Developing Perspective

00:00:00 ◼   ► Hello and welcome to Developing Perspective. Developing Perspective is a podcast discussing

00:00:03 ◼   ► news of note, and I have a development, Apple and the like. I'm your host, David Smith. I'm

00:00:08 ◼   ► an independent iOS developer based in Herndon, Virginia. This is show number 218. Today is Friday,

00:00:13 ◼   ► May 8th. Developing Perspective is never longer than 15 minutes. So let's get started. Okay,

00:00:19 ◼   ► before I dive into the main topic today, just a quick reminder. If you would like a Developing

00:00:23 ◼   ► Perspective t-shirt this year, with an absolutely dashing blue with words, happy coding on the front

00:00:29 ◼   ► You can still do that.

00:00:31 ◼   ► There's about a week left to order.

00:00:32 ◼   ► There's a link in the show notes,

00:00:34 ◼   ► or you can go to teespring.com/happycoding.

00:00:37 ◼   ► All right, the topic I'm going to be diving into today

00:00:41 ◼   ► is the question about sustainable revenue, I guess,

00:00:46 ◼   ► and revenue in the App Store.

00:00:48 ◼   ► And this old perennial topic that I have addressed

00:00:50 ◼   ► many times on the show, but has recently

00:00:53 ◼   ► has come back to the surface again, as it always does.

00:00:56 ◼   ► And it always probably will.

00:00:57 ◼   ► That's a very, very core part of making a living doing something is understanding the

00:01:03 ◼   ► dynamics around making a living from something and the financial part of that.

00:01:08 ◼   ► And there's a whole bunch of links in the show notes.

00:01:10 ◼   ► And now if you aren't, if you're interested in this topic and there's things in the show

00:01:15 ◼   ► notes that you haven't read, I highly recommend just kind of going through and skimming them.

00:01:18 ◼   ► There's a lot of really good articles, a lot of really interesting information that has

00:01:21 ◼   ► come out in the last couple of weeks that is very helpful in trying to gather a good

00:01:26 ◼   ► snapshot of where we are in the App Store as developers.

00:01:30 ◼   ► And I'm going to start off by mentioning the thing

00:01:32 ◼   ► that Tim Cook said in the earnings call

00:01:36 ◼   ► that he did a few weeks ago, where he said,

00:01:39 ◼   ► the App Store has had its best quarter ever,

00:01:41 ◼   ► with a record number of customers making purchases,

00:01:43 ◼   ► driving a new record for revenue,

00:01:45 ◼   ► and 29% year-on-year growth.

00:01:50 ◼   ► Wow.

00:01:51 ◼   ► That sounds great, right?

00:01:52 ◼   ► 29% year-on-year growth in revenue in the App Store?

00:01:56 ◼   ► Like, that sounds like a really, really cool thing

00:01:59 ◼   ► as someone who makes my living there.

00:02:01 ◼   ► That's, of course, contrasted with a lot of other stories

00:02:04 ◼   ► we heard over the last week.

00:02:06 ◼   ► There was a discussion about the Mac App Store,

00:02:09 ◼   ► which is somewhat different than the iOS store in a lot of ways.

00:02:12 ◼   ► It was prompted by Sam Sophis, who

00:02:13 ◼   ► was talking about the launch of his app ReadRedacted, which

00:02:18 ◼   ► had a pretty good launch, launched

00:02:19 ◼   ► pretty high in the charts.

00:02:20 ◼   ► But the revenue that that generated

00:02:22 ◼   ► was surprisingly low.

00:02:24 ◼   ► And there's been a few other people

00:02:25 ◼   ► who've shared a link in the show notes to RealMax,

00:02:29 ◼   ► who posted some details about how their rankings compared

00:02:32 ◼   ► to sales in both the iOS and Mac App Store.

00:02:36 ◼   ► And generally, the picture you get is that being well ranked

00:02:40 ◼   ► and top paid is not nearly what it used to be

00:02:45 ◼   ► and is not necessarily great from a revenue perspective.

00:02:50 ◼   ► It's not necessarily surprising.

00:02:51 ◼   ► I think we've all known for a very long time

00:02:54 ◼   ► that being in top free or top gross paid

00:02:57 ◼   ► isn't particularly interesting.

00:02:59 ◼   ► What's interesting in some ways is

00:03:01 ◼   ► where you are on grossing in terms of the actual money

00:03:04 ◼   ► that you're making.

00:03:05 ◼   ► Now, obviously, top grossing is completely

00:03:08 ◼   ► dominated at this point at the high end

00:03:11 ◼   ► by things like free to play games,

00:03:13 ◼   ► by Candy Crush, Clash of Clans, Game of War, whatever.

00:03:18 ◼   ► I don't really play these games.

00:03:19 ◼   ► I don't know all their names.

00:03:20 ◼   ► But there's lots of these types of games

00:03:22 ◼   ► that are these sort of these free to play things where you buy, I don't know, gems and

00:03:27 ◼   ► smurf berries and stuff like that.

00:03:31 ◼   ► And it, you can pour an unlimited amount of money into it.

00:03:35 ◼   ► And they're designed in a variety of sometimes kind of sketchy ways to create, you know,

00:03:42 ◼   ► kind of addictive or at least compulsive behaviors.

00:03:46 ◼   ► And that's kind of tricky.

00:03:47 ◼   ► And that's a whole topic that I've talked about before.

00:03:49 ◼   ► And I'm not going to really dive into now.

00:03:50 ◼   ► But that's where the majority of that revenue

00:03:53 ◼   ► that Tim was talking about, that 29% year on year growth,

00:03:56 ◼   ► is going into those types of games.

00:03:58 ◼   ► And in many ways, that makes sense, simply

00:04:01 ◼   ► because they're a platform where there

00:04:04 ◼   ► is an unlimited amount of money that can go into it,

00:04:07 ◼   ► because consumable in-app purchase is, by its nature,

00:04:11 ◼   ► never-ending.

00:04:12 ◼   ► Whereas the types of revenue that most--

00:04:16 ◼   ► whatever you want to call it-- classic software developers,

00:04:19 ◼   ► utilities, people who make applications like that,

00:04:22 ◼   ► very rarely have consumable in-app purchase in them.

00:04:25 ◼   ► There are some, certainly, and even

00:04:26 ◼   ► pedometer++, one of my own applications

00:04:28 ◼   ► has a tip jar, which is a consumable in-app purchase.

00:04:30 ◼   ► So I'm not saying it's exclusively something

00:04:31 ◼   ► that's happening in games.

00:04:33 ◼   ► But by and large, whenever you don't place a limit

00:04:39 ◼   ► on the size of the revenue that you

00:04:41 ◼   ► can get from an application, from an individual user,

00:04:44 ◼   ► there's more and more possibility for it to grow.

00:04:47 ◼   ► And we're seeing that.

00:04:49 ◼   ► And I think the amazing quarters that the iPhone has had

00:04:52 ◼   ► recently in terms of sales has definitely, I'm sure,

00:04:57 ◼   ► spurred this on where more and more people have phones.

00:05:01 ◼   ► And more people have phones, more people

00:05:03 ◼   ► can download apps, et cetera.

00:05:05 ◼   ► And so that's kind of what we're seeing.

00:05:09 ◼   ► But obviously, that is only somewhat helpful

00:05:12 ◼   ► as somebody like myself who makes

00:05:14 ◼   ► their living from the App Store to know kind of what's

00:05:17 ◼   ► going on on the high end.

00:05:19 ◼   ► I'm nowhere near the top grossing chart in the App Store.

00:05:23 ◼   ► That's not somewhere that I hang out, and I'm OK with that.

00:05:26 ◼   ► That's fine.

00:05:29 ◼   ► But what does that mean for me as I'm

00:05:30 ◼   ► trying to build a business, or keep and maintain

00:05:33 ◼   ► a business on this platform?

00:05:35 ◼   ► Some interesting stats that I thought

00:05:37 ◼   ► were kind of interesting in terms

00:05:38 ◼   ► of giving some context for where I was going

00:05:41 ◼   ► is I looked up in April, so in the last month,

00:05:46 ◼   ► how many apps were added to the App Store.

00:05:49 ◼   ► And according to the Pocket Gamer biz,

00:05:53 ◼   ► they have a metric site that I'll link in the show notes to.

00:05:55 ◼   ► In April, 1,561 apps were added to the App Store every day,

00:06:01 ◼   ► on average.

00:06:02 ◼   ► In the whole month, that was about 36,000 non-games

00:06:07 ◼   ► and about 12,500 games, for a grand total of just over 48,000

00:06:13 ◼   ► applications, which is a lot. The fact that that pace is continuing, in spite of the challenges

00:06:23 ◼   ► on the financial side, is in and of itself kind of remarkable. When it speaks, I think,

00:06:28 ◼   ► to the the the comparative low barrier to entry that I think app developers face these

00:06:37 ◼   ► days, that developing on this platform has gotten to a point that it is very mature and

00:06:42 ◼   ► very relatively straightforward.

00:06:46 ◼   ► That there was a time, I remember when I first got started, and I was in this boat myself,

00:06:53 ◼   ► just learning Objective-C and learning COCO and learning how to build an application,

00:06:58 ◼   ► how to use Xcode and code signing and all these things were genuinely difficult, were

00:07:03 ◼   ► genuinely hard problems that I had to work through to even get to the point of submitting

00:07:08 ◼   ► something and put it on the store.

00:07:10 ◼   ► At this point, while it's not like the tools are perfect

00:07:14 ◼   ► or the tutorials or the documentation or things

00:07:16 ◼   ► are without fault, things are pretty stable.

00:07:20 ◼   ► Things are very straightforward.

00:07:23 ◼   ► If you have an app idea and you want to build it,

00:07:26 ◼   ► that process is much more straightforward now,

00:07:28 ◼   ► in some ways, than it has ever been.

00:07:31 ◼   ► I would say the bar for making a really good application

00:07:35 ◼   ► has probably gone up because of the complexities we now face

00:07:38 ◼   ► and how many-- if you want to build an application that spans

00:07:42 ◼   ► from Apple Watch, iPhone, iPad, all the different sizes

00:07:46 ◼   ► of iPhone, maybe with some syncing,

00:07:49 ◼   ► all these things that go into a typical application these days,

00:07:53 ◼   ► the bar is higher.

00:07:54 ◼   ► But the bar for just putting something together

00:07:56 ◼   ► and putting it on the store is probably lower

00:07:59 ◼   ► than it has ever been.

00:08:00 ◼   ► And so we're seeing tremendous growth

00:08:01 ◼   ► in terms of even just the number of apps.

00:08:03 ◼   ► In that same report, there's something like 1.6 million

00:08:06 ◼   ► applications on the App Store at this point, which is almost

00:08:11 ◼   ► staggering to think about.

00:08:13 ◼   ► If you think about how long it would take to even just go

00:08:17 ◼   ► to the App Store and download them all-- that was your goal.

00:08:20 ◼   ► You're just going to go to the App Store app,

00:08:22 ◼   ► and I'm going to download every single application.

00:08:24 ◼   ► That would probably be insane.

00:08:25 ◼   ► But I don't know if you could reasonably--

00:08:28 ◼   ► you couldn't reasonably do that over the course probably

00:08:31 ◼   ► of a year, of two years.

00:08:32 ◼   ► I don't even know how many hours it would take to sit there

00:08:35 ◼   ► and physically download every application.

00:08:37 ◼   ► The store is vast.

00:08:39 ◼   ► Even if you just wanted to load the description page

00:08:41 ◼   ► and look at every application in the store,

00:08:43 ◼   ► it would take forever.

00:08:45 ◼   ► So the store is vast.

00:08:49 ◼   ► It's growing every day at a pace that is remarkable

00:08:52 ◼   ► and does not seem to be slowing down.

00:08:53 ◼   ► If anything, the pace at which the apps are being submitted

00:08:56 ◼   ► to the store is probably growing.

00:08:58 ◼   ► Revenue on the high end continues

00:09:01 ◼   ► to grow and grow and grow.

00:09:05 ◼   ► And so where does that leave us?

00:09:07 ◼   ► I make my living from the App Store.

00:09:08 ◼   ► I have for many years.

00:09:11 ◼   ► That is where I make my primary living, from the money that

00:09:13 ◼   ► comes in from the applications that I put on the iOS App

00:09:16 ◼   ► Store.

00:09:17 ◼   ► That's my primary source of revenue.

00:09:19 ◼   ► And it is lower now than it has been in a while.

00:09:24 ◼   ► But the interesting thing is that it is somewhat stable.

00:09:28 ◼   ► The funny thing that it's easy to get

00:09:30 ◼   ► lost in what's going on on the high end

00:09:34 ◼   ► is the degree to which it is somewhat still stable on the low end. The bottom hasn't fallen

00:09:41 ◼   ► out in my experience. It's not one of these things where we are seeing month after month

00:09:46 ◼   ► just catastrophic reductions in income. It's a very gradual, slow process where over time,

00:09:56 ◼   ► you know, revenue from each of my applications is going down for the most part, with occasional

00:10:01 ◼   ► exceptions. But in general, it's going down. And it's always been doing that.

00:10:06 ◼   ► Back from, you know, from, from back several years ago, I probably you may have heard me talk

00:10:13 ◼   ► about the way in which I, you know, probably three or four years ago decided to I was going to need

00:10:17 ◼   ► to structure my business where every year I need to add one new thing, sort of on top of the layer

00:10:24 ◼   ► cake that is my portfolio. That's the way that I make, I'm able to make a sustainable living every

00:10:30 ◼   ► year, the existing applications that I have in the store make a little bit less and less,

00:10:35 ◼   ► and so it compresses down. And so every year I add something on top, and that bolsters

00:10:41 ◼   ► things a little bit, and then it'll slowly compress more and more, and so on and so on.

00:10:45 ◼   ► But the approach works, and I've talked about it at length. That's why I have so many applications,

00:10:50 ◼   ► and yet I've still been able to keep doing what I'm doing.

00:10:54 ◼   ► But I'm starting to feel, and this is why I thought it would be interesting to actually

00:10:58 ◼   ► talk about this today, that even that process is perhaps even changing somewhat subtly.

00:11:04 ◼   ► And there's an article that I wrote, which is hopefully interesting for you to read,

00:11:10 ◼   ► which I'll have a link to in the show notes, called "Learning to Ride a Bicycle Again."

00:11:13 ◼   ► And the actual premise of the article got started from this video where someone learned

00:11:17 ◼   ► to ride a backwards bicycle.

00:11:20 ◼   ► And that process of training yourself to ride something like-- running a bicycle is something

00:11:25 ◼   ► that we kind of do naturally after you have learned to do it.

00:11:27 ◼   ► But if you take a bicycle and you put gears on the handlebars, so when you turn to the

00:11:31 ◼   ► left, the wheel actually turns to the right, it's basically impossible to ride without

00:11:36 ◼   ► retraining your brain.

00:11:38 ◼   ► You have all these built-in assumptions, all these built-in biases, all these things that

00:11:41 ◼   ► you expect to happen that suddenly don't, and you can't necessarily be aware of them

00:11:46 ◼   ► until you're put in a situation where what you were doing before no longer works.

00:11:50 ◼   ► And I thought that was an interesting parallel for where I think I find myself.

00:11:55 ◼   ► the lesson that I thought would be good as sort of the culmination of this discussion

00:11:58 ◼   ► today, I'm increasingly of the opinion that I need to be ever more open-minded about the

00:12:07 ◼   ► approaches and the expectations that I have for making my living in the App Store, whether

00:12:13 ◼   ► or not even that is what I continue to do.

00:12:17 ◼   ► I think the problem I run into now, having been doing this for so long, is that there

00:12:23 ◼   ► There is, oh, I have certain expectations for how the App Store works.

00:12:27 ◼   ► What is important?

00:12:28 ◼   ► What is not important?

00:12:29 ◼   ► What are the things that go into making a sustainable living?

00:12:33 ◼   ► What are the things that go into building an application in the first place?

00:12:38 ◼   ► And I'm not sure if the App Store that I have in my mental model is actually the App Store

00:12:42 ◼   ► that is currently in existence.

00:12:45 ◼   ► I think the App Store and the typical users of it, the expectations of those users and

00:12:50 ◼   ► the ways in which those users expect to part with their money are different.

00:12:55 ◼   ► And it's a gradual process, but it is something that I think is transitioned in a way that

00:13:02 ◼   ► I am now, I'm still trying to ride the old App Store bicycle, but the bicycle that I'm

00:13:08 ◼   ► riding is now backwards.

00:13:10 ◼   ► It's different.

00:13:11 ◼   ► And exactly all of those ways are hard to unpack in the two minutes that I've left on

00:13:16 ◼   ► the show, and I probably will over the next however many episodes, maybe I'll talk about

00:13:20 ◼   ► it.

00:13:21 ◼   ► But the thing that I'm struck by is I think I need to be more shrewd, maybe is the right

00:13:28 ◼   ► word for it, and look at what I'm doing in a bit less, slightly less, I hate to use the

00:13:35 ◼   ► word artistic, artisanal or something like that.

00:13:39 ◼   ► But a lot of what I am coming from is a background where that was kind of the approach that you

00:13:43 ◼   ► took, that you are trying to make things, you're trying to

00:13:47 ◼   ► Google is to make great things. And those great things will find

00:13:50 ◼   ► their audience because they are great. And as I said, it's a bit

00:13:53 ◼   ► highfalutin. And I'm not sure I've made truly great things.

00:13:57 ◼   ► But that was sort of the goal and the expectation. But I think

00:14:00 ◼   ► the reality of the App Store now is that there is a much stronger

00:14:03 ◼   ► urgency around business around advertising and cost management,

00:14:09 ◼   ► and me being worried both on the revenue and the expense side of

00:14:12 ◼   ► of my business, those kinds of things.

00:14:15 ◼   ► And looking in very detailed ways at customer acquisition

00:14:19 ◼   ► and the costs associated with that.

00:14:20 ◼   ► I'm delighted that we finally got iTunes Analytics.

00:14:23 ◼   ► And I've only just barely seen the tip of the iceberg

00:14:25 ◼   ► in terms of the information I can get out of that.

00:14:27 ◼   ► But I think that is the perspective and the direction

00:14:30 ◼   ► that I need to head to make sure that I'm

00:14:32 ◼   ► going to stay relevant and I'm going

00:14:33 ◼   ► to be able to continue to do what it is that I love to do.

00:14:37 ◼   ► All right.

00:14:38 ◼   ► That's it for today's show.

00:14:39 ◼   ► As always, if you have questions, comments, concerns,

00:14:40 ◼   ► or complaints, you can find me on Twitter.

00:14:42 ◼   ► underscore David Smith there. You can email me at David at developing perspective.com.

00:14:45 ◼   ► And otherwise, I have a great week. Happy coding and I will talk to you next week. Bye