snake chasing and biting its tail.

00:09:22   Like, there's a very circular and closed nature to it that when I open any almost any application

00:09:28   that includes advertising, the number of products and applications that are being advertised

00:09:34   in there is very small and very narrow.

00:09:37   If you open up like in preparation for this, I opened up an application with iAds in it

00:09:41   and I just sat there watching it for five, 10 minutes as it flipped over.

00:09:45   And all I got ads for were Game of War, Clash of Clans, and Google.

00:09:50   That's it.

00:09:51   kept cycling between those three.

00:09:53   And maybe, you know, they're just their ad targeting system

00:09:56   and it thinks that I'm a great candidate for Google,

00:09:58   Clash of Clans, and Game of War,

00:10:01   which probably isn't actually right.

00:10:02   But anyway, the fact is that's all I was seeing.

00:10:06   And whenever I see something like that,

00:10:08   like whenever it becomes very like monocultural-ish,

00:10:12   it makes me a little nervous.

00:10:14   As someone who makes money from advertising,

00:10:16   like that's a little awkward.

00:10:18   And the reason it makes me awkward

00:10:19   And the thing that it got me thinking about

00:10:21   is an observation I remember someone making

00:10:23   about the original dot-com bubble.

00:10:26   And there was something that they'd noticed

00:10:29   that had happened a lot in that time

00:10:32   was a lot of the activity and the apparent sustainability

00:10:36   and revenue and things that was coming

00:10:38   from a lot of these dot-com companies

00:10:40   was actually just a cycle inside

00:10:44   of these kind of these new dot-com companies

00:10:49   sort of moving money between themselves.

00:10:51   Where company A would buy services or advertising

00:10:55   or something from company B,

00:10:56   company B would do the same from company C,

00:10:58   company C would do the same from company A,

00:11:01   to grossly simplify it.

00:11:02   But you'd end up with these circles

00:11:04   where a lot of money's moving around,

00:11:06   but it isn't actually generating new and novel value.

00:11:10   Like it's just some type of investor

00:11:14   put money in at the beginning,

00:11:15   and it just sits there cycling around,

00:11:17   sort of almost like a bureaucracy in that way.

00:11:19   Like, you can just keep cycling this money around and around,

00:11:22   and it looks superficially that all these companies are having

00:11:27   ever-increasing revenues.

00:11:28   That they're growing, there's lots of money flowing around,

00:11:30   it looks great, right?

00:11:32   But as long as the degree to which that is a closed cycle

00:11:37   is the degree to which that that is extraordinarily precarious.

00:11:40   Because if at any point, along that circle,

00:11:44   if one of the companies has a problem

00:11:46   and pulls out or breaks that cycle,

00:11:49   then suddenly it very quickly runs dry

00:11:52   because it's not coming,

00:11:54   the health and vitality of it isn't coming from the outside,

00:11:57   it's sort of just internal.

00:12:00   And so when I see that most advertising

00:12:02   seems to be coming from these very few products,

00:12:04   these very few games,

00:12:05   and especially in a very narrow industry,

00:12:08   that's worrying to me,

00:12:09   just as someone who makes their money from advertising.

00:12:12   And I will certainly confess that it is a bit odd to me

00:12:15   that I make a substantial portion of my money

00:12:17   from free-to-play games,

00:12:18   because they're the people who are buying ads

00:12:22   in my applications, and that's a bit weird and a bit odd

00:12:25   and something that I kind of wrestle with sometimes,

00:12:28   but the reality is they're, at this point,

00:12:30   they're willing to pay quite a lot of money

00:12:32   to put their ads in front of my users,

00:12:35   and it's hard to say no to that.

00:12:38   So I worry, though, at some point,

00:12:41   if Clash of Clans or Game of War

00:12:44   suddenly has, I think most of these companies

00:12:46   are fairly investor driven.

00:12:48   If at some point their money runs out

00:12:50   and their funding runs out,

00:12:51   or they have to scale back in some way,

00:12:53   what that will do to mobile advertising rates.

00:12:56   'Cause I remember when I had was first introduced

00:12:59   and this was four or five years ago,

00:13:02   Apple's, they started off the platform

00:13:05   almost entirely as trying to be a big brand thing.

00:13:08   Like, the first ads were for the Nissan Leaf and Coca-Cola

00:13:13   and products like that, like Dove, I think,

00:13:15   had a campaign for a while, like big national brands.

00:13:18   And it seems like that didn't quite work out for them.

00:13:22   In the long run, what happened is that it's become a user

00:13:26   acquisition platform, that it's a way to try and get people

00:13:29   out of one app and into another.

00:13:31   And that's just weird.

00:13:33   And that circular nature of it makes me nervous.

00:13:36   And it certainly is encouraging to me in terms of my business

00:13:39   is very-- I've intentionally diversified dramatically.

00:13:42   So advertising is a substantial,

00:13:44   but not the only way that I make my money.

00:13:45   I make a lot of my money from subscriptions,

00:13:48   from paid upfront, from in-app purchase.

00:13:51   There's a variety of things that I do

00:13:52   so that it's not like if one day this happens,

00:13:55   I would suddenly be in a really bad spot.

00:13:58   But it's definitely something that I worry about

00:13:59   and I think about as I see what's the nature

00:14:03   of the store as it is now.

00:14:04   And it's a weird place to find ourselves.

00:14:07   And it's just something I wanted to mention and talk about.

00:14:09   I don't have some grandiose conclusion to make,

00:14:12   but it's an observation that I thought was interesting

00:14:14   that some of these things in the store

00:14:17   may be more precarious than they may superficially look.

00:14:20   When we look at the grossing charts and we see,

00:14:22   oh wow, these games are making tons and tons of money,

00:14:25   what is the cost that they are having to spend

00:14:27   to make that money and is that sustainable?

00:14:31   All right, that's it for today's show.

00:14:32   As always, if you have questions, comments,

00:14:33   concerns, or complaints,

00:14:35   I'm @_davidsmith on Twitter.

00:14:36   You can find me there or email me,

00:14:38   at developingperspective.com. Otherwise, I hope you have a great week. Happy coding and

00:14:42   safe travels if you're at WWDC and I look forward to seeing you there. Bye.