[moved] Apple iPhone Developers Mostly Don't Make Much Money

[proberts]

With all the OVI to Apple comparisons (mostly by Apple apologists bashing Nokia - OMG! You can make a video call on your phone!?!?) I thought I'd post a link to this article. Most people I know with an app on the iPhone app store have made less than $100. I hate to go all "Nokia Fanboy", but if there's any place to do it, Forum Nokia would be it.

http://www.informationweek.com/news/...leID=217801029

Martin surveyed 100 development teams, received 85 usable responses, and found that 52% of the developers had earned less than $15,000 for their efforts and 33% earned less than $250.

For those bringing in more significant sums, the breakdown is as follows:

* 2%, $15,001-$50,000
* 1%, $50,001-$100,000
* 1%, $100,001-$250,000
* 1%, $500,001-$2,000,000

About 38% did not disclose revenue.

[Leviathan2040]

This may be very well true, but certainly depends on what kind of applications these developer did. It is not because there are 1,000 flash lights that all of them will make money. In any case, I don't see the point of bashing AppStore, at the moment it doesn't look like any of the publishers on the Ovi Store is going to be a millionaire either.

P.S. true you can't make video phone call with iPhone but I still have to see somebody that actually uses this feature, video calls on mobile have been an abysmal failure (ask to 3/Hutchinson-Wampoa for details)

[grahamhughes]

Adding what I've managed to discover...

There is a small number of figures that Apple publish, and a large number that they don't. But taking figures from various analysts, it seems that:

• About 20% of applications on the Apple store are free.
• Free apps account for somewhere in the region of 95% of downloads.
• The average price of a paid app is £2/€2/$2.80.

So, 1,000,000,000 downloads equals 50,000,000 paid downloads, equals €100,000,000, equals an average €2,500 per paid-for-app average (based on Apple's claim of 50,000 apps, so 40,000 paid for), of which the developer gets €1,750.

Add to that the fact the downloads are not evenly distributed, and a small number of top-downloaders gets a hugely disproportionate share of the volume, and I'd say that most apps are not even hitting the average.

Which means that most developers with a single app will probably not even recoup the cost of the Mac they had to buy to do the development in the first place.

Since Ovi's modus operandi is broadly the same as Apple's, I would expect a similar story.

The problem appears to be the mix of freeware and paid apps on the same store. Read the last section in this article ("Free!").

Graham.

[proberts]

Read the last section in this article ("Free!").

Woo hoo! I'm "rational" ...at least according to their test.


We had a meeting a couple of months ago with a guy from Sony's mobile game division. He said in previous years they usually got a mix of demo apps from graduates looking for work: Win Mobile, PC, J2ME, and even Symbian. He said this year every single submission was an iPhone app so they were considering leaving the iPhone market. His thought was that if every school in the US is teaching software development on iPhone, you've got a huge group of students that will be cranking out apps and they'll be giving them away for free, since publicity (getting hired) is more important than revenue. Even though most of the apps will be mediocre (Hershey's kiss), they'll still be free.


I hope Nokia doesn't try to compete head-to-head with the iPhone app store. Not because they can't, but because the iPhone app store isn't a very good model - for developers or consumers. I'd rather see Nokia do a mobile store based on the XBOX Live Arcade model. Not only do I think XBLA is a better model, it keeps Nokia from having to best Apple to be seen as successful. If Apple has 1,000,000 apps, Nokia will need 1,000,000 apps to be viewed successful. I'd rather Nokia create something better and be able to use Apple's numbers against them, rather than needing to match them.

[pjohnsen]

I totally agree with pat, that XBLA is a very good model Too me it is definitely one of the best app stores around today, so I sure hope Nokia will take a look at it for inspiration

I have also been eying the XNA Community Games (think they are renaming it to Indie Games now). I kind of like the model with using peer reviews to 'guarantee' some level of quality, however it is not yet available here (Denmark), so I cannot really tell how well it works in practice. Some info on Community game sales:
http://www.gamasutra.com/php-bin/new...hp?story=22970

And here is some sales charts for XBLA:
http://news.vgchartz.com/news.php?id=3527

[svdwal]

Woo hoo! I'm "rational" ...at least according to their test.

I hope Nokia doesn't try to compete head-to-head with the iPhone app store. Not because they can't, but because the iPhone app store isn't a very good model - for developers or consumers. I'd rather see Nokia do a mobile store based on the XBOX Live Arcade model. Not only do I think XBLA is a better model, it keeps Nokia from having to best Apple to be seen as successful. If Apple has 1,000,000 apps, Nokia will need 1,000,000 apps to be viewed successful. I'd rather Nokia create something better and be able to use Apple's numbers against them, rather than needing to match them.

Apple and Nokia are in direct competition with their smartphones, and phones are not seen as competing with the XBOX. Going to compare App Store and Ovi Store is the natural thing to do, and comparing Ovi Store with XBLA is not. Nokia made mistakes, and Apple is exploiting those mistakes. If Apple makes mistakes, Nokia is going to exploit these mistakes too, at least that is what they should do.

What you saw happening in App Store and will see in Ovi Store is that the right price of an app is set by the market. And that is the way it should be in a free economy. Nobody is forced to develop for any platform at all, if your think you can't make enough money, move to a field where you can.

Because both Apple and Nokia can make money from running their stores (which is fine by me) they won't let free apps take over everything because at some point running the Store becomes too expensive.

[pjohnsen]

It wasn't my intention to directly compare Ovi and XBLA, I merely wanted to suggest that looking at some of the things that works well for XBLA would be beneficial for Nokia and Ovi.

Specifically for games the presentation in the store: multiple screen shots, optionally a short trailer video and structured information on basic features like: number of players, online play, co-op, etc. - yes, I know these don't necessarily directly apply to mobile games, the point is having the basic features shown in a structured way instead of relying on the publisher mentioning them in the description text, so for mobile it might be: online yes/no, sound yes/no, turn-based yes/no.

I also think the 'try first by later' works really well on XBLA, while there currently isn't a good solution for doing this on Ovi.

I didn't provided links to sales info to suggest you could directly compare those to Ovi (or iPhone AppStore), it's a different price point and a different target market. The sales figures does however show that some XBLA and many XNA Community games aren't exactly earning tons of money either.

[grahamhughes]

I think the point is that Nokia could innovate a little, rather than adopting a "me too" approach.

It's not clear that Apple make money through the app store... work out their share of the revenue, divide that by the number of apps, then think about how much it costs to test and vet each app, the cost of hosting, marketing, billing, and all the other infrastructure set-up and running costs.

Yes, developers are free to take their products elsewhere. That's an important difference between Ovi and Apple. Anyone wanting to publish an iphone app must go through the app store. This is the danger for Ovi in adopting the same model - it doesn't exist in the same world. Developers with products that meet the requirements of more selective, premium sales channels may well choose not to publish through Ovi. While it's true that there are small developers who can't meet those requirements, but who nonetheless have quality, innovative products, I suggest that they are not in the majority. The result could be that the average quality of Ovi apps will be lower than that of iphone apps. I don't think that's good for developers, I don't think it's good for end-users, and I don't think it's good for Nokia.

Sadly, it appears that the game is one of quantity, either of apps or downloads. Quantity is easier to measure than quality, and it grabs headlines.

Graham.

[proberts]

Graham said it very well. XBLA, just like Store.OVI, iTunes, GetJar, etc. are B2C content distribution models. The obvious comparison is to the iPhone app store, but innovation isn't in the obvious, plus extending the successful parts of XBLA to mobile phone B2C app dist isn't much of a stretch.

Apple also has a different goal than Nokia. Apple needs to build market share. Companies building market share spend millions of dollars to buy a piece of the market without prioritizing revenue. (Twitter = $55M) Nokia is already the market leader. Granted they need to protect and grow their share, but they can afford to be concerned with profitability.

Just to add to what Graham said, on XBLA they also have a "community games" channel for free games developed by "community" developers. Top games occasionally are promoted from this channel, but it provides an opportunity for innovative garage developers - something very important that many companies miss (Nintendo - I'm looking at you).


BTW - I'm not a Microsoft fanboy. I think most of their software is horribly designed (by the marketing dept) and the XBOX 360 hardware platform is terrible (failure rates). They just got XBLA incredibly right.

[svdwal]

Graham said it very well. XBLA, just like Store.OVI, iTunes, GetJar, etc. are B2C content distribution models. The obvious comparison is to the iPhone app store, but innovation isn't in the obvious, plus extending the successful parts of XBLA to mobile phone B2C app dist isn't much of a stretch.

I wouldn't call having a demo section innovative. PC and PDA/Smartphone developers have been releasing demo's since the beginning of time itself. Not that Ovi Store doesn't need a demo mode but that is because higher-priced PDA software (i.e. in the USD 25 region) doesn't sell very well without demo's.

Note that Apple now has a demo channel for developers too with iPhone OS 3.0. You can release a free demo version and let the user buy the full version from within the demo itself.

Apple also has a different goal than Nokia. Apple needs to build market share. Companies building market share spend millions of dollars to buy a piece of the market without prioritizing revenue. (Twitter = $55M) Nokia is already the market leader. Granted they need to protect and grow their share, but they can afford to be concerned with profitability.

AFAIK, Apple's iPhone/iPod touch business is and has always been profitable (see for instance http://online.wsj.com/article/SB124043063507044823.html).

Just to add to what Graham said, on XBLA they also have a "community games" channel for free games developed by "community" developers. Top games occasionally are promoted from this channel, but it provides an opportunity for innovative garage developers - something very important that many companies miss (Nintendo - I'm looking at you).

BTW - I'm not a Microsoft fanboy. I think most of their software is horribly designed (by the marketing dept) and the XBOX 360 hardware platform is terrible (failure rates). They just got XBLA incredibly right.

Given that Microsoft is one the the most succesful sellers of computer software ever, getting XBLA right probably was a no-brainer for them ;-)

But what I mean is this. There are a couple of smartphone software selling business models that are known to work. The PDA model of high priced software with demos works, the subscription ringtone/wallpaper model works and the Apple model of low-priced apps works. The trick is to get all these business models work at the same time in the same shop. Apple isn't using the ringtones/wallpaper model, but is using both high and low-priced app models. Nokia is trying to do all three in Ovi.

[grahamhughes]

Very few ideas are actually innovating. Often, "innovation" simply comes from picking the best ideas from several places and blending them.

It's not clear to me that Apple's model "works"... for whom does it work? It may work for Apple (maybe financially, but certainly in generating a lot of publicity). And there is a small number of anecdotal stories of successful developers. But I think there is a larger number of developers who now have an increasingly dusty Apple Mac in the corner of a room.

Hmmm... I don't think Nokia is using the subscription model. They can't copy the iphone model (though I think they are trying to), because the App Store has a monopoly, and Ovi does not.

There are other models. Try-before-you-buy is extrememly successful for those developers able to get a deal to embed a game on the device. Other developers are using this too (without an embed deal) for example.

Other models: operator portals have been one of the biggest sources of downloads, selling typically between €2 and €8 (no freeware). The big problems for developers here have been (1) the need to sell you app to many operators, (2) the need to sell it early (often before it's written), to secure one of a limited number of launch slots, and (3) the need to hit a huge list of devices, including many that will not yield sufficient download volumes to cover the porting costs.

My interpretation of the "Hershey Kiss" experiment (and the analysis of downloads on the Apple store) is that as soon as there is freeware available, anyone trying to make a living is seriously disadvantaged.

By choosing the model of network operators, but dropping the launch slot limitations and device "drop lists", I think Nokia could have created something both accessible and profitable to developers. However, it would not have delivered iphone-shattering statistics (number of apps/downloads). And I guess that's what Nokia wants, to steal publicity away from Apple. After all, their business is to ship handsets.

Graham.

[proberts]

Another "innovation" that I think could be quite successful and differentiate OVI from iTunes is incorporating the social elements of the (pirate) site "Mob ile 9 (dot) com" (spaced to keep spiders away). They've successfully built a pretty amazing, diverse "community" using a rather simple social framework. Granted it's rife with illegal content. However, unlike MOSH, they've built a strong community - it answer it's own questions, rewards community engagement, and the profile-friend-gift-reward system and contests (ringtone remixing, wallpaper and theme creation) are engaging. It's simple, but appears effective. We started posting our free demos there about 6 weeks ago after finding our software there. (They did honor a remove request quickly without any questions.) We currently have more downloads of free content from this site than any other except perhaps OVI...then again perhaps not :P hopefully we'll find out soon.

[svdwal]

It's not clear to me that Apple's model "works"... for whom does it work? It may work for Apple (maybe financially, but certainly in generating a lot of publicity). And there is a small number of anecdotal stories of successful developers. But I think there is a larger number of developers who now have an increasingly dusty Apple Mac in the corner of a room.

The Apple model/smartphone software mass market model works in the same way that pop music works. There are an awful lot of bands out there. Some bands become immensely popular and make lots of money. A few more become more reasonably popular and make a reasonable amount of money. Most bands pay money to play their music. You get a lot of "one-hit wonders", and a few megastars.

Hmmm... I don't think Nokia is using the subscription model. They can't copy the iphone model (though I think they are trying to), because the App Store has a monopoly, and Ovi does not.

The Apple model is selling "cheap-and-cheerful" apps, like iFart and iBeer. You couldn't sell such apps in traditional stores like MobiHand and Nokia Software Market, as they were too cheap to pay for by credit card.

In practice Ovi will become the monopoly holder because 1) all potential customers are there, 2) all potential customers are there and 3) all potential customers are there so 4) all ISV's are going to be there too. It's one of those size-of-network effect things. The Agreement explicitly forbids selling upgrades, new versions etc through your own website and I expect that Nokia will start checking that requirement or is already doing that because it will 1) provide lock in and 2) generate more money for them.

There are other models. Try-before-you-buy is extrememly successful for those developers able to get a deal to embed a game on the device. Other developers are using this too (without an embed deal) for example.

I consider that part of the demo model.

Other models: operator portals have been one of the biggest sources of downloads, selling typically between €2 and €8 (no freeware). The big problems for developers here have been (1) the need to sell you app to many operators, (2) the need to sell it early (often before it's written), to secure one of a limited number of launch slots, and (3) the need to hit a huge list of devices, including many that will not yield sufficient download volumes to cover the porting costs.

My interpretation of the "Hershey Kiss" experiment (and the analysis of downloads on the Apple store) is that as soon as there is freeware available, anyone trying to make a living is seriously disadvantaged.

But that has always been the case. Nothing new here.

By choosing the model of network operators, but dropping the launch slot limitations and device "drop lists", I think Nokia could have created something both accessible and profitable to developers. However, it would not have delivered iphone-shattering statistics (number of apps/downloads). And I guess that's what Nokia wants, to steal publicity away from Apple. After all, their business is to ship handsets.

Graham.

I'll wait for the download figures to become available to see whether Ovi will be as popular as App Store.

[svdwal]

Another "innovation" that I think could be quite successful and differentiate OVI from iTunes is incorporating the social elements of the (pirate) site "Mob ile 9 (dot) com" (spaced to keep spiders away). They've successfully built a pretty amazing, diverse "community" using a rather simple social framework. Granted it's rife with illegal content. However, unlike MOSH, they've built a strong community - it answer it's own questions, rewards community engagement, and the profile-friend-gift-reward system and contests (ringtone remixing, wallpaper and theme creation) are engaging. It's simple, but appears effective. We started posting our free demos there about 6 weeks ago after finding our software there. (They did honor a remove request quickly without any questions.) We currently have more downloads of free content from this site than any other except perhaps OVI...then again perhaps not :P hopefully we'll find out soon.

Mmmm, interesting concept. There are a lot of Symbian related sites out there with a strong community aspect, but all of these have taken a firm stand against piracy. If Ovi is going to run an affiliate scheme such sites could very well make money using that.

[proberts]

If Ovi is going to run an affiliate scheme such sites could very well make money using that.

That's a great idea!