Rss

Nostalgianomics

Yay! Another App Store think piece!

No, wait, where are you going? Hang on, I promise it won’t be the same old “Apple needs to do trials and paid upgrades” rant. In fact, I don’t think Apple’s the problem at all.

I think maybe we’re the problem.

So yeah, I listened to both parts of Marco Arment and David Smith discussing “Improving the App Store” Under The Radar, but this isn’t about picking apart their ideas. Instead, it’s more about what we even expect from an app economy.

Well what is an app economy, anyways? A lot of us remember when you’d go to a CompUSA or a Micro Center or even Best Buy, and there would be shelves and shelves of boxed software that you could buy for whatever purpose suited you — well, on Windows anyways… Mac software was harder to come by — and you’d go home and install it and get value from whatever functionality it provided, like creating graphics, or writing, or making music, or whatever.

So the idea that a lot of people have is that the retail store and the boxes have gone away, replaced by downloads, but still with this underlying idea that you buy software to do stuff. That what the code does provides value to you.

I’ve come to wonder if that’s not a mistake. People don’t pay for functionality, at least not anymore. They do pay for content and services, but they don’t pay for functionality.

Let’s go back to our hypothetical late 90’s CompUSA. If we can get past the stock ladder that’s always parked right in front of the Mac software, we can pick up copies of, say, WriteNow, Kai’s Power Goo, and Quicken 1998. We’ll install it on our Bondi blue iMac, and create written documents, pictures, and financial records. This is great! Total bicycle-for-the-mind stuff.

But what do we do then? With our word processing documents and our graphics, maybe we print them, or just keep them on the computer, as we do with the financial records from Quicken. And that’s probably all we want in the 90s.

But what do we do today? Why don’t we use WriteNow, Kai’s Power Goo, and Quicken 1998? I think it’s because we use Medium, Instagram, and Mint, respectively(*). The web makes our creative works far more valuable when we share them, and sharing a URL gets us a lot farther than running a bunch of copies through the laser printer ever could. And for our financial stuff, maybe we barely even need to keep our own records when the bank and credit card company is already doing so on their sites for us.

(* – yeah, obviously there are other values you could insert here, like WordPress, Flickr, and Wells Fargo. Please don’t get hung up on this detail)

On the computer, web pages have in many cases replaced apps. In these cases, we’re using services (paid for with subscriptions or ads, or maybe the nature of the service itself, like your bank’s monthly fees). We underestimate the degree to which the web competes with, and in many cases has defeated, native applications.

On the mobile device, the web is not nearly as good, and the app starts to look a lot more appealing as a client. There’s still a lot of friction getting an app downloaded and installed, but if your service is worth it, people will do it.

The above also applies to content. Think about your streaming media: Netflix and Spotify keep you fat and happy with movies, TV shows, and music, again paid for with subscriptions or ads. On the computer, you access them through a browser; on the phone or tablet, you get an app.

People will pay for content. People will pay for service. People will not pay for functionality.

Most people don’t need a word processor or image editing app anymore, because the distribution is far more important than the creative tool, and in many cases, the service has captured the tool portion of this market. You usually don’t use a separate app to create your blog posts, you type it right into a browser editor or a native app provided by the service. After all, I’m not writing this post in TextMate or BBEdit, I’m using the WordPress editor in Safari… even though TextMate and BBEdit are far better text editors. The frictionlessness of working directly with the service outweighs the value of what a native app can provide.

So, if you even buy this argument a little, look how that renders most App Store talking points irrelevant.

  • Paid apps are dead, because apps are clients to content and services. You wouldn’t pay for a Hulu app, any more than you’d pay for a Hulu-only browser. You’re getting the app because you want the internet-connected content and services behind it.
  • Since paid apps are dead, trials and paid upgrades are irrelevant.
  • What Apple does to feature apps on the App Store is also irrelevant. Users are motivated by wanting to access internet-connected content and services. They discover those on the internet or in real life (as the businesses and organizations they interact with on a regular basis), not by browsing the App Store.

You know that big check that Tim Cook will show in a keynote, like how Apple has paid developers $20 billion as of 2014? That pales compared to the value of all the companies whose existence is predicated on being a mobile app. A billion for Instagram here, a billion for Waze there, it all adds up. Facebook’s $19 billion acquisition of WhatsApp nearly matches the Tim Cook check all by itself.

And pretty much all those cases are internet-based content and services, with free apps.

Of course, there are exceptions, there always are. Nearly all games fail, but every now and then you’ll get, if not a black swan, then at least a Flappy Bird. But overwhelmingly, I think this is the reality of iOS app development: you’re writing the mobile, user-local part of a larger service.

And this does have career implications for all of us. The indie developer story is over, unless you’re the legendary full-stack developer who can write mobile, browser, and backend code, and actually enjoy and be good at all three. But modern labor markets tend to reward specialization, so chances are you’re part of a larger team. Maybe that’s just a handful of people, but it’s still going to tend to take the form of a company or other organization (non-profit, government, etc.) and not an individual.

And yes, again, there are exceptions, but consider: Marco has admitted on the last two ATPs that his patronage model for Overcast is only barely viable (and he’s starting from a stronger position than most of us), and my friend Curtis stands to make about $20K/yr on his terrific Slopes app, something he sets aside about a third of the year to work on. These are the success stories. Care to speculate what the median is like?

I have a saying, “the first rule of capitalism is that stuff is worth what people will pay for it.” That’s not meant to be a value judgement. It’s not good or bad, it just is. People won’t pay for apps. Therefore, the value of an app is typically zero. However, they will pay for stuff behind apps, for what the app will do for them, or let them do, what it will show them, or let them show their ideas and works to others.

“Fixing” the App Store, saying that Apple needs better curation or promotion of apps, is like “fixing” Yahoo!… and not the entertainment conglomerate of today, but the browsable collection of websites that Filo and Yang put together in their Stanford dorm room. It’s premised on a model and a value proposition that doesn’t exist anymore.

Next Post

Comments (6)

  1. Chris Carr

    Word. Great post.

  2. […] (2016-03-30): See also: Under the Radar, Chris Adamson, Christopher Mims, Nick […]

  3. flooky

    “they will pay for stuff behind apps, for what the app will do for them”

    True of a lot of products, you don’t buy a car, you buy a way to get around.
    What my apps do for them is provide the functionality that they pay for.

    Theres an argument that recurring revenue in the form of subscriptions for content is a better monetization method, but that doesn’t mean that people don’t pay for functionality any more. Because they do.

    A bit of overanalysis here in my view.

  4. GT

    I have to agree with Flooky… “A bit of over analysis here…”
    but it’s also surprisingly pessimistic perspective from an educator and author who’s work helps people achieve that very dream of having an app in the App Store.
    Most entrepreneurial ventures fail, but they’ll never succeed if we don’t at least try.

    ( … and thanks for the reference to Kai’s Photo Goo… I’m one of the engineers that worked on it )

  5. Noam

    Fabulous post – really focuses on the core of the issue. Makes it easier for me to see the current landscape. Thank you!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.