The Spotify for Apps — Reimagining App Stores
Or how we can all benefit from a subscription-based app market.
For a long long time I’ve been thinking how broken the market for apps is. We are now over 1.75 billion people needing apps for our smartphones. We all want to text for free, talk for free, be entertained for free and use the best of technology to do anything you can imagine and we want it all for FREE! But we also don’t want to be the product, we don’t want ads and no way in hell we’re gonna pay a monthly subscription. We simply want it for FREE and we’ve been spoiled to get it!
Honey, we’ve spoiled the kids!
In the highly-competitive app market, mobile developers fight for exposure as the Seven Kingdoms — for the Iron Throne. But the odds are not on their side and a massive delusion has taken over their clear minds causing them to believe they will be the lucky 1/10th of 1 percent of apps that actually makes it to the top charts and to the millions of users. In their insanity and fight for glory, most developers slave away their work for free and users feast on the gourmet. But who am I to blame the devs? — I’m practically one of them! I’m sure our awesome task manager wouldn’t have gathered hundreds of thousands of downloads if it wasn’t for the ‘Zero’ price tag! So as guilty as we are, me and my team just played the game by the rules, hoping we’d be the ones to win. But in this game no body really wins, not even the leachers!
Game for the losers.
With the current app market model no one truly benefits and here are my arguments for that:
- The App Stores don’t earn nearly as much as they could — AppStore, Google Play Store, Windows Phone Store etc., they all charge ~ 30% of the earnings of an app. Well, the majority of apps are free (90%) which leads the stores with 30% of ZERO which is…well, less than ZERO ‘cause the stores have to put plenty of work into every app , profitable or not — maintenance of dev structure, support, reviews, featuring etc. Sure they earn sh*t load of money on in-app purchases (75% coming from the gaming sector) but they could earn SO much more! How? Read on!
- The Mobile Operators, on the other hand, get no piece of the big creamy cake. They earn on data, calls and phones but nothing like they did before. The times where they could live on high bills are long gone. No body can make a high bill anymore! It’s not like you’re gonna talk more than the 2000 min of calls you’ve got per month or text more than 1000 times (outside Snapchat). For $20/month you get your 5GB data and you’re all set to go. Just like that, the market changed but business model didn’t and now mobile operators sit in the corner and cry over missing on the deal of where money are really made in mobile — apps!
- The 8.7M Mobile Developers are the big time losers. They posses some of the highest paid skills in any economy around the world, yet the majority of those who create their own apps, are barely making it:
Having hundreds of thousands, even million of users on your free app doesn’t make you rich, it makes you poor! You freaking have to pay for servers, emails, analytics — everything, just to be able to maintain your widely popular charity. Users don’t get that part. They picture devs as:
And gladly— there are those cases! Or else we wouldn’t have been making apps, would we? But for devs to make money, they need investors to back their years of ‘charity’ work, help them grow-grow-grow and then sell off for a lot more money. Few manage to create a sustainable business around their app and them I endorse BIG time! But in general — the majority sinks to the bottom of the app stores’ pages with heavy legcuffs on. On them you can read ‘Price tag Zero. I dreamed I’d go Big.’.
- Finally, the users outsmart no one but themselves (ourselves) and the free lunch turns into a expensive feast they (we) never wanted. Getting apps for free causes a few things users hate at most, even more than paying: a) favourite awesome apps stop being updated ‘cause the devs run out of money b) favourite awesome apps get sold to somebody and shut down (Hello Yahoo!) with all user data disappearing somewhere in the clouds c) from a user you turn into a product d) ads/offers etc. pollute your screen at all time…e,f, g…the list goes on and on and it does not get any better.
How can this market be so broken? At the end of the day, we, humans figured the solution out looong time ago — free market, supply-demand driven, you pay for what you use.
The Spotify for apps.
So here comes my idea of reinventing the app market which is by the way projected to be a $70 billion monster by 2017.
Along with their monthly data plan, users pay subscription to use the app store for their smartphone. Mobile operators facilitate the process, just like data and get a piece of the earnings. In exchange, they preload the best apps and help out the app stores with promotion — currently something that only the app stores are doing but not so successfully since only 1/10th of 1% makes it to their top shelfs.
App stores increase their earnings because they don’t just earn on the 10% paid apps and in-app purchases, they earn on all their users who uses the stores every month for many years to come. Much tastier slice of the cake!
The developers become happy campers! Forget about the 10% paid apps! Who cares? The basics of every app should be free aka included in the monthly fee, and every dev can upsell premium packages to the users who really need his power features. Just like in the current model but with the upside of steady income coming from the basic app. The twist is that devs only earn if there’s a demand for their product. The more awesome work they do, the better paid they are. Just like Spotify pays royalties to artists for each time a song is played, App Stores should pay royalties to the devs for each time their apps are used!
The users seem to be the one who’d protest most — Something that was free yesterday, is now paid! OMG! I can already hear them screaming. But as we already discussed — it was never free at first place! The whole model costed them much more. With the new app store they get to try any app for free and if they actually end up using it, their money go to support it and making sure it’s always updated and improved for them.
In brief, we move fast, we reinvent things but sometimes the old school ways are just better and I definitely vote for a subscription-based app market driven by demand!
What is your vision for the future app stores? Who’d be the winners? Who’d be the losers in your scenario?
