Categories

(Much) Bigger than Hollywood

Eddy Cue seems like a nice guy. I can’t say that for sure as I’ve never met him, but he seems to be amiable enough. Maybe it’s because he has a seat on Ferrari’s board of directors. Maybe it’s because he enjoys dancing.

Or maybe it’s because he’s in charge of the only real “division” at Apple. All the other senior managers have functional roles. Eddy has a bona-fide business unit called Services.

Services is Apple’s division of many things. It has the iTunes stores (Music, Video, Apps and iBooks). It has Software with consumer bundles like iWork and iLife and Pro tools like Aperture, Final Cut Pro and Logic Pro. It still has OS X as a product, though revenues are pretty low as updates are now free. It also includes Services with iCloud, Apple Music and Applecare.

These things are not iPhones or iPads but they are many and all together they form a modest little unit. I say modest because not much is said about it. When seen in contrast to the other Apple product lines, it’s hard to be impressed. In the graph below it’s the purple area.

Screen Shot 2015-08-25 at 5.56.19 PM

Apple does not help much. Occasionally  Apple offers updates on iTunes/Services using various (rarely the same) metrics. For example, in early August, Eddy Cue offered an update during an interview with USA Today on Apple Music relating how many users there were one month after the service started (11 million).  It was worth a few headlines.

However he also noted in passing that the App store did $1.7 billion in transactions during July. If you convert that to a yearly run-rate it comes out to about $20 billion/yr. Digging through previous announcements, the equivalent figure for 2014 was about $13.7 billion. Nice growth.

But is $20 billion of “transactions” of any significance? It’s not even a figure that Apple reports as revenue. For apps, Apple reports only the 30% fee as revenues so 70% of that transaction value passes through to developers and is therefore not part of its statement of accounts.[1]

However perhaps we should consider the figure in some way. It represents transactions in an economic sense–the amount people spend on apps. It’s therefore comparable with what people spend on other forms of entertainment. Movies for example.

The following graph shows the spending on apps within the iTunes App Store[2] as well as spending on other forms of iTunes stores as well as Services. It also shows how all the services compare with box office revenues from movies. Both the US and World-wide. And how these figures changed over the few years that the App Store has been in existence. The individual service line items are shown in the graph on the left and the stacked totals are on the right.

Note that already last year App Store Billings overtook US Box Office gross revenues and that Services a whole overtook Global Box Office gross revenues. It’s not likely to happen this year but next year Apple’s Apps will almost certainly overtake global Box Office in revenues.

Screen Shot 2015-08-25 at 5.39.08 PM

This contrast with movies gives some perspective on the creation of a new market. Apps did not exist as a medium in 2007. But, together with Android apps, apps are likely to have already overtaken revenues from an industry that is a century old. And not just any industry. Hollywood represents more than an economic power, it has a cultural power affecting perceptions and political opinion. And although universally envied, it has not been successfully replicated.

So having created this market and becoming bigger than Hollywood, and grossing more than what 90 countries produce, Apple’s Services not something that is interesting to many who think about technology or even to many who think about Apple.

Which is why I think Eddy’s such a nice guy. No matter how little attention is paid to his economic empire, he always seems to be in a good mood. Maybe he knows something we don’t.

Notes:
  1. From SEC filings: For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. []
  2. note that this does not include Google’s Play Store whose transaction values are not public and is therefore not a gauge of all apps. []
  • normm

    It sounds like counting only its cut of App Store purchases as revenue must improve Apple’s overall margin numbers.

  • Fran_Kostella

    It isn’t clear to me what portion of these numbers are effectively equivalent to Hollywoood in that they are from large entertainment companies. I suspect that the majority are and it doesn’t feel right to call them developers. Further, it isn’t clear what the distribution of payments looks like. What I’ve gleaned from app surveys and reports and anecdotal evidence is that the lion’s share goes to a very small coterie of players and that 75% of the apps make less than a hundred dollars a year, with the majority of those making zero.

    That isn’t unexpected nor necessarily problematic, but the real issue I see is that it is slowly becoming impossible for indie developers and small companies to use the app store as a place to do business. The nightmarish search problem means that there is no way to get noticed if you don’t have the store itself, or some high profile blogger advocating for your app (should we note that every Disney app seems to end up on the front page somehow?). The majority of apps look like those horrible ads we all block on the web and look forward to blocking in iOS9. There is so much crap in the store that it is impossible to find anything good if you don’t already know the app you seek or find it in the few hundred apps that get placement. Lord knows what gems might be in there dying from lack of light.

    From the dev side of things, it is impossible to interact with customers or offer the kind of support you would do outside the app store, like offering upgrade discounts or free trials or correcting abusive or incorrect claims in reviews, let alone responding to them. As a result the majority of money seems to flow through in-app purchases. So everthing is tailored for that. If you remove the “whales” from the big-ticket games from the equation, what would it look like? I suspect the numbers would be dramatically lower. But we don’t know for sure. I bet Apple does, and I’d be frowning about it, too, if my conjecture is true.

    It is kind of silly that after many years the only improvement in the app store is that you can now add videos to your app’s page. The whole thing is just getting silly and pointless from neglect when it should be steadily improving and being a vital place for new mobile experiences. It is advantageous to Apple to point to the number of apps and the amount of developer payments, but they really need to fix the search problem and give all devs the ability to run their own stores instead of providing the clunky little slow motion robot arm that passes for the ability to interact with customers and operate as an app business in the app store.

    I know tons of good developers and all of them have given up on selling their own stuff through the app store. I only have one on there now and only keep it up there as a labor of love. I do lots of contracting work building apps for bigger companies now, but I feel it is shame what the app store has become and what it might have been.

    • jameskatt

      Any developer large or small has to do marketing outside the App Store. The App Store is where you get the app once you know of its existence from other websites. This has been true since the dawn of software on personal computers. You always have to market your product. No one is going to give you money for nothing. You have to work for it.

      • Fran_Kostella

        Nothing I said contradicts that. I’ve never supposed that Apple needs to give me free money or do the hard stuff for me. I do think the app store has languished and isn’t a great platform to run a business from, but we are forced to use it if we want to play in the ecosystem.

        For comparison, just take a look at what a third party can do on Amazon. I’ve been able to contact sellers and discuss issues, provide feedback about product details, answer surveys, arrange returns or replacements, and so on. I’ve also often seen reviews answered directly by representatives of the seller trying to prove they are worthy of business. All in all one senses that sellers have an opportunity to use the platform Amazon has built to sell and market and generate goodwill. Yes, they still need to get the word out and do all the work needed to be a success. Which, incidentally benefits Apple

        Look at what you get on the app store. An app page, a support link.

        And Apple likes to point out how many free app there are, gee thanks.

        I once had a customer find an annoying bug, he emailed my support email. I responded immediately, literally moments later, fixed the bug, promised to have it in the app store ASAP (which is a usually about a week even though I have a few years of no violations of policy), offered to set him up on my beta tester’s list so he could get the benefit immediately and see that I wasn’t kidding.

        He wrote back that he was too nervous, he demanded a refund of a few dollars from the store, who gave it to him without consulting or telling me. Eight days later the fix appears, he writes me to tell me he is amazed. Well, OK, but I really think Apple could do a lot more to help. They don’t. It is the same app store I first used over five years ago, with a few minor changes but *nothing* to help me run a better business on the app store or build a following or reputation. I’m not asking for the moon, just something that would benefit us both. Geez. This isn’t rocket science.

      • melci

        And yet 37.4% of iOS app developers worldwide make between $60,000 and $6 Million dollars annually with 1.6% generating greater than $6 Million p.a.

        Sounds like a pretty good success rate and business platform to me (considering the figures for success in other businesses and platforms).

      • Fran_Kostella

        Put me and eight people in a room with Bill Gates and 90% of the room is worth from 0 to billions! Sounds like a good deal! Right?

        The median monthly income for iOS app developers, according to the report, is about $500 a month. If we take the $1.7 billion for apps mentioned above and divide it into the million apps in the store, and it is probably more than that now but just for round numbers on the high side we use that, and we get $1700 as the monthly average per app, about $20k per year.

        Since 1.6% of developers get “multiple of” the 98.4%, we can see where the money is going, to the very top. They don’t publish the actual surveys in the report, so I can’t break it all out, only show the partitions they report. This is for iOS only, page 19:

        0-37% make $500k/mo.

        So 37% make $60k+, but that is not a viable income for a software business. The last time I was involved in budgeting software engineers was 15 years ago, and the rule of thumb then was that you got ten engineers a year per million. I’m sure it is higher now, but if you need to hire a developer you aren’t getting much of one for 60k. Well, after you pay taxes and expenses, it leaves a salary that goes down below poverty level in the US for just you. Plus you need to do support and new products because nothing lasts forever. How do you hire someone on that much?

        I’ve worked at or consulted at dozens and dozens of software companies that made a success of it and who still survive, some in their third decade or so. None of them could survive on these kinds of numbers unless they were at the top end.

        So I don’t see the app store being a viable business when there are so many other opportunities that pay better. These days the app store is a must-have in some other business plan, not a place for selling much else than games. And it is still a very risky business even then, the risk level in game production is quite scary.

      • melci

        When the majority of app developers are hobbyists, part-timers and/or residing in the developing world, $60K – $6 Million p.a. is absolutely a viable income. You neglect the fact that US-based professional development houses only make up a small percentage of these figures and would no doubt skew towards the higher percentiles thanks to large marketing budgets, business networking etc etc.

        You also ignore the fact that most developers are making even more money developing apps on a fee-for-service basis directly for clients. This aspect of their revenue is not captured in Apple’s App Store figures as they are directly billing their clients for large sums (or are in-house salaried devs) even if the apps are “free” on the App Store and/or distributed through Apple’s MDM solutions.

        In addition, you ignore the fact that many developers churn out up to hundreds of apps, so multiply that average of $20K per year per app by the number of apps per developer and the figure is more substantial.

        And lastly, with 212,000 iOS developers worldwide (July 2014 AppFigures), if 1.6% of them make more than $6 Million p.a., that is 3,392 developers. That leaves 80,000 developers (37.4%) making between $60,000 and $6 Million.

        As I say, sounds like a pretty healthy ecosystem to me compared to many other businesses.

      • Fran_Kostella

        I’m not ignoring any of that, and I’m quite aware that app developers make money consulting. That’s actually what most of us professionals do now, we’re hired guns for businesses that don’t have the software capability in-house but who see that a mobile presence is not optional in this day. There’s no app store business in that scenario, it is a way to get on a phone as we shift away from a browser-centric internet.

        I did read the report, from cover to cover, so quoting it to me isn’t revealing anything new to me. Although I find things to quible with in that report, I accept it is within the same order of magnitude as reality. So, I don’t think we are in disagreement about the details reported. I disagree with the claim that this is a “healthy” environment for running a business. I read those numbers as indicating that your odds of breaking even are worse than starting a restaurant or buying some kind of franchise business.

        I’ve worked in small businesses since I was a kid, and have been in dozens of tech companies that were either software companies or built on software. I know a little about what it takes to succeed in this business and I don’t think that the app store is such a place. It might have been at one point, but certainly isn’t any more.

        I think that comparing it to Hollywood is right on the mark. 80% of the money is in games, less that 2% of the producers capture the overwheliming majority of the money. Most of the technical talent has left the field for the more lucrative job of hiring themselves out to these big money players or other who feel that have to be present in the market or become irrelevant. It is interesting to dig into how Hollywood finances pictures and I suspect that is the coming thing in app development. My reading of it is that the app store is the new Hollywood.

        What it boils down to is that lots of my peers have left it or are leaving it now. There is no “middle class” in the app store to speak of. I’d hoped Apple would do more to encourage this, but they don’t. Too bad.

      • melci

        Fran, remember that half of small businesses fail within 5 years and who knows how many barely break-even – not necessarily a favourable comparison with the iOS App Economy particularly after you take into account those devs residing in countries with lower costs-of-living or the 23% of iOS devs who are hobbyist and part-time “explorer” developers.

        Even if we don’t subtract those non-Western or casual devs from the figures, with 8% of iOS app developers (17,000 devs) capturing greater than $2.4 Million in annual revenue and 7% (15,000) generating between $600K and $2.4 Million, it seems that is a healthier spread of revenue across the App industry than the 2% of producers gobbling up all the profits in the Movie industry that you cite.

        And with a quarter of all iOS app developers (50,000 devs) making between $60K and $600K, I would have thought that a reasonably significant proportion of middle to upper class incomes even including all the casual and foreign devs. Unfortunately Vision Mobile doesn’t appear to break down how many of these developers are one-man shops vs larger teams as that would certainly affect these categories.

        I think what we are seeing here is a healthy App Economy that nonetheless has been transitioning from the gold-rush mentality of past years to a more mature and sustainable market going forward.

        I respect your experience in the industry Fran, but the reality of these figures just doesn’t seem to me to be as negative as your anecdotal criticisms.

      • Fran_Kostella

        Well, I hate to belabor the point but you are off base. First, those “normal” small businesses do fail, but they are not forced to do business through the app store, which is like interacting with the public through one of those robot arms used to manipulate radioactive materials. I emphasize again, the app store gives you a page and a support link. Plus, you get a 1-2 week wait to add the most trivial modification to code and no ability to interact with customers on the site or correct abusive postings from competitors. The app store is my major complaint, the money is secondary. This structure limits who can be profitable. It is a like a poll tax, everyone pays it, but the few big players don’t feel any pain from it and it effectively suppresses smaller, indie developers.

        And again, your characterization of the payments distribution is problematic. $60k-600k is not a linear distribution among that 25% of developers. The curve is an almost fractal reflection at that level of detail that mirrors the total distribution. So in that cohort the bulk of those payments go to the top tier. If you look at the bottom of page 19, you see that of this cohort (or one like it as the wording is a bit fuzzy, but it fits no matter what):

        2% make $100k+, or 54% of the money

        9% make $10k-100k, or 35% of the money

        88% make <$10k, or 11% of the money,

        Therefore, 2% make half of the money, 11% total make 89% of the money. The rest, your supposed middle class makes nearly nothing. Certainly not enough to run a viable business.

        Note that page 19 jumps around with terms and time periods, and doesn't always distinguish what group it is following nor how the divisions occur. But a generous reading of this page is that of the $1.7 billion a month…

        1.6% of devs capture 80%+ of the money, or $1.35 billion,

        leaving $350 million.

        another 2% capture 54% of that, or $189 million, and

        another 9% capture 35% of the rest, or $123 million, leaving $38 million

        So the remaining 50000 devs you site share the rest of the pot, which is of course not evenly distributed. But this leaves $760 per dev on average. This group would have a similar distribution as above, with a few hundred taking the lion's share of the $38 million.

        This is NOT robust and vibrant and able to support thousands of "middle class" developers. This is a few hundred companies taking 98% of the pot. I talk to devs every day, this is not a place that anyone with skills is running toward. Again, pro developers are consulting and only building their own apps as part of some other business plans.

      • melci

        Hi Fran, I understand where you are coming from and I agree Apple could definitely do better with the App Store. However, that 2% that you indicate rake in half the money potentially represents 4,240 iOS developers.

        Add to that the 8% or 17,000 developers who are making more than $2.4 Million annually and the 7% or 15,000 developers taking between $600K and $2.4 Million.

        These are not a mere “few hundred” developers. I think the fact that a few extraordinarily successful developers raking in hundreds of millions of dollars each is perhaps clouding the picture and hiding the very substantial number of developers who are making what in any other industry would be a *very* decent income.

        The problem is exacerbated due to the very low bar of entry to the app developer club and the App Goldrush which have brought in hundreds of thousands of additional casual developers who have diluted the revenue averages making it harder to stand out. This no doubt is why so many of your fellow developers are exiting the App Store.

      • Fran_Kostella

        The 2% that “take half” are from your cohort of those who make less than $500k annually. So that is AFTER the 1.6% get their 80%, they get half of the remaining 20%, which is actually 10%, 1/5th of what you claim, which puts them in the <$500k group.

        Again, the report can be misleading as it doesn't compare "apples to apples" but forms groups and discusses shares within the groups. You have to break out the numbers to get something the real picture.

        I repeat, 1.6% take 80% of the money, another 2% take 10% of the money, so 3.6% if developers make 90% of the money. These are the viable businesses, assuming they continue to do everything right.

        The next 9% take 1/3 of the remaining 10% of the money. The rest make up to a few hundred dollars annually. These devs are not making enough to run an ongoing business.

      • melci

        Fran, where are you getting these figures of “1.6% take 80% of the money, another 2% take 10% of the money” from? I can’t see either of those statements in Vision Mobile’s report.

        What the report does state is that:
        – 8% make greater than $200K per month (greater than $2.4 Million annually),
        – 7% make $50K-200K monthly ($600K – $2.4 M annually)
        – 24% make $6K-50K monthly ($60K – $600K annually)

        You also have not addressed the fact that there are well over 30,000 developers in these 3 brackets – far greater than the mere “hundreds of developers” that you claim are viable.

      • markwilcox

        I wrote the VisionMobile report being quoted here. Let me clear something up. The monthly revenue levels mentioned in the report are from all revenue sources, not just payments from the App Store. Developers that rely on the app stores for their revenues do indeed tend to fare pretty terribly unless they are successful with F2P games. The distribution of revenues from the App Store is significantly worse than the one described in the report (i.e. It is more concentrated at the top).

      • melci

        Thanks for the confirmation Mark. That is indeed what I argued a few comments higher up to indicate why direct App Store figures from other sources may seem to be in conflict with your report.

        Ad revenue from apps or apps developed on a fee-for-service basis directly for clients or by in-house salaried devs that are “free” on the App Store and/or distributed through Apple’s MDM solutions help to show how app developers run viable businesses around, but not necessarily dependent on Apple’s App Store.

        Do you happen to have more detail on this aspect?

      • Fran_Kostella

        Thanks for confirming how bad it really it is. L2 recently put app developers in the “loser” column on their weekly report, citing the massively skewed payouts to the few at the top.

        One suggestion I have for future reports would be to put in a few charts showing the complete distributions. But then, the chart would probably look like a capital L. Your report is one of the better ones and I always look forward to the next installment. Great work, thanks!

      • Ray

        We are missing half of the data necessary to evaluate whether the App store is an attractive platform for developers: their costs. Many of those high revenue developers have also huge development and marketing costs to get their app developed, promoted, discovered and maintained.

        In general a duopoly iOS – Android is not good for developers as it provides the bargaining power to Apple and Google, and takes it away from developers. Imagine if there were only two retailers in the world that control 99% of retail space.

        Apple has little incentive to improve the App store as its business model relies on smartphone sales, and apps are a complement to their main product line. As long as iPhone sales keep growing, and wiith over a billion apps, Apple has no need to improve the app store and developer side of the platform as they make their profits on the user side.

        Apple’s app store has had as much innovation in the last few years as Craigslist.

      • DocNo42

        Fascinating – would you say your argument is the store is “successful enough” and thus the issues Fran brings up aren’t worth discussing? Because that’s what I see the majority arguing here.

      • melci

        Doc, I actually agree with most of Fran’s criticisms of the App Store and absolutely believe that is worth discussing.

        It was just the characterisation that only a “few hundred” developers make enough money to run a viable business that appears to be unsupported by the data and which I think perhaps weakens the argument.

        I think the App Store has been a bit of a victim of its own success with large numbers of gold-diggers dreaming of replicating Angry Birds extraordinary success that are diluting the revenue share distribution and making it hard for developers to stand out.

        At the same time though I think the figures show that a pretty decent number of developers do make a decent income when you reset your expectations to understand that only a few will be able to make the hundreds of millions of dollars of the super-star developers.

        But surely 17,000 app developers each making greater than $2.4 million annually isn’t that bad is it?

      • DocNo42

        I don’t get the arguments against Apple further improving the App Store.

        Fran Kostella is absolutely correct that it’s essentially unchanged – and it boggles my mind that Apple tolerates it, let alone so many here are so ready to accept it as “good enough”.

        On Mac OSX where there is real choice in how code gets on one’s machine, the Mac App Store is langusihing. I no longer am enthusiastic to buy their, indeed I will always buy from the programmer directly if given the choice.

        Not providing customers and developers *who want, mutually, to communicate* the means to do so is rediculous. Never coming back to address upgrades as was earlier promised is simply outrageous. Pieces for that support are plainly visible; they never have been activated (or possibly even completed). Never mind all the other various, niggling issues that Fran and many others have brought up and really should be addressed.

        I argue the iOS App Store is successful because of the platform, in spite of itself – not because of its existing or it being inherently successful. I can back that up by looking at the lackluster performance of the OSX App Store where real choice exists.

      • melci

        Actually Fran, I underestimated the high-end revenue of iOS developers. From Vision Mobile’s Report:
        – 8% of iOS developers (17,000 devs) generate greater than $2.4 Million annually
        – 7% or 15,000 iOS devs make between $600K and $2.4 Million p.a.
        – 24% or 50,000 iOS devs make between $60K and $600K p.a.

        I know Apple can do better to improve discovery and support in their App Store, but the figures show that the iOS App Economy is thriving.

    • melci

      Fran, Vision Mobile’s data indicates a far healthier iOS app market than your comment supposes:
      http://www.visionmobile.com/blog/2015/02/app-developer-trends-q1-2015/

      “Of those that prioritise iOS, only 37% are below the app poverty line, making less than $500 per month on iOS. On the opposite end of the revenue scale, 39% make more than $5,000 per month on the iOS platform”

      “Rather surprisingly, the revenue distribution for Android-first developers is not much different than for those targeting BlackBerry 10 or Windows Phone.”
      57% are below the $500 App poverty line while only 19% of Android devs make over $5,000 per month.
      Ouch!! 🙂

      “The iOS ecosystem appears to have a lock on the high end that will be hard to break. Slow but steady, iOS developer mindshare declines over recent years have reversed; they’re now back up to 54%.”

      “Android handset makers are increasingly unable to compete effectively for the premium customers. Those are the customers that are most interesting to well-funded developers, as well as advertisers, retailers and various service providers.”

      • Fran_Kostella

        Their report is in terms of developers, not apps, as I was using. I don’t recall the specifics of why I came up with those numbers but it isn’t that far off base, but I concede it is easily a multiple off from my numbers, $200 a year? $300?

        If we just focus on the VisionMobile numbers it is still quite dismal. $500 a month ($6k annual) is a horrible income in the west. If you assume you can make a couple of those you might make it out of the US poverty level. Most app dev jobs I see posted locally are in the $150k range, for comparison.

        The telling point in the report is: “1.6% of developers have an app earning >$500k per month, Together they earn multiples of the other 98.4% combined.”

        I’d love to see this year’s numbers.

        I don’t have a problem with their being a disparity if it reflects the market, but the current app store is just a stone tied around developer’s necks. It it the system they had in place to handle a few thousand apps and hasn’t changed.

      • Fran_Kostella

        And I want to thank melci for pointing out the VisionMobile report, it is one of the better app surveys. It is full of interesting stuff. For example, last year, it says, 80% of all app revenues in the app stores came from games. Etc., well worth the read.

      • ptmmac

        Would it help if Apple had a map to find developers, so developers that are producing things in my area would be something I could look for? I can imagine looking through San Francisco for the most popular apps in that city. The real problem here is a better way to slice the data. Ultimately the answer is a much more powerful Siri assistant that can run a search of all the Apps that would help me do the task at hand. My Bank’s mobile App has transformed banking for me. My Accountants is doing the same. My own data being in the cloud where my Accountant can access it without my intervention is another looming move foreward.

        When there is job to be done, the App is apparent. Part of what makes the app store so appealing is the lack of commercial sales clamoring for my limited attention.

      • Fran_Kostella

        Good questions. I don’t know the answer. I do think that the app store could be so much better. Today on Amazon I noticed that I could select a product and use it as part of a promotion on Amazon. Just one of the many ways Amazon tries to extend the use of their site to enable more commerce by other and also benefit themselves. I bet if we asked 50 experienced developers they could suggest 100 ways to improve the app store. Just picking a few at random would probably be better than doing nothing for years on end while the app store fills up with 100s of thousands of clones of popular apps.

      • melci

        Fran, the important fact to remember is that $6,000 figure is a minimum. According to that Vision Mobile report, 61.4% of iOS app developers make BETWEEN $500 and $500,000 per month. 39% make MORE than $5,000 per month – that’s $60K p.a. at a minimum.

        The other thing we need to bear in mind is that thanks to the low bar for entry to the “app developer” community, the majority of app store developers are amateur, hobby or part-time developers who still have a day job. For them even the minimum value of $6,000 annual income is actually fantastic.

        I’m not sure how you construe these sorts of returns to be dismal?

      • Fran_Kostella

        See below.

      • melci

        ps. These are 2015 Q1 numbers – as recent as you could ask for.

      • Walt French

        I just conceived of a small app. It’s only a bit beyond my programming skills; it’d be useful to me & likely other twitter users and … at $1, which is about all I could imagine people paying for it, it’d be a huge financial drain.

        People write apps as a business, but many more do it as a learning exercise, or as a desire to supplement some other work they’re doing. I posit that the huge majority of those very-low-income apps were never built by somebody who’d thought out why they should make a lot of money.

        That’s not to say Apple, or developers, or third parties couldn’t do better with the App Store. But the figures don’t suggest OTHER stores are particularly better; despite some obvious potential improvements such as upgrades, trials etc, the app economy is actually pretty good for what people ask of it.

      • Fran_Kostella

        Absolutely right, Walt. But it would be nice to have the option for a change. Apple has been raking in profit, but the app store hasn’t changed much at all and could really use some attention and work. All the devs I know have just given up on it. I know a number of folks, myself included, who are talking about switching over to the mac since you can still sell those from your own site. And I won’t mention the devs leaving the mac app store.

        I think that Apple is going to eventually realize that this part of the ecosystem is important to cultivate. Sure, you can always find some young guys to write 10 thousand flappy bird clones for free, as if that were good for the ecosystem beyond being a obfuscating metric, but the real problem is that nobody can invent an Omni group or Panic or other small and strong indie company that fills the gap between major players and amateurs. It is just a pity and a waste.

    • Childermass

      Good thread. I’m reminded of small town ‘high’ street (‘main’ street) shopping. There are the usual chains. The ones you expect. Every now and then along comes a new one, sometimes to complement, sometimes to replace. Alongside them are the many and various local traders. An endless series of ‘heart over head’ enthusiasts. They come, and, always, they go. Their presence is the triumph of hope over experience. And yet, and yet, every now and then one of them makes it. Why that one? Why then?

      Who knows? It is like catching lightning in a bottle. Captain Shakespeare could maybe explain.

    • Fran_Kostella

      Ben Thompson covers this well in his “From Products to Platforms” posting: stratechery.com/2015/from-products-to-platforms

      He’s saying something similar to what I’m laying out, the app store just doesn’t cut it as a place for doing quality apps or running an app business. Well worth the read.

  • Childermass

    Eddy is smiling because he knows that everywhere else (maybe one exception comes to mind) the ‘purple’ bit, the grease, the oil, costs money. Cost. Not here. And, lo!, genius. Marketing as an earner? This is the differentiation between Apple and other businesses. And he has it. I’d smile too.

  • http://www.indiobailbonds.com/ Indio John

    Great research work you done.