An Interview About Paid Apps

Last October, Andrew Hayward interviewed me for an article that ran in the print edition of MacLife. Since it was never published online, I completely forgot about the interview. Today, the article was posted on TechLife, a subsidiary of MacLife. Andrew used several quotes from our interview, but didn’t have room for some of my longer rants. Since the topic is just as relevant today, I figured it was worth posting the entire interview as emailed on October 30th, 2013.

How has the market for paid apps changed during your time selling premium apps in the App Store?

I’m not sure to what extent each factor is impacting the market, but it seems as though many factors have been at play in reshaping the market over the past couple years.

As the US smartphone market matures, it’s no longer more affluent early adopters buying iPhones and scouring the App Store for new apps, it’s less tech savvy users and more price sensitive consumers.

At the same time, the early adopters who are still upgrading their iPhone every year or two seem to not be as actively looking for apps. I used to buy 5+ new apps a week and now I hardly buy any. Not because I’m trying to spend less money, I’ve just already settled on 10-15 apps I use daily and am not seeing as many new apps that seem worth my time to check out.

It also seems as though there are enough free and cheap alternatives that people looking for specific types of apps end up using “good enough” free and cheap apps, rather than risking $3-5 on a premium app.

And I’m sure there are other factors at play as well. I’ve heard other theories about people no longer downloading and playing with apps as a form of entertainment in and of itself.

Have you taken any steps to counteract the changing market regarding the way you price and construct your apps, and have you seen results (whether positive or negative)?

I was hoping that as people upgraded to iOS 7 and went looking for iOS 7 compatible apps there would be a surge in sales for great iOS 7 apps. So, I decided to postpone more experiments with freemium and go with premium prices for the iOS 7 launch. But from what I’ve seen and heard from other developers, there wasn’t much of a surge in paid apps. In fact, it seems like sales of paid apps have been even worse since iOS 7 was released (which could be in part due to the App Store having so many issues since the iOS 7 launch). I have a few more experiments planned with premium pricing, then I’ll probably start working toward switching them to some sort of freemium model next year. Thankfully, Apple implemented App Store receipts in iOS 7, so developers can switch to freemium while still rewarding the early adopters who paid full price.

Do you think that there’s anything Apple can (or should) do to help buoy the premium app market?

There’s a lot Apple can do. Few people think of it this way, but Apple controls the App Store economy in a way similar to how the US government controls the US economy. The government doesn’t have complete control of the economy, but they work hard to shape it through a combination of tax incentives, monetary policy, and other means. Similarly, I think people underestimate just how much Apple’s policies shape the App Store market.

Currently developers can use IAP for all sorts of convoluted free-to-play schemes, but Apple has a rule against free trials, demo apps, and the like. With a single policy change, Apple could empower developers to use App Store receipts to roll their own free trials. Surely that’s no more user hostile than Candy Crush’s casino-like techniques for milking users for cash.

There are lots of other seemingly small things Apple could do that would end up rewarding developers who line up with Apple’s priorities. For example, there seems to be absolutely no search ranking boost associated with apps that were rebuilt for iOS 7. So, Apple pushed hard for developers to support iOS 7, but when you search for “weather” in the iOS 7 App Store, you see a bunch of apps that haven’t been updated in ages, much less optimized for iOS 7. Search is incredibly important to the App Store market, yet it’s absolutely terrible and Apple doesn’t seem to care.

Not only that, Apple didn’t even bother optimizing search for the iOS 7 release. If you search “iOS 7 weather” in the App Store, you don’t get weather apps that were optimized for iOS 7, you get SEO spammers (and soon my Perfect Weather app since I figured out the issue).

What’s your take on the trend (especially post-iOS 7) of developers releasing an entirely new app for a significant version release, as we’ve seen with Tweetbot and Screens of late? Do you think consumers will become more accepting of this approach as it continues?

There is a vocal minority that seems to be bothered by this, but I think it’s absolutely the right thing for developers, and ultimately for users since it keeps developers in business and updating their apps. However, I will say that I think developers should be careful in how they do this. Charging frequently for minor updates does feel like nickel and diming users. One big paid upgrade every 12-18 months with lots of new features seems fair to me.

I talked at length about all this today on CMD+Space. Feel free to use anything from there as well: http://5by5.tv/cmdspace/68

UPDATE: One caveat about releasing paid updates in the App Store: they can kill search ranking. If your app relies heavily on search for user acquisition, a paid update could significantly reduce sustained downloads once the initial surge of upgrades slows. This happens because App Store search results seem to be very heavily weighted to all-time downloads, which obviously gets reset with a new SKU.

david