On the first few years, the App Store seemed like a boom for the independent developer with multiple stories of an individual or small teams making a comfortable living and some with outright mega hits. In those days most apps had a low upfront price and sustained their continuing development with the constant flow of new users arriving at the App Store, as the iPhone smashed sales records and became the most recognizable smartphone in the world.
Eventually, things changed, and the App Store grew from a few thousand apps to a couple of millions in 2017. The flow of new apps and the popularity of free apps supported by advertising or offered by big companies, combined with the App Store restrictions, contributed to landscape changes that would influence App Store design and functionality over the next few years.
The explosion of free and sometimes low-quality apps also made it harder to find the quality apps available, and it’s challenging to compete with free, especially when the potential customer can’t try the app before purchasing.
For a time we witnessed two significant tendencies; the race to the bottom with prices of paid apps getting lower and offering frequent discounts. Complicating matters, eventually the iPhone market matured and the number of new users kept increasing but at a slower pace, diminishing the sustainability of the paid upfront model. To aggravate the situation, at this point users were accustomed to paying nothing or very little for software and expected continued support and new features for free. Developers that launched newly paid versions of popular apps frequently had to deal with the backlash from users who felt angry for having to spend a few more dollars for something that they had previously purchased.
This market evolution was meet with some changes in the App Store with the introduction of in-app-purchases and more recently, adding subscriptions. Developers welcomed these changes, but some still feel the need for upgrade pricing because it fits better with their particular product, and its a tried and proved practice used outside the App Store and well accepted by users.
During all these changes there were casualties. We lost some quality apps that weren’t replaced by better options, and we can only speculate about the ones that never materialized because the commercial appeal wasn’t there.
I feel this way about Zite, a magazine app with some similarities to Flipboard that intended to give a customized news feed, and in my opinion, it succeeded brilliantly. CNN bought it a few months after launch and eventually sold it to Flipboard, but not before languishing for a couple of years without updates. Other more famous apps at least in their respective categories also followed this path of successive acquisitions. Instapaper, a read later app created by Marco Arment and sold to Betaworks, that added new features and changed the revenue model to subscriptions. Despite their excellent work, improving on the original app, it was bought by Pinterest last year, and for now, it’s available free of charge.
Other apps are acquired by bigger companies like Google, Apple, Facebook, and Microsoft just to name some, has a way of hiring talented developers, and frequently the original app ceases to exist. Such was the case of Sparrow or Mailbox that were purchased by Google and Dropbox respectively and ultimately abandoned.
On my article about Unread, I emphasized that having a critically acclaimed app is no guarantee of financial success. This were the conclusions of its creator, Jared Sinclar:
The paid-up-front app market is smaller than it may appear.
Coverage from influential bloggers can drive more sales than an App Store feature. Paid-up-front business models don’t generate sustainable revenues. If you want to make “real money” from a paid-up-front app, your launch week has to be a box-office smash.
Don’t launch your paid-up-front app at a reduced price. Demand for your app will likely never be higher again. Price it accordingly.Sustainable revenue must come from other sources than the original app purchase, either from consumable in-app purchases or recurring subscriptions.
Assuming his conclusions are correct and they seem very convincing to me, we can evaluate recent changes in the App Store, were previously paid up-front apps are shifting to subscription models. That is the case of successful apps like Ulysses, Day One, 1Password, and TextExpander among others.
It’s easy to understand the advantages of a subscription model for developers. It provides a regular and predictable revenue that allows them to work on the apps and provide periodic updates without needing to launch new versions of the apps to make money. I’m assuming It’s probably easier to evaluate the financial risks involved and retaining talented developers; plus if a business it’s not sustainable it might provide enough insight in time to scale, change or even end the experiment. I guess this would be the ideal scenario for most developers because everyone needs regular income to survive and it removes the dependency of needing to think about the next big version of the app to gain revenue.
Of course, this isn’t a model that will succeed for every app, and some will work with in-app purchases (like most games), some will keep the paid up-front model, and others will rely on advertising or more creative solutions.
As a consumer, I can see advantages and disadvantages of these changes. There are some apps where I feel more comfortable with the in-app purchase or paid up-front model, and others that I prefer the subscription model. This option in particular, is unwelcome and protested by many users because they feel entitled to continual updates having already bought the app. I can understand this perspective, and maybe its adequated for some low maintenance apps but its unrealistic for others that need continued development. Would you be willing to work for free? I don’t, unless in particular circumstances. I believe most people understand the concept of being paid for their work, but when it comes to software development, they may not have an accurate idea of the effort involved and thus can’t value it accordingly.
There are other considerations with this model: the feeling that you are renting software and its never really yours, or even something more extreme like a loan that you need to pay every month but can never settle. Then there’s the financial part, and subscription models are usually more expensive than the alternatives and users may not be able to afford or value the service at that price.
However, all is not bad news, and there are benefits to software subscriptions. First, there is no significant upfront payment and most times you can try it for some time before subscribing. Another advantage is the possibility of changing to another app or service at any time you want if you become dissatisfied or find a better alternative. There’s also another upside when you need to use an expensive application but only for a limited period. In this situation, a subscription may be a better value proposition than buying an app.
Other benefits that may not be readily apparent. If an app has a sustainable income, the users will benefit from regular updates because the developer won’t need to keep them for the next big release. It also gives you a higher probability that you will be able to use your favorite apps for years to come without worrying that the developer will cease development or get bought by another company with different goals.
The app development process needs resources, so when using free apps, there’s a higher chance that your personal information is getting sold, that the app will not find an adequate revenue model or that will be purchased by a big company for a talent acquisition and not for the development of the app itself. In all these cases we stand to lose not only productivity but above all the interaction with an app that we choose, hopefully, because is not the only available option but the best, or the one we find most pleasurable to use.
If you use an Apple product, you are already paying for much more than performance. Maybe because you feel they have better quality, a better operating system or just because they look good and are pleasurable to use. Or perhaps for an entirely different reason, but whatever the primary driver behind your choice, you are going to have to live with the software available on the platform. If you are buying Apple because you perceive it to be the best it stands to reason that you will be equally demanding regarding the quality of the software.
After all this, there’s one more challenge. Humans have been trading money for physical goods for thousands of years. We even adapted in part to using digital currency, but most people find it hard spending their money on something intangible like software. In part, it’s extended to other digital goods like movies, books, and music. I don’t know how to convince someone to spend money on software, but if you are reluctant to spend your hard-earned cash on digital goods, I would suggest to start small and try to put things in context. How much would you pay for a meal or a movie that you might not like? Maybe five dollars for that app you use every day isn’t such a bad deal after all.
Some people are going to be content using only free apps, and that’s fine, others may not have the money to spend and will have to use them for lack of choice. That’s not fine, but fortunately, there are free options for commonly used tasks, even if they are not the best.
As for me, what would happen if some of my favorite apps turned to subscriptions? I would have to make choices because most likely I could not afford them all, maybe not even most of them. That’s not in my best interest. However, it may be better than merely watching them disappear. I would rather they continued to exist even if I could not afford them that not having the option at all. At the same time, I would be guaranteeing the development of the few that would receive my support.
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