Difference in payment and estimated revenue

[jimgilmour1]

Jim - I don't think currency fluctuations enters into this do they? Aren't we talking percentages? Like I said up top, I'm about to publish an app here and I'm a little suprised that given Nokia's recent financial performance and smartphone market metrics, they're seeming to be squeezing the very people who are going to help them out.

My point is that say I have a 5Mb app - why should I have to pay more if I price it at €30 than if I price it at €10? I mean, surely this is not about a multi-billion dollar enterprise taking 40% off my margin just because my app is worth €30? Nokia should be encouraging quality by saying 'hey we don't care what the price-point is guys - we'll just charge you a flat €1. Whaddya reckon?

Hi Currency charges/exchange rates annoy me!.

Anyway another person put this well

Lets say I sell something over operator billing for E1.99, Nokia takes E1.30 for of that leaving 70c gross or 35% gross margin which is abysmal, is that the case

Unfornately thats what everyone who signs up agrees to. Operators dictate to Nokia the rates and one reason Ovi did have a long overdue launch was that Nokia could not agree a rate with loads of Teleco's of course on the Iphone you only have one operator! per country.
Jim

[spol]

Lets say I sell something over operator billing for E1.99, Nokia takes E1.30 for of that leaving 70c gross or 35% gross margin which is abysmal, is that the case

Just to clarify, 35% was an estimate. It turns out to be around 30% and that's when our second largest market is the U.S. The developers percentage of gross revenues will decrease further after operator billing is introduced into the U.S.

[modifed09]

Hi Currency charges/exchange rates annoy me!.

Anyway another person put this well


Unfornately thats what everyone who signs up agrees to. Operators dictate to Nokia the rates and one reason Ovi did have a long overdue launch was that Nokia could not agree a rate with loads of Teleco's of course on the Iphone you only have one operator! per country.
Jim

yep - but my point is why should anyone get a scalar percentage of my price point? Bits is bits! it should be flat rate. The telco agreement must be on bandwidth surely? not on price-point? I can't see the business logic here - that model is old skool retail.

It's like saying 'okay you drive a mercedes, we're gonna charge you 3 times the cost for travelling that bit of road than the guy in the ford focus'. I don't get it. They're cutting their own throats. Sure we can sign up to it, because we want to travel that bit of road but, hey, there would be a helluva lot more more people taking the journey if there was no prohibition on the cost of making it.

And I don't buy the argument that the telcos define the cost of travel on the basis of an app's price point - all they're interested in is the bandwidth. So I think it comes down to Nokia taking a stand and saying to us 'okay this is the road and it's gonna cost you a flat €1 to travel it'. And we say 'thanks you're really switched on, can't wait for the lights to change to green!'.

[modifed09]

For PSMS billing, that's pretty good actually. Rates are typically 40%-60% based on price. It's totally screwed up, and that's why everyone wants the carriers to become dump pipes. Their 50% cut just to bill their customer (compared to credit card compaines that charge around 3%) has hindered the mobile app market more than anything. Why should a developer create a high-end app customers are willing to pay $20 when the carrier is going to take half just for the processing the billing transaction.

Well, at least IMO... :P

yeah Pat, this is the nub. I read the other day that the guy who developed 'Gravity' - you know the cool kinetic Twitter client - makes 90% of his income from his web site - not the app stores. And if he has a merchant account taking orders with an overhead of 3% then that's a helluva lot of telco saving he's making on an app he's selling right now for €10 in Ovi.

On the other hand, he's relying on his app's wider exposure ( albeit on the back of excellent reviews) - not the built-in Ovi store icon bandwidth. So it's horses for courses as they say... Be interesting to see how that develops over time once he's off the blog/mag front pages....

[spol]

And we say 'thanks you're really switched on, can't wait for the lights to change to green!'.

I think what Jim is trying to say (and I don't wish to put words in his mouth) is that the current position is the reality and it's what we have to work with.

With respect to Nokia being switched on, they're not. That's the reality. Don't hold your breath waiting for some-one from Nokia to tell you that you're correct. 30% of gross revenue is what's on offer, that's not going to change. There's no way that any developer will cover their costs through Ovi.

I attended the SEE this week. I had a stand and not one person from Nokia approached me. Talking to other developers there, it would appear that I'm doing better, revenue wise, than they are. However, it cost me a two full months income from Ovi to attend.

[proberts]

...course on the Iphone you only have one operator! per country.

At least here in the US, iPhone/iTunes doesn't offer carrier-based billing. It's all credit-card through iTunes (which come to think of it also has pre-pay cards.)

Does iTunes/iPhone offer PSMS billing in the UK?

(BTW - On your other post, I'm trilled to get paid in Euros. They're better than USD right now, and we can get accounts here denominated in Euros.)

[modifed09]

No-one selling on Ovi is coming near that figure.

How do you know this?

[spol]

I don't know for sure since no figures have been released (there's probably a very good reason for this). I can tell you what other developers tell me and what I have experienced.

When our best selling app launched it failed to reach 40 sales per day. The tail was almost immediate as the app fell outside the "suggested for me" and "most popular" indexes within a couple of days. Within a week after the launch daily unit sales dropped into the teens and within a month it was down to single digit daily sales. We have since managed to get daily sales back into the teens and even past the 20 mark on occasion by localising it into five languages and launching a trial version. By the way, the vast majority of comments have been great other than when Ovi gives a version not compatible with the users phone (different thread).

I've had several email discussions with people from Nokia about the fact that the sales-cycle "tail" is almost immediate. I also posted extensively here about the fact that "most popular" index is broken. There are a couple of threads about this. Nothing has changed.

I can also tell you, from our experience, that mid-tier-phone owners download much more free apps than they buy. High-end phone owners will purchase apps. For example, the 5800 accounts for 60-70% of our free downloads while the N97 accounts for 50-60% of paid downloads. This makes sense as the high-end phone owners would probably have a higher disposable income. Unfortunately, most of the recent Nokia smart phone sales have been in the mid-tier segment and Apple have taken over the the high-end. The launch of the N900 should fragment Nokia's share of this lucrative market segment. That would make it more difficult for app developers to generate a return.

I think my earlier point is worth repeating considering the data I just shared. In order to generate an income similar to that of a contract engineer you need to sell over 300 units each day at €3 consistently for a year (you reach 300 immediately and have no sales-tail for twelve months). That's without accounting for VAT or any other expense. As it stands, Ovi is not viable.

[modifed09]

I think my earlier point is worth repeating considering the data I just shared. In order to generate an income similar to that of a contract engineer you need to sell over 300 units each day at €3 consistently for a year (you reach 300 immediately and have no sales-tail for twelve months). That's without accounting for VAT or any other expense. As it stands, Ovi is not viable.

Thanks for sharing the data.

Hopefully, other publishers here might like to share their stories too.

Spol, first up, you sound pretty depressed about this and I'm sorry to hear of your frustrations. I don't know what your app is but it seems pretty obvious to me that in order to reach your 100k/year minimum target you have to migrate to other online app stores and their devices. That way you could at least spread the frustraion across multiple platforms! Anyway, again, sorry to hear of your dilemma.

Secondly, you quoted me earlier saying that Nokia doesn't listen so there's little point arguing the toss. Well, look, that's life huh? If you don't articulate your position who is to know?

So, imagine for a moment that Nokia were receptive. What would be the 5 ideas that would make Ovi(and you) successful - and thereby help you achieve your target?

[modifed09]

(BTW - On your other post, I'm thrilled to get paid in Euros. They're better than USD right now, and we can get accounts here denominated in Euros.)

Yes, if you track the dollar v euro over the last 12 months (http://newsvote.bbc.co.uk/1/shared/f...elve_month.stm) you'll see that, yeah, there is quite a curve going on there. So setting up a euro account makes sense. Best to have both for fear it starts swinging the other way - not that, IMHO, that's likely in the near-term....

[mstream]

We finally got our remittance notice from Nokia this evening. The difference between estimated revenue as per the Ovi website and the payment is huge.
Our estimated revenues are 64% greater than the payment value for the third quarter. Has anyone else experienced this? How could it be so large?

I've just received the following e-mail from OVI Publishing, it explains the difference:

For the first payout period, you may notice that your payment is less than what was shown on your September 30th cumulative estimated revenue metric in the Ovi Publisher Paid content reports. The reason for this is:
1) The Estimated revenue metrics shown in Ovi Store Paid Content Reports provide an estimated view of revenue which include both operator and credit card revenue. This first payment going included credit card revenue only.
2) Due to delays in Nokia’s receipt of payments from our operator partners, the payments being made in this first cycle payment do not include operator revenue.

[spol]

I've just received the following e-mail from OVI Publishing, it explains the difference:

Thanks mStream. I got that email Saturday night also.

Just prior to getting that email, I also got another email from one of the guys at Nokia telling me that they sent that same note to all developers early last week.

"I'm not sure if you got a chance to go through that email sent to all publishers earlier on this week."

I've been in contact with about a dozen developers since Saturday night and no-one I've spoken with receieved any prior notice. Maybe some-one out there did get this email before Saturday? Should I feel eeked?
Is this symptomatic of the problems facing Nokia?

[ejohn]

All, Thanks everyone for your posts below. I want to make sure we answer your questions. I’ve included some quick facts below and I’ve included the FAQ that went out to our registered Ovi Store publishers in an email this past Saturday 11/31/09.

FYI..we’ll be hosting a Webinar for our publishers next week covering these billing /payout questions and some best practices vis-à-vis pricing and distribution. To register, choose one of these two times below

Session 1 - November 12th 8am NY | 3pm Helsinki
http://forumnokia.emea.acrobat.com/e...istration.html

Session 2 - November 12th 11am San Francisco | 2pm NY
http://forumnokia.emea.acrobat.com/e...istration.html

More later – Eric

--------------
Ovi Publisher Payout details:
Nokia pays revenue share to Publishers based on the revenues we receive from Credit Card and Carrier billing. The Carrier payouts will be on a 30 day lag month-to-month.

The most recent payout to Ovi Store publishers was for revenue received by Nokia between May 26th and September 30th.

Due to the slower rate of payments made by carriers to Nokia, the payout that went out on October 30th DOES NOT INCLUDE carrier revenue. As such, this payout is, in some cases, significantly below the estimated revenue shown in the Ovi Publish tool.

Going forward, payouts will be on a monthly schedule and the threshold for payment is now 100 Euros.

The revenues we pay out INCLUDE the revenue share cut and all taxes for the sale of content. You do not have to worry about additional taxes EXCEPT those you’d normally be liable for your business.

Estimated revenues shown in the Ovi Publish reports user interface DO NOT INCLUDE carrier bad debt or refunds. This could cause the Estimates to be slightly higher in any given month than the actual payout, but this percentage should be small and in the single digits.

FAQ
Q) What period of sales did the first publisher payout cover?
A) This first payout covers the period between when Ovi Store launched on May 26th to September 30th.

Q) It’s good that you’ll be making payments on a monthly basis and lowering the payout threshold but how come my payment this period doesn’t match what I see in the Ovi Publish estimated revenue metrics?
A) The numbers shown in the estimated revenue metrics includes sales data (from credit card and operator billing). The payout for this period includes only revenues received via credit card. Future payments will include both credit card and operator billing.

Q) Will the payment that Nokia makes to publishers for revenue earned during the month of October include the May through September operator billing receipts?
A) Yes, the October revenues, which will be paid out in November, will be composed of all credit card revenue for the month of October and all operator revenue received by Nokia for the sales period between May 26th and September 31st. These will be combined into one single payment.

Q) Given the delay in Operator billing receipts, should we include this form of billing?
A) Yes. As a default, Ovi Store offers operator billing to consumers in those geographies where operator billing is available. It’s our belief that many consumers prefer having their content purchases appear directly on their operator bill. Despite this delay in the payout of operator billing receipts, we believe operator billing is good for consumers and is a good opportunity long term for our publishers to participate in these easy user-flow transactions.

Q) Why is it that even though I reached the 100 euro threshold, my actual payout was less than 100 euros? Are there other charges being subtracted from my receipt?
A) When Nokia pays out revenue to our publishers, we make these payments in Euros. When your designated bank receives that payment electronically, depending on your local currency, your bank may charge a fee for transferring Euros to your local currency.

Q) Can you summarize what the payment process will be going forward?
A) Going forward Nokia will be paying publishers on a monthly basis for all revenues received, (operator and credit card revenue), if over the 100 euro threshold, as follows: last month’s Operator Revenue plus this month’s Credit Card Revenue is combined and paid at the end of each month.

At the end of each year, all publishers will receive a payment (less any currency translation fees, taxes, refunds, cancellations or bad debt) of all credit card revenues from May 26th to December 31st 2009 and all operator revenues from May 26th to November 30th 2000, regardless of the threshold.

Q) What if at the end of a calendar year, my payout amount is the same as the currency conversion? Is it possible my net actual payout would be zero?
A) If your transaction fee is equal to your payout amount, then yes, the net amount would be Zero

Q) I was frankly hoping to see more revenue this period. When does Nokia anticipate my sales will increase?
A) Ovi Store is still a young service and we’re now seeing good progress in terms of scaling the service as well as enhancing the user experience, which we expect will result in continued usage improvements and increased sales. Here’s a quick update to some key metrics that help show the direction of the business.

Usage: on average, each registered user has downloaded at least seven items from Ovi store
- In the month of September our active user base grew by over 50%

Country by country rollout: Ovi store is available in more than 180 countries, available in six local languages, and nine countries supported with operator billing.

Recent service updates and improvements: content item redownloading has been implemented and we have made recent improvements in keyword search and discovery functionality

Ovi Store marketing has begun scaling and appearing in many major markets around the world in TV, print and web/ digital ads, starting with the promotion of the Ovi store client, shipping on the Nokia N97. Ovi Store specific campaigns supporting Nokia XpressMusic devices are also running in many markets.

Q) Earlier this month there was a glitch in Nokia’s estimated revenue reports that caused a gap in the data shown in the reports interface. Has that glitch affected this period’s payouts?
A) There is no relationship between the estimated revenue metrics and the actual payments made to publishers. Payments are calculated based on final revenues received from Operator and Credit card providers. The estimated revenue metrics shown in Ovi Publish are calculated from an entirely different set of data based on a run rate of sales and does not factor in operator refunds or bad debt.

Q) Has that estimated revenue metrics reports glitch been fixed?
A) Yes, the estimated revenue reports are fixed and are up to date.

Q) My estimated revenue report shows I was well above the 100 Euro earning threshold but I have yet to receive any payment in my bank account? What could be the problem?
A) There may be a couple of issues.

1) Banking Information: It may be possible that your banking account information, is missing or incorrect. To check your banking information in Ovi Publish see Payee Details under the Admin tab. If there is no banking information there, Nokia will not be able to make a payment to you. If your Payee Details are correct, but you haven’t gotten paid, please send an email to: PublishToOVI.Support@nokia.com Be sure to give us your company name in the Subject Line of your email.

2) Estimated revenue is not the same as received revenue: What this means is a publisher may see more than 100 Euros of estimated revenue in the Ovi Publish user interface, but remember, estimated revenue is calculated based on transactions. Final payments are sent out after Nokia has received the payments from Operators and when actual the revenue share calculations have been completed. This means that some publishers might see in the Paid Content Reports interface for example150 Euros, but since Nokia has not yet received operator billing revenues, the actual payable sum could be less than 100 Euros. Remember too, no pay out of carrier billings are being made in the month of October. It won’t be until the month of November that the first combination Credit Card and Carrier Billing payments will be made to publisher’s bank accounts.

Q) Are there things I should be thinking about to build my business further on Ovi Store?
A) Some things to think about include:
Pricing: Make sure you are monitoring the prices of competitor content relative to yours.

Content Differentiation: If you are in a crowded content category –think about ways to improve your experience. Read your user reviews. Are there things they don’t like? Chances are they are reflected in your reviews.

Relevancy: Is your content targeting the world but it’s only available in English? Think about creating locally translated version of your application / content as well as the related metadata.

Is your content Spotlight ready: Spotlight is a promotional ad unit that the raises visibility of your content in the Ovi Store mobile and desktop experiences. Be sure to include the Spotlight metadata (images and descriptions) so that your content can be considered for these promotions. While having your metadata entered in Ovi Publish is not a guarantee that it will receive promotion, it does raise the chances of it being considered for promotion.

Device targeting: have you created versions for multiple devices? Try to make sure you have a range of devices covered including touch devices (Nokia N97, Nokia 5800 XpressMusic and Nokia 5530 XpressMusic) as well as S60 3.2 and 3.1 devices (Nokia E71, Nokia E63, Nokia N95 and Nokia N95 8G)

[jimgilmour1]

Hi Eric,

Going forward, payouts will be on a monthly schedule and the threshold for payment is now 100 Euros.

I would like to say THANK YOU that this is a significant improvement. Historically in U.K. the main problem with small business is "cash-flow". If our suppliers want 30 day payment, then the original 90 days was unacceptable and so was the 500 EUR limit now reduced to 100 Euros is significant.


The full document can be download from File:OviPublishPaymentUpdate FAQ11-09.pdf
or http://wiki.forum.nokia.com/index.ph...sh_Payment_FAQ

Because Euro payments are much more common in the U.K. "SOME" banks are offering reduced rates on conversion. You must *ASK* for these facility often just asking for a Euro account to be open the when you have a larger amount you ask the bank to use its "automated" conversion rate, where the bank transfer all its Euros when the exchange rate reaches a peak, therefore getting the best rate.
Thanks,
Jim

[spol]

After attending the webinar this afternoon, the revenue share from Operator Billing transactions is roughly 35% for the publisher. I'm assuming that's for content priced at €3 and above. With respect to sales figures, I asked a question that ran something like this...

In your presentation, you showed an example revenue report of paid content with daily sales figures in the 000s, is there any publisher achieving such a figure?

Naturally, it wasn't answered. After all it was an example revenue report of an imagined publisher. Some-one did get a reply to a question about sales numbers. The answer was the same as Erics reply on this thread, namely that Ovi is a young service, that the number of subscribers grew 50% in September and the average download per user is seven items. The problem with this answer is that it fails to recognise two important facts
- Publishers can't sustain huge losses for such an extended period. They'll either go out of business or go where they can generate a return.
- The competition are doing so much better. Apple had very profitable iPhone developers from the very start and recent reports suggest some Android developers are generating monthly revenues in the tens of thousands from the Android market place.

I saw nothing in the webinar that would suggest Ovi is becoming a viable market place. This is my main concern and it was not addressed to any degree this afternoon. I can't take the losses I've sustained from supporting Ovi.