0:00:00Hello and welcome to Developing Perspective. Developing Perspective is a podcast discussing
0:00:03news of note, and I have a development, Apple and the like. I'm your host, David Smith. I'm
0:00:08an independent iOS developer based in Herndon, Virginia. This is show number 218. Today is Friday,
0:00:13May 8th. Developing Perspective is never longer than 15 minutes. So let's get started. Okay,
0:00:19before I dive into the main topic today, just a quick reminder. If you would like a Developing
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0:00:29You can still do that.
0:00:31There's about a week left to order.
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0:00:34or you can go to teespring.com/happycoding.
0:00:37All right, the topic I'm going to be diving into today
0:00:41is the question about sustainable revenue, I guess,
0:00:46and revenue in the App Store.
0:00:48And this old perennial topic that I have addressed
0:00:50many times on the show, but has recently
0:00:53has come back to the surface again, as it always does.
0:00:56And it always probably will.
0:00:57That's a very, very core part of making a living doing something is understanding the
0:01:03dynamics around making a living from something and the financial part of that.
0:01:08And there's a whole bunch of links in the show notes.
0:01:10And now if you aren't, if you're interested in this topic and there's things in the show
0:01:15notes that you haven't read, I highly recommend just kind of going through and skimming them.
0:01:18There's a lot of really good articles, a lot of really interesting information that has
0:01:21come out in the last couple of weeks that is very helpful in trying to gather a good
0:01:26snapshot of where we are in the App Store as developers.
0:01:30And I'm going to start off by mentioning the thing
0:01:32that Tim Cook said in the earnings call
0:01:36that he did a few weeks ago, where he said,
0:01:39the App Store has had its best quarter ever,
0:01:41with a record number of customers making purchases,
0:01:43driving a new record for revenue,
0:01:45and 29% year-on-year growth.
0:01:50Wow.
0:01:51That sounds great, right?
0:01:5229% year-on-year growth in revenue in the App Store?
0:01:56Like, that sounds like a really, really cool thing
0:01:59as someone who makes my living there.
0:02:01That's, of course, contrasted with a lot of other stories
0:02:04we heard over the last week.
0:02:06There was a discussion about the Mac App Store,
0:02:09which is somewhat different than the iOS store in a lot of ways.
0:02:12It was prompted by Sam Sophis, who
0:02:13was talking about the launch of his app ReadRedacted, which
0:02:18had a pretty good launch, launched
0:02:19pretty high in the charts.
0:02:20But the revenue that that generated
0:02:22was surprisingly low.
0:02:24And there's been a few other people
0:02:25who've shared a link in the show notes to RealMax,
0:02:29who posted some details about how their rankings compared
0:02:32to sales in both the iOS and Mac App Store.
0:02:36And generally, the picture you get is that being well ranked
0:02:40and top paid is not nearly what it used to be
0:02:45and is not necessarily great from a revenue perspective.
0:02:50It's not necessarily surprising.
0:02:51I think we've all known for a very long time
0:02:54that being in top free or top gross paid
0:02:57isn't particularly interesting.
0:02:59What's interesting in some ways is
0:03:01where you are on grossing in terms of the actual money
0:03:04that you're making.
0:03:05Now, obviously, top grossing is completely
0:03:08dominated at this point at the high end
0:03:11by things like free to play games,
0:03:13by Candy Crush, Clash of Clans, Game of War, whatever.
0:03:18I don't really play these games.
0:03:19I don't know all their names.
0:03:20But there's lots of these types of games
0:03:22that are these sort of these free to play things where you buy, I don't know, gems and
0:03:27smurf berries and stuff like that.
0:03:31And it, you can pour an unlimited amount of money into it.
0:03:35And they're designed in a variety of sometimes kind of sketchy ways to create, you know,
0:03:42kind of addictive or at least compulsive behaviors.
0:03:46And that's kind of tricky.
0:03:47And that's a whole topic that I've talked about before.
0:03:49And I'm not going to really dive into now.
0:03:50But that's where the majority of that revenue
0:03:53that Tim was talking about, that 29% year on year growth,
0:03:56is going into those types of games.
0:03:58And in many ways, that makes sense, simply
0:04:01because they're a platform where there
0:04:04is an unlimited amount of money that can go into it,
0:04:07because consumable in-app purchase is, by its nature,
0:04:11never-ending.
0:04:12Whereas the types of revenue that most--
0:04:16whatever you want to call it-- classic software developers,
0:04:19utilities, people who make applications like that,
0:04:22very rarely have consumable in-app purchase in them.
0:04:25There are some, certainly, and even
0:04:26pedometer++, one of my own applications
0:04:28has a tip jar, which is a consumable in-app purchase.
0:04:30So I'm not saying it's exclusively something
0:04:31that's happening in games.
0:04:33But by and large, whenever you don't place a limit
0:04:39on the size of the revenue that you
0:04:41can get from an application, from an individual user,
0:04:44there's more and more possibility for it to grow.
0:04:47And we're seeing that.
0:04:49And I think the amazing quarters that the iPhone has had
0:04:52recently in terms of sales has definitely, I'm sure,
0:04:57spurred this on where more and more people have phones.
0:05:01And more people have phones, more people
0:05:03can download apps, et cetera.
0:05:05And so that's kind of what we're seeing.
0:05:09But obviously, that is only somewhat helpful
0:05:12as somebody like myself who makes
0:05:14their living from the App Store to know kind of what's
0:05:17going on on the high end.
0:05:19I'm nowhere near the top grossing chart in the App Store.
0:05:23That's not somewhere that I hang out, and I'm OK with that.
0:05:26That's fine.
0:05:29But what does that mean for me as I'm
0:05:30trying to build a business, or keep and maintain
0:05:33a business on this platform?
0:05:35Some interesting stats that I thought
0:05:37were kind of interesting in terms
0:05:38of giving some context for where I was going
0:05:41is I looked up in April, so in the last month,
0:05:46how many apps were added to the App Store.
0:05:49And according to the Pocket Gamer biz,
0:05:53they have a metric site that I'll link in the show notes to.
0:05:55In April, 1,561 apps were added to the App Store every day,
0:06:01on average.
0:06:02In the whole month, that was about 36,000 non-games
0:06:07and about 12,500 games, for a grand total of just over 48,000
0:06:13applications, which is a lot. The fact that that pace is continuing, in spite of the challenges
0:06:23on the financial side, is in and of itself kind of remarkable. When it speaks, I think,
0:06:28to the the the comparative low barrier to entry that I think app developers face these
0:06:37days, that developing on this platform has gotten to a point that it is very mature and
0:06:42very relatively straightforward.
0:06:46That there was a time, I remember when I first got started, and I was in this boat myself,
0:06:53just learning Objective-C and learning COCO and learning how to build an application,
0:06:58how to use Xcode and code signing and all these things were genuinely difficult, were
0:07:03genuinely hard problems that I had to work through to even get to the point of submitting
0:07:08something and put it on the store.
0:07:10At this point, while it's not like the tools are perfect
0:07:14or the tutorials or the documentation or things
0:07:16are without fault, things are pretty stable.
0:07:20Things are very straightforward.
0:07:23If you have an app idea and you want to build it,
0:07:26that process is much more straightforward now,
0:07:28in some ways, than it has ever been.
0:07:31I would say the bar for making a really good application
0:07:35has probably gone up because of the complexities we now face
0:07:38and how many-- if you want to build an application that spans
0:07:42from Apple Watch, iPhone, iPad, all the different sizes
0:07:46of iPhone, maybe with some syncing,
0:07:49all these things that go into a typical application these days,
0:07:53the bar is higher.
0:07:54But the bar for just putting something together
0:07:56and putting it on the store is probably lower
0:07:59than it has ever been.
0:08:00And so we're seeing tremendous growth
0:08:01in terms of even just the number of apps.
0:08:03In that same report, there's something like 1.6 million
0:08:06applications on the App Store at this point, which is almost
0:08:11staggering to think about.
0:08:13If you think about how long it would take to even just go
0:08:17to the App Store and download them all-- that was your goal.
0:08:20You're just going to go to the App Store app,
0:08:22and I'm going to download every single application.
0:08:24That would probably be insane.
0:08:25But I don't know if you could reasonably--
0:08:28you couldn't reasonably do that over the course probably
0:08:31of a year, of two years.
0:08:32I don't even know how many hours it would take to sit there
0:08:35and physically download every application.
0:08:37The store is vast.
0:08:39Even if you just wanted to load the description page
0:08:41and look at every application in the store,
0:08:43it would take forever.
0:08:45So the store is vast.
0:08:49It's growing every day at a pace that is remarkable
0:08:52and does not seem to be slowing down.
0:08:53If anything, the pace at which the apps are being submitted
0:08:56to the store is probably growing.
0:08:58Revenue on the high end continues
0:09:01to grow and grow and grow.
0:09:05And so where does that leave us?
0:09:07I make my living from the App Store.
0:09:08I have for many years.
0:09:11That is where I make my primary living, from the money that
0:09:13comes in from the applications that I put on the iOS App
0:09:16Store.
0:09:17That's my primary source of revenue.
0:09:19And it is lower now than it has been in a while.
0:09:24But the interesting thing is that it is somewhat stable.
0:09:28The funny thing that it's easy to get
0:09:30lost in what's going on on the high end
0:09:34is the degree to which it is somewhat still stable on the low end. The bottom hasn't fallen
0:09:41out in my experience. It's not one of these things where we are seeing month after month
0:09:46just catastrophic reductions in income. It's a very gradual, slow process where over time,
0:09:56you know, revenue from each of my applications is going down for the most part, with occasional
0:10:01exceptions. But in general, it's going down. And it's always been doing that.
0:10:06Back from, you know, from, from back several years ago, I probably you may have heard me talk
0:10:13about the way in which I, you know, probably three or four years ago decided to I was going to need
0:10:17to structure my business where every year I need to add one new thing, sort of on top of the layer
0:10:24cake that is my portfolio. That's the way that I make, I'm able to make a sustainable living every
0:10:30year, the existing applications that I have in the store make a little bit less and less,
0:10:35and so it compresses down. And so every year I add something on top, and that bolsters
0:10:41things a little bit, and then it'll slowly compress more and more, and so on and so on.
0:10:45But the approach works, and I've talked about it at length. That's why I have so many applications,
0:10:50and yet I've still been able to keep doing what I'm doing.
0:10:54But I'm starting to feel, and this is why I thought it would be interesting to actually
0:10:58talk about this today, that even that process is perhaps even changing somewhat subtly.
0:11:04And there's an article that I wrote, which is hopefully interesting for you to read,
0:11:10which I'll have a link to in the show notes, called "Learning to Ride a Bicycle Again."
0:11:13And the actual premise of the article got started from this video where someone learned
0:11:17to ride a backwards bicycle.
0:11:20And that process of training yourself to ride something like-- running a bicycle is something
0:11:25that we kind of do naturally after you have learned to do it.
0:11:27But if you take a bicycle and you put gears on the handlebars, so when you turn to the
0:11:31left, the wheel actually turns to the right, it's basically impossible to ride without
0:11:36retraining your brain.
0:11:38You have all these built-in assumptions, all these built-in biases, all these things that
0:11:41you expect to happen that suddenly don't, and you can't necessarily be aware of them
0:11:46until you're put in a situation where what you were doing before no longer works.
0:11:50And I thought that was an interesting parallel for where I think I find myself.
0:11:55the lesson that I thought would be good as sort of the culmination of this discussion
0:11:58today, I'm increasingly of the opinion that I need to be ever more open-minded about the
0:12:07approaches and the expectations that I have for making my living in the App Store, whether
0:12:13or not even that is what I continue to do.
0:12:17I think the problem I run into now, having been doing this for so long, is that there
0:12:23There is, oh, I have certain expectations for how the App Store works.
0:12:27What is important?
0:12:28What is not important?
0:12:29What are the things that go into making a sustainable living?
0:12:33What are the things that go into building an application in the first place?
0:12:38And I'm not sure if the App Store that I have in my mental model is actually the App Store
0:12:42that is currently in existence.
0:12:45I think the App Store and the typical users of it, the expectations of those users and
0:12:50the ways in which those users expect to part with their money are different.
0:12:55And it's a gradual process, but it is something that I think is transitioned in a way that
0:13:02I am now, I'm still trying to ride the old App Store bicycle, but the bicycle that I'm
0:13:08riding is now backwards.
0:13:10It's different.
0:13:11And exactly all of those ways are hard to unpack in the two minutes that I've left on
0:13:16the show, and I probably will over the next however many episodes, maybe I'll talk about
0:13:20it.
0:13:21But the thing that I'm struck by is I think I need to be more shrewd, maybe is the right
0:13:28word for it, and look at what I'm doing in a bit less, slightly less, I hate to use the
0:13:35word artistic, artisanal or something like that.
0:13:39But a lot of what I am coming from is a background where that was kind of the approach that you
0:13:43took, that you are trying to make things, you're trying to
0:13:47Google is to make great things. And those great things will find
0:13:50their audience because they are great. And as I said, it's a bit
0:13:53highfalutin. And I'm not sure I've made truly great things.
0:13:57But that was sort of the goal and the expectation. But I think
0:14:00the reality of the App Store now is that there is a much stronger
0:14:03urgency around business around advertising and cost management,
0:14:09and me being worried both on the revenue and the expense side of
0:14:12of my business, those kinds of things.
0:14:15And looking in very detailed ways at customer acquisition
0:14:19and the costs associated with that.
0:14:20I'm delighted that we finally got iTunes Analytics.
0:14:23And I've only just barely seen the tip of the iceberg
0:14:25in terms of the information I can get out of that.
0:14:27But I think that is the perspective and the direction
0:14:30that I need to head to make sure that I'm
0:14:32going to stay relevant and I'm going
0:14:33to be able to continue to do what it is that I love to do.
0:14:37All right.
0:14:38That's it for today's show.
0:14:39As always, if you have questions, comments, concerns,
0:14:40or complaints, you can find me on Twitter.
0:14:42underscore David Smith there. You can email me at David at developing perspective.com.
0:14:45And otherwise, I have a great week. Happy coding and I will talk to you next week. Bye