Brandon Ashmore, a 21-year-old from Mentor, Ohio, has a lot to smile about as the winner of a US$10,000 gift card from Apple for being the person who downloaded the 50 billionth app from the App Store. Ashmore told NewsChannel5 in Cleveland that he had saved up five apps to download onto his iPhone 5 to try to win the contest, and thought he was being pranked when an Apple rep called him to relay the good news.

Ashmore finally believed the caller, saying that the Apple employee had "too much information" about him. The winning app was Say the Same Thing by SpaceInch, LLC, a free word game that has been floating around the Top Free Apps list since it was released in April 2013.

So what's Ashmore going to do with his $10,000 gift card? He refers to the credit as "free music, movies and books for life."

Apple's 50 billionth app contest winner saved up five app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 17 May 2013 14:00:00 EST. Please see our terms for use of feeds.

Apple's 50 billionth app contest winner saved up five app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 17 May 2013 14:00:00 EST. Please see our terms for use of feeds.

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Shortly before 5 PM ET, Apple officially hit the 50 billion-app mark on the App Store. The grand prize for achieving this is a US$10,000 gift card redeemable on the App Store and $500 App Store gift cards to the next 50 customers following that. We'll let you know the winners as soon as they're announced, and congratulations to Apple for hitting the milestone!

App Store hits 50 billion apps downloaded originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 15 May 2013 17:00:00 EST. Please see our terms for use of feeds.

App Store hits 50 billion apps downloaded originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 15 May 2013 17:00:00 EST. Please see our terms for use of feeds.

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Apple has been steadily beefing up its in-app purchasing policy to prevent children and adults from inadvertently buying items from within an app. As spotted by App Advice, Apple recently added a new disclaimer about in-app purchases to its App Store on the iPad.

The new "Learn More About In-App Purchases" page explains what in-app purchases are and how they work. Apple also gives tips on how to limit in-app purchases using parental controls.

You can find this page in the featured section of the iPad App Store, directly below the "What's Hot" section. There you will see a "Learn More About In-App Purchases" card. Tapping on it will bring up the full page.

Right now, this information is only available on the iPad. We assume it eventually will land on the iPhone App Store and the iTunes desktop version.

Apple posts 'Learn more about in-app purchases' in iTunes originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 26 Apr 2013 10:00:00 EST. Please see our terms for use of feeds.

Apple posts 'Learn more about in-app purchases' in iTunes originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 26 Apr 2013 10:00:00 EST. Please see our terms for use of feeds.

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As reported by China Daily, a Beijing court has ordered Apple to pay three Chinese authors US$118,000 in damages for selling their books without prior consent through apps available on its App Store.

The lawsuit was filed against Apple by the Writers' Right Protection Union (also known as the Writers' Rights Alliance), an organization that protects the copyrights of authors whose works are published online.

According to China Daily, Judge Feng Gang, who was presiding over the case, said Apple "has the duty of checking whether books uploaded by third parties are in line with current laws."

The ruling follows a long line of complaints and lawsuits against Apple by Chinese authors who claim their works have been uploaded through apps to Apple's App Store without their permission.

[Via Engadget]

Apple to pay Chinese authors $118,000 for violating copyrights originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 25 Apr 2013 15:30:00 EST. Please see our terms for use of feeds.

Apple to pay Chinese authors $118,000 for violating copyrights originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 25 Apr 2013 15:30:00 EST. Please see our terms for use of feeds.

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Brian Stucki is the developer behind MacMiniColo (the Mac mini colocation outfit in Las Vegas), and he recently sent us a fun project he's hosting called "Ransom Apps." It's just a silly little web app, but the idea is that you enter a phrase of text, and Ransom Acts returns your phrase written in App Store app icons. I don't know if there's a real use for it, but it's fun and creates some neat designs.

Speaking of using App Store icons creatively, Ransom Apps reminded me of App Icon Quiz (free), which is kind of ingenious. It's a trivia quiz based around identifying App Store icons. The app uses real icons (with the permission of the actual developers -- more on that in a second) to create quiz questions, challenging you to match the icon with its app. It may sound goofy, but in practice, it's actually fun, especially if you spend quite a bit of time browsing the App Store.

App Icon Quiz is clever in another way as well. The developers, GameVision, told me back at GDC that they're using the app to market and brand new icons, so users' feedback is going the other way as well. Developers whose icons are included receive information about how easily players ID their icons as well as the word people tend to associate with their images. Personally, I think that can be a little shady. There's no indication in the app's description that the "game" is being used for marketing purposes. But as long as you know and agree to that use, it could be a fun way to give feedback on an app's most important visual element.

App Icon Quiz is available on the App Store now

Creative uses for App Store icons: Ransom Apps and App Icon Quiz originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 24 Apr 2013 19:00:00 EST. Please see our terms for use of feeds.

Creative uses for App Store icons: Ransom Apps and App Icon Quiz originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 24 Apr 2013 19:00:00 EST. Please see our terms for use of feeds.

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The App Annie Index market report for the first quarter of 2013 is out, showing some fascinating trends. While the Android-centric Google Play app store is seeing continued growth in download volume, the iOS App Store dominates revenues, earning almost 2.6 times the app revenue of Google Play.

Almost half of the total iOS downloads were from four countries -- the US, China, United Kingdom and Japan. Not surprisingly, those four countries were also responsible for the most revenue from the iOS App Store, followed by Australia.

App Annie analysts noted that games were the big growth driver for the iOS App Store and made up almost 40 percent of downloads in the first quarter. One fascinating trend is that the Photo and Video category moved up to the No. 3 spot during the quarter, leading this blogger to wonder if that trend reflects increased usage of the iPhone as a primary camera.

Games were also the top category in the iOS App Store by revenue, followed by Productivity, Social Networking, Education and Entertainment apps. How big are games as a revenue generator for iOS? Almost 70 percent of App Store revenue came from firing birds at pigs and slaying raiding zombies.

Google Play catching up with iOS App Store in volume, trails in revenue originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 17 Apr 2013 14:00:00 EST. Please see our terms for use of feeds.

Google Play catching up with iOS App Store in volume, trails in revenue originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 17 Apr 2013 14:00:00 EST. Please see our terms for use of feeds.

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Today's edition of "How the AppGratis Turns" finds Business Insider reporting on a "leaked document" showing that the company supplies developers with estimates on where their app will land in the App Store rankings based on how much they're willing to spend. This contradicts what AppGratis CEO Simon Dawlat stated yesterday to TUAW sister site TechCrunch.

In Dawlat's statement, he said that "We've never been in the business of gaming the top charts or anything." Business Insider contacted Dawlat about a chart they received showing that an approximately US$100,000 buy with AppGratis would place an app in the top five in the US App Store; something that BI considers to be at odds with what Dawlat said.

Dawlat took a look at the chart published by BI and replied that "Today, mobile-media buying is this simple equation where the biggest industry players will acquire a certain number of installs through guys like AppGratis, Facebook Mobile Ads, Apple's iAd and all the other guys in order to reach their ranking objective."

In other words, what Dawlat thinks is business as usual in the mobile app-marketing world is what Business Insider and Apple appear to see as disrupting the system. AllThingsD featured a guest post by former OMGPOP CEO Dan Porter last week in which he said that App Store rankings are so important to Apple that the company strives to keep them fair and democratic. Apps like AppGratis are seen as artificially inflating rankings based on how much a developer is willing to pay, totally at odds with Apple's goals and probably what lead to the current AppGratis ban.

Well-known iOS developer David Barnard of App Cubby (@drbarnard) tweeted earlier today that "I don't get why BI and people linking to it make that chart out to be a bad thing or inconsistent with statements" made by Dawlat. Barnard noted that "many developers buy ads on launch day to help get that traction" in the App Store, essentially gaming the App Store rankings as well.

Ads in the Facebook iOS app highlight a variety of apps that are for sale in the App Store. Will Facebook eventually face the wrath of Apple's iOS developer guidelines? Guideline 2.25 states that, "Apps that display apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected." How Apple interprets and applies that guideline to apps other than AppGratis that are also used to promote apps needs to be clarified quickly.

For further details on this continuing story, a look at the previous posts about AppGratis is a good way to get some background.

AppGratis document shows disconnect between statement and promotion originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 16 Apr 2013 19:00:00 EST. Please see our terms for use of feeds.

AppGratis document shows disconnect between statement and promotion originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 16 Apr 2013 19:00:00 EST. Please see our terms for use of feeds.

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Several statements from Apple representatives have been posted on various blogs, saying that Apple is in conversations with AppGratis. According to AppGratis CEO Simon Dawlat, those reports couldn't be further from the truth.

On a post this morning on the AppGratis blog, Dawlat said:

"It is important to me and my team that we clarify what happened. It is absolutely untrue that there were discussions between AppGratis and Apple in advance of our app being removed from Apple's platform. The first communication from Apple we received was an email sent to us after our app had been removed.

Since our app was removed, we have had one telephone conversation with an Apple employee who repeated the content of Apple's email to us, and refused to discuss the matter further. Since then, Apple has not returned any of our calls. It goes without saying that I am still very keen to speak to them."

You may want to visit the AppGratis blog just for the classic animated GIF image being used on the post. We'll keep our eyes and ears open for more on this story.

AppGratis CEO: 'Apple has not returned any of our calls' originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 12 Apr 2013 16:00:00 EST. Please see our terms for use of feeds.

AppGratis CEO: 'Apple has not returned any of our calls' originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 12 Apr 2013 16:00:00 EST. Please see our terms for use of feeds.

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Remember the UK police officer who reported his son to authorities for fraud after the 13-year-old ran up a US$5,600 bill for in-app purchases on the iOS App Store?

That kind of unexpected consumer cost has thrown the UK Office of Fair Trading (OFT) into a tizzy, and they've announced that they'll be starting a six-month investigation into whether children are being "unfairly pressured or encouraged to pay for additional content in 'free' web- and app-based games."

Our sister site TechCrunch confirmed that the OFT is contacting Apple and Google; not surprising, as the companies run the two largest app stores, but it's not clear whether either company could be held responsible for the actions of individual developers who abuse IAPs. While Google Play includes guidelines for developers and reserves the right to remove apps that abuse them, it does not review / approve individual apps for compliance in advance; Apple's App Store, of course, does approve or reject apps prior to release.

When the investigation is completed, the OFT could seek "legal undertakings from court" if it is displeased with the results. An OFT spokesperson told TechCrunch that companies ignoring court directions could face "an unlimited fine."

The OFT Senior Director for Goods and Consumer, the implausibly-named Cavendish Elithorn, noted in a statement that "The OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected. We are speaking to the industry and will take enforcement action if necessary."

Neither Google nor Apple have replied to TechCrunch with regard to the investigation.

Apple could face 'legal undertakings' in UK over in-app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 12 Apr 2013 14:00:00 EST. Please see our terms for use of feeds.

Apple could face 'legal undertakings' in UK over in-app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 12 Apr 2013 14:00:00 EST. Please see our terms for use of feeds.

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Dawlat started by relating how he first heard about the app being pulled when he got off of an airplane in São Paulo, Brazil and received notifications for "over 75 missed calls, and an seemingly infinite flow of unread text messages." Next, he reassured the millions of users of the app that even though the app is "momentarily unavailable," anyone who downloaded the app prior to last Friday will still receive continued information about free apps and "cool discounts."

Some speculation came out yesterday that the company may have used questionable tactics to grab more than 5 percent of the US iOS marketshare. Several developers I talked with about the AppGratis situation were critical of the company's business model, in which app developers pay for placement to drive up the rank of their apps. A Forbes article from February highlights this practice, where Dawlat himself describes how AppGratis moves developers up the charts and then grabs the app revenue for a set amount of time as payment. In other words, it's more of an advertising service than an app-recommendation service.

Dawlat's blog post then describes which clauses in the iOS Developer Guidelines were questioned by Apple. The latest version of the app was actually approved by Apple on April 4, 2013 -- the day before it was pulled from the App Store. As reported by AllThingsD yesterday, Clause 5.6 -- dealing with the use of push notifications to send advertising, promotions or direct marketing -- was to blame. Additionally, Clause 2.25 prohibits apps that display apps "other than your own" for purchase or promotion.

Dawlat found the push notification complaint to be somewhat foolish, saying that "...we only send one 'system notification' a day to our users, coming in the form of a generic, opt-in only 'Today's deal is here!' message." That practice is based on Apple's own recommendation on how to use the push notification service.

The AppGratis CEO recounted phone calls yesterday with Apple, noting that they "... basically couldn't go beyond repeating multiple times that our app had been pulled due to guideline 2.25 and 5.6." Dawlat finished his post by listing his email address and stating, "If someone in charge at Apple reads this and wants to discuss the matter more in-depth, I'm happy to jump over to Cupertino anytime to prove to you that we're on a mission for good." He also asks happy users of AppGratis -- both on the end-user side and developers -- to share his post.

The AppGratis situation has far-reaching implications for other app discovery apps, and this story is far from being at an end.

AppGratis CEO speaks out about app being pulled from App Store originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 09 Apr 2013 13:28:00 EST. Please see our terms for use of feeds.

AppGratis CEO speaks out about app being pulled from App Store originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 09 Apr 2013 13:28:00 EST. Please see our terms for use of feeds.

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Apple developer Michael Jurewitz took a detailed look at Mac App Store pricing in a five-part series on his Jury.me blog. It's a thorough exploration of the dynamics of App Store pricing that touches upon revenue maximization, demand curves and the basic research each developer should be doing before they write any code.

You can read each segment on Jurewitz's Jury.me blog using the links below.

• Understanding App Store Pricing - Part 1 In this first part of his series, Jurewitz looks at the Top Grossing apps versus their Top Paid counterparts and discovers that the Top Grossing list was 329 percent more expensive than the Top Paid list.
• Understanding App Store Pricing - Part 2 In part two, Jurewitz explores the reasons why the Top Grossing list was 329 percent more expensive than its Top Paid counterpart.
• Understanding App Store Pricing - Part 3 In part three, Jurewitz looks at whether you can charge more for your app. It's Microeconomics 101 for the Mac App Store.
• Understanding App Store Pricing - Part 4 In part four, Jurewitz examines the hows and whys of product development.
• Understanding App Store Pricing - Part 5 Pricing Kaleidoscope In the fifth and final part of the series, Jurewitz summarizes "how you can take real world data and use it to make better real world decisions about how you price your app."

This series is based on presentations Jurewitz gave at Çingleton and NSConference earlier this year. If you are a developer, it's a must-read. iOS owners should also peruse the articles to get an appreciation of the time and effort that goes into the business side of app development.

Detailed look at pricing an app for the Mac App Store originally appeared on TUAW - The Unofficial Apple Weblog on Mon, 01 Apr 2013 18:00:00 EST. Please see our terms for use of feeds.

Detailed look at pricing an app for the Mac App Store originally appeared on TUAW - The Unofficial Apple Weblog on Mon, 01 Apr 2013 18:00:00 EST. Please see our terms for use of feeds.

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The next time you let your child play with your iPad or iPhone, you might want to pay attention to what he or she is up to. The BBC ran a story today about 5-year-old Danny Kitchen of Bristol, England, who ran up a £1,700 (about US$2,500) bill in iTunes after his dad entered his passcode to allow Danny download a free iPad game from the App Store.

While Danny only spent about 15 minutes playing with the game, that was long enough for him to repeatedly tap an in-app purchase button and rack up a string of £69.99 (about $105) charges. Mum and Dad received emails from the iTunes App Store the next day itemizing the purchases, but they figured that the charges were an error and ignored them.

Danny's parents found out that the charges were real when they received a call from their credit card company asking about the transactions. Apple was reportedly helpful in providing the Kitchens with a full refund, and Danny has learned "not to do it again."

Ars Technica's Jacqui Cheng offered a quick solution for parents who don't want their little darlings to spend their college tuition on in-app purchases: turn off in-app purchases in Settings > General > Restrictions before handing over the iOS device.

Five-year-old spends $2,500 on in-app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 01 Mar 2013 15:30:00 EST. Please see our terms for use of feeds.

Five-year-old spends $2,500 on in-app purchases originally appeared on TUAW - The Unofficial Apple Weblog on Fri, 01 Mar 2013 15:30:00 EST. Please see our terms for use of feeds.

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The market for dedicated portable game consoles from Nintendo and Sony appears to be shrinking due to competition from iOS and Android tablets and smartphones. Data from IDC and App Annie shows that fourth-quarter 2012 consumer spending on game apps from the App Store and Google Play was greater than spending on those portable consoles.

In the Portable Gaming Report (PDF), the two companies noted that well over 20 billion games were downloaded across the mobile platforms in 2012, and that over a third of app downloads were games.

The report also pointed out a fascinating statistic -- in terms of total consumer spending on games, Nintendo and Apple were almost equal. That Apple could become a major player in gaming in less than five years since the App Store first opened its virtual doors is amazing, particularly when the Nintendo DS and its successors have been around since 2004.

One other key comment from the IDC / App Annie report was that purchases of dedicated game consoles appear to be highly seasonal, with 60 percent of spending in the fourth quarter of 2012 being done in December. Game app purchases, on the other hand, don't exhibit the seasonal variability of the dedicated units.

[via The Verge]

Consumer spending on mobile games tops that for portable consoles originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 21 Feb 2013 16:30:00 EST. Please see our terms for use of feeds.

Consumer spending on mobile games tops that for portable consoles originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 21 Feb 2013 16:30:00 EST. Please see our terms for use of feeds.

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A developer training firm named Shiny Development has been tracking waiting times for the App Store review process as closely as it can, and it has bad news for would-be app developers: The waiting times for the Mac App Store are growing longer. In the last six months or so, the waiting time for getting a Mac App published has gone from under seven days to almost as high as a month, according to Shiny's data. Apple's process is largely closed off -- there is a little bit of information for developers on the main dev website, but otherwise Shiny has mostly gathered this information from the various developers it tracks and corresponds with online. If indeed the times for the Mac App Store have gotten this bad, it could mean that big apps are getting delayed longer and longer, and that could be trouble for the platform in general.

The good news is that the iOS App Stores' waiting times appear to be going down over nearly the same time period, from 10 days a few months ago, down to right around a week now. Apple has hired lots of app reviewers in the past year or so, and that's likely the reason for dropping times: As it has more people to check incoming apps, it can get approvals through the system quicker. Hopefully there's a bigger horde of Mac App reviewers on the way, so these apps can get out to the public in a relatively timely fashion.

[via MacRumors]

Wait times for App Store approvals reportedly rising originally appeared on TUAW - The Unofficial Apple Weblog on Mon, 08 Oct 2012 22:00:00 EST. Please see our terms for use of feeds.

Wait times for App Store approvals reportedly rising originally appeared on TUAW - The Unofficial Apple Weblog on Mon, 08 Oct 2012 22:00:00 EST. Please see our terms for use of feeds.

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This should come as no surprise to anyone following the saga of Chomp, the app search engine Apple acquired some time ago. It has now ceased operations as an independent app.

Apple appears to have integrated Chomp's technology in the latest major overhaul of the App Store. While some have lauded the changes, others have found search results to sometimes come up lacking.

Personally, I can't fathom why Apple would remove the ability to gift an app from my iOS devices (look and try to gift an app from your iPhone -- you no longer can!), but that's one of many minor issues plaguing Apple's reboot of the store.

Yet more worrisome than the issues in the store itself (which can be fixed on Apple's end) is the possibility of third-party app discovery tools going away. MacRumors points out a quiet change to the developer docs (first mentioned by PocketGamer.biz), which warns devs of apps being rejected if they "display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store."

Never mind how confusing the App Store can be. While I admit there are apps which could lead to customer confusion, there are also some great apps which help people find what they are looking for -- something Apple's store has yet to perfect.

App search engine Chomp shuts down, but is Apple cracking down on app discovery apps? originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 03 Oct 2012 14:00:00 EST. Please see our terms for use of feeds.

App search engine Chomp shuts down, but is Apple cracking down on app discovery apps? originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 03 Oct 2012 14:00:00 EST. Please see our terms for use of feeds.

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Amazon.com has filed a statement in Apple's ongoing claim against the online retail giant, saying that the generic use of the term "app store" is not a violation of Apple's "App Store" trademark. Amazon also asked for judgment regarding the suggestion that its use of "Appstore" to describe its own Android marketplace would be considered false advertising, in an attempt to somehow convince customers that the marketplace was related to Apple's own iOS App Store. Amazon also cites Steve Jobs and other Apple executives as calling competitors' markets "app stores" as well.

Apple has trademarked the phrase "App Store," in reference to its own very popular iOS apps marketplace. But Amazon says this isn't even a question of trademark just yet -- it's simply trying to get a judge to agree that using the phrase "appstore" isn't false advertising. We should hear a decision on this filing coming up sometime soon.

Amazon rejects Apple's false advertising claim in App Store suit originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 27 Sep 2012 17:00:00 EST. Please see our terms for use of feeds.

Amazon rejects Apple's false advertising claim in App Store suit originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 27 Sep 2012 17:00:00 EST. Please see our terms for use of feeds.

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On the 25th of July, a shiny iOS remake of the 8-bit classic Spy vs Spy launched on the App Store for $1.99. The next day, the price dropped to $0.99 in a launch sale. On the 30th, it went up briefly, then developer Robots and Pencils announced that "to show our appreciation, we are extending the sale price indefinitely." It remains at $0.99 to this day.

I'm annoyed by this. Now, please note that this is not a complaint about sale pricing per se. As it happens, I bought Spy vs Spy a few hours after it launched (I'm a sucker for a well-done 8-bit remake) so I paid $2; I suppose from a miserly point of view I'm out a buck. I'm fully capable of spending seven times that for lunch without blinking, however, so I can't claim with a straight face that I'm annoyed about the money.

I'm annoyed because Robots and Pencils has just taught me a lesson: don't buy iOS games for $2+ because they'll be cheaper soon. I do not intend this to be any sort of slight against Robots and Pencils, however. If it was the only outfit doing this it wouldn't matter, but the same lesson is being taught to us all, over and over again, by many of the most successful devs in the App Store. For example, it feels like EA puts its entire back catalog on sale for $0.99 roughly every other week. Free App a Day has been enduringly popular for years. Gameloft has regular sales and giveways of its apps. And so on, and so on. It's sale pricing all the way down.

App Store consumer valuations: hopelessly broken?

So here's my hunch: I think the constant sales are training consumers to avoid "expensive" apps, where "expensive" has taken the seemingly ludicrous definition of "anything more than a dollar." Furthermore, I think this will be to the detriment of us all, in the end: devs and users alike.

Before I detail my reasoning, a quick poll: please be honest with me now. How many of you cruise AppShopper's price drops page for bargains when looking for a new game to while away a boring commute? Or how many of you, when someone recommends an iOS app to you, find the first thing you do is load the AppShopper app to check the "price history" section... and if the app routinely goes on sale for less than it costs now, add it to your wishlist to buy the next time it's cheap? I've done both of these things. I suspect many of you have too.

This is perfectly rational, Economics 101 behavior: experience has taught all of us that apps do, frequently, drop in price. If we wait it out, we can save a buck or two, and who doesn't like to save money? Suckers, that's who, and I'm no sucker! With the iOS apps market -- particularly the games bit -- teeming with competition, it's not like the pressure to acquire some hot new release right now is very great. There's always something else to buy, something else that's cheap or on sale. So I think some people (most people, perhaps?) take a wait-and-see approach.

Insidiously, this is self-sustaining and self-reinforcing; once people are trained to wait for sales, devs can only generate revenue when they put apps on sale, which further encourages consumers to avoid expensive apps. And if you're the only dev trying to swim upstream, people will ignore your app forever waiting for a sale that never comes. It's a vicious circle.

For example, consider the case of App Cubby's Timer, an app I liked when I reviewed it recently. App Cubby recently cut the price of the app from $0.99 to free, resulting in downloads going up from 13 per day to around 25,000. That's a not-inconsiderable number of people who, presumably, wanted the app enough to go to the effort to download it but not enough to pay a buck. Now, perhaps Timer's relatively small (but beautifully formed!) feature set meant people were put off. But is that fair? It does one thing well, and it cost a tiny amount of money. Just how much do people expect for $1?

I think near-constant sales and price cuts are at the root of at least some of the "but $2+ is soooo expensive!" world view for app pricing, which is (on the face of it) so utterly counter-intuitive as to be baffling. But it does make sense from some angles, and this is one of them.

Talking to developers and marketers

The acquisition of the Sparrow email client by Google kicked off an extensive dialog between lots of bloggers on the subject of app pricing, App Store economics, and whether or not current "mainstream" pricing clustered around $0.99 leaves enough room for most devs to earn a living or not. Interesting posts from active iOS developers abounded and covered a wide spectrum of opinions; for a few of the more thoughtful, look to App Cubby's David Barnard, Instinctive Code's Matt Gemmell and Instapaper's Marco Arment. It's a problem that's on a lot of people's minds right now.

I reached out to a few folks to gauge what they thought of my hypothesis above.

First of all, I approached Robots and Pencils itself. Company spokesperson Michael Sikorsky declined to comment, saying "I've polled the team of 5 [who wrote Spy vs Spy] and we got back 8 opinions. So, we're not even all on the same page [ourselves]." However, his wife and co-founder Camille did share her personal opinion: "I think Apple screwed everyone by offering games at $0.99. I think our game is easily worth more but it's a race to the bottom dollar in the App Store. And yes, the users' expectations reflect Apple's choice which is good for them but not good for the devs who spend a ton on production."

David Barnard of App Cubby agreed to chat with me and said a few interesting things. Firstly, he urged me not to "lambast" Robots and Pencils for the price cut -- as he said, "They did what worked and are raking in the cash. Better for them to make great money than stand by some sort of principle and lose their shirt." I think he's absolutely right here. Although Robots and Pencils wouldn't tell me directly, I strongly suspect that sales at $2 were simply too disappointing to be sustainable, and the company acted out of desperation. I'd have done the same in its place.

He went on to say:

The thing is, the ship has already sailed on premium one-time pricing on hit apps. Some apps can survive in a niche at a premium price, but as I showed in my post about Sparrow, you still need to rank relatively high even at a "premium price" to make much money.

More and more I just think the App Store has completely shifted the reality of making money on software. Apps that could be hits should try the 99¢ route, and others should just look for other ways to make money. I'll be writing a blog post about this in the next few weeks, but I'm thinking about doing a complete strategy shift for App Cubby. And I'm definitely not going to be working on any new apps without carefully weighing the monetization options.

I'm not sure exactly what the long term solution is, but I'll be thinking a lot more about that as I work on my next blog post.

(Emphasis mine.) It's that emphasized part that most worries me as an iOS user: I have this nagging feeling that there are great apps I could be using, great ideas that devs have in their heads, that will never see the light of day because the dev isn't confident of a return on the investment. We cannot know for sure just how significant that factor is, though it's not hard to find devs who'll admit they've stopped pursuing ideas because of concerns about profitability. Or, as Keith Shepherd of Imangi Studios (Temple Run, Harbor Master) put it, "I think even one year projects on iOS are too risky from a business standpoint."

It's also noteworthy that David isn't specifically talking about games here -- App Cubby's products are utilities.

I also spoke to Brian Akaka, CEO and founder of Appular -- a mobile app marketing and consulting services firm. Brian's experience with App Store pricing goes back right to the very beginning (and before; he was a director of Mac gaming outfit Freeverse before moving to iOS projects), so his insight is particularly valuable:

I have a unique perspective, as I was working with apps on the day the App Store launched in July 2008, and have seen how prices have reached a downward spiral towards free.

While I agree with your idea that the consumer is a culprit in this, I think that the root blame lies with Apple and [the] design of the App Store.

A bit of history: When the App Store opened, no one really knew how to price their apps. As I was working with games at the time, the only points of reference we had was pricing for handheld devices like the Nintendo DS ($20-$45) and casual downloadable games from companies like Popcap (approx. $10-$20 at the time). Prior to the App Store launch, someone at Sega was interviewed who mentioned that the price of Super Monkey Ball would be $9.99. So that's what we charged for our iPhone games. And so it went... we would watch our competitors, and when they adjusted their prices, so did we.

One day someone at Pangea (who was one of the leading iPhone developers in the first year) decided to cut the price of all their games to $0.99. They immediately shot to the top of the charts. And stayed there. I recall a conversation I had with our CFO at the time. He argued that they weren't maximizing their revenue by charging so little. I rebutted him with, "if they aren't making more money at the lower price point, they would raise their price back." Within a few weeks, we had lowered our prices to $0.99 as well. This price drop, combined with some Apple love (they featured one of our games in their TV campaign for "the funnest iPod") got us to the #1 position in the App Store and several million units sold.

Fast forward to 2012, and the situation is worse. The App Store is incredibly crowded and competitive, and additionally Pricing is the one marketing tool (of the 5 P's of marketing) that developers can adjust at a moments notice. This means that developers have (over)-relied on pricing as a tool to promote their app. This leads to frequent price drops, sales, and all kinds of frequent price changes. As you mentioned, this has led to consumers coming to expect that an app will go on sale. And if it doesn't, it's ok, because a similar app will go on sale.

An additional issue is that Apple's App Store has suffered from a huge issue since 2008, which is that it is too difficult for a consumer to find the best, most useful app for what they are looking for. As a result, a vast amount of app sales are being decided by what is on the Top Paid charts, which ranks by # of units sold. Any Econ 101 student will know that you will sell more units at a lower price.

At this time, many game developers have given up on trying to charge even $0.99 for their app, instead going for the "Free to Play" model. As evidenced by the download numbers as well as the headlines and acquisitions by these "freemium"/"social"/"casual" game developers (such as Zynga, TinyCo, Funzio, GREE, DeNA, etc), the consumer will overwhelmingly pick a "free" game versus one that you have to pay for (upfront).

Fixing the problem

Brian was kind enough to continue with three pieces of advice to developers launching an app. I'll take them one by one:

Be realistic, not idealistic. Even if you know your app is worth more than $0.99, based on your time, costs, blood, sweat, tears, failed relationships etc. It doesn't matter. Remember that the market decides the fair price, not you.

There's no getting away from this one. A common problem when economics amateurs consider at what level to price products is getting tangled up in the idea of how much money (or time) it cost to make; but the laws of supply and demand are cold and uncaring. If competitors are selling for $0.99, and your app isn't clearly better than the competitor's offerings, then you're not going to do well selling at $3 -- even if that's what you need to cover your costs.

Look at the competition. Is there a similar app out there? Is it priced at $0.99 (or free)? Then so should your app. Until you've developed a reputation as having such outstanding quality that you can charge a "premium" for your product over competing products, you need to be price-competitive. Even Apple struggled through most of it's life by trying to charge a higher price for its products. Consider being freemium and monetizing off of advertising or in-app-purchases. With thousands of games that are available for free, it's a very rare iOS game that can charge more than $1. Typically these are games with enormous brand appeal (such as Tetris) or are well-known for having something truly unique, such as the best graphics (such as Infinity Blade).

Josh Lehman's post "Stop Using The Cup of Coffee vs. $0.99 App Analogy" made a number of points. Some of them have been well rebutted by David Chartier and Joe Cieplinski, but the one I really liked, especially for gaming, was "Free Apps Are Often A Great Alternative."

In theory, games on the App Store are not fungible; if I want to play Swordigo then 10000000 is not a substitute because it's a different game. In practice, however, for the more casual gamers that make up the bulk of the App Store market I think games purchases are fungible because people just want some entertainment and aren't too fussy about exactly what form it takes. I think consumers looking for a new game probably have a mental shortlist of dozens of "might buy" titles to look into -- the sheer scale of the App Store contributes here -- and one of them is almost inevitably going to be free or $0.99, so the more expensive titles might not even get a look-in to the purchasing decision.

Brian touches on the idea of alternative monetization strategies, like freemium games and IAP. As a gamer, however, I am less convinced than him by either approach.

I'm wary of freemium games because, fundamentally, I believe extensive use of IAP actively encourages developers to adopt bad game design. Many freemium titles work by being attractive at first, then requiring the user to gradually do more and more amounts of boring tasks -- "grinding", in gamer slang -- to progress... unless the user buys, with real money, some sort of bypass option. Think buying Tower Bux in Tiny Tower, or gold coins in Infinity Blade, or the "do the farming for you" power ups in Farmville.

The more boring the grind, the easier it is to lure motivated players into forking out to bypass it. I'm not against developers making money, but I'd much rather pay upfront for a well-designed game that's fun all the way through. I'm not saying all IAP is bad, but I do feel that it's a disappointingly rare dev who can avoid its siren call to the dark side.

Still, I cannot deny that freemium games are very popular, so it seems likely I'm simply on the wrong side of history here. So it goes.

Non-grind-avoidance use of IAP might not be the ticket to riches either. Consider the sad story of Gasketball, an iOS game that released for free with a $2.99 in-app purchase to unlock the rest of the content. It managed 200,000 downloads, and at one point was close the top of the iTunes games chart -- but only 0.67% of customers paid for the IAP. After two years of work, the two developers behind the game ended up homeless, staying with friends while trying to address the reasons the app didn't sell well and recoup their investment of time.

Whither Apple?

Brian's last point was:

Pray that Apple changes the App Store. (Just don't hold your breath). Apple definitely knows the criticism about the way that apps are discovered, and has shown signs of trying to address the issue, from redesigns of the layout, to the purchase of Chomp (a startup focused on app discovery). However, it's important to remember that Apple's main goal is to create profits for itself, not developers. Something like raising the prices of apps will benefit developers, but not necessarily consumers. And remember that the sheer volume of iOS apps is an important selling point for the iPhone and iPad versus other platforms.

So what about Apple? It keeps 30% of all App Store sales revenue, after all. Surely it would try and keep app prices high to make more money?

Well, I'm not so sure. Consider Horace Dediu's deduction that app developers receive $12 for each iOS device sold. That implies that Apple makes $5.14 per device from app sales. Apple never discusses margins, of course, but I think I'm on safe ground if I suggest it makes at least ten times more profit from the hardware sales of the cheapest iOS device. I therefore contend that Apple doesn't have much reason to care about how much software is sold for. Profits from the App Store are insignificant compared to hardware sales.

An alternative viewpoint is that proposed by "revorad" in this Hacker News post. As Joel Spolsky wrote in his seminal post on software economics, "smart companies try to commoditize their products' complements." Some products naturally fit together and complement each other, and wherever possible, you want to try and engineer the market to force down the prices of things that complement your product.

In other words, if you're Microsoft and you sell PC operating systems, you want to create a market with hundreds of OEMs driving down prices of PC hardware; that way, more people can afford to buy a PC and can then be sold your software. If you're today's IBM, you work hard to foster Open Source software, so that enterprise software can be commodized and the market for your profitable consultancy services grows. If you're Google, you release Android to OEMs under permissive, almost-Open-Source licences, so as to commoditize Internet access from mobile devices; then you have a bigger pool of users using Google services, looking at ads and earning you revenue.

And if you're Apple? Well, Apple benefits from a crowded App Store marketplace where developers cut prices to the bone in an attempt to stand out from the crowd. Every single app uploaded to the App Store adds value to every iOS device in existence; every single app a customer buys is another reason for them not to migrate away from iOS in the future.

Apple is certainly motivated to keep the App Store busy, and sales high; these things help iOS stand out from competitors like Android. But it's not motivated to keep prices high. In fact, lower prices for apps help to attract consumers to iOS as a platform, selling more of the hardware devices from which the bulk of Apple's vast profits flow.

The bottom line: I don't think it's likely Apple will do anything of consequence to help struggling smaller devs.

Be the change

So, let's recap what we know for sure:

1. Numerous iOS devs are reporting that they are struggling to make enough money to stay afloat because consumers won't buy "premium" (i.e. more than a buck or two) apps.
2. Apps that cut their prices report very high sales boosts.
3. Apple makes much more money from iOS hardware than it does from its commission on App Store sales.

I believe that points one and two together are rooted in consumer psychology; we're locked into a feedback loop, where about the only way for a dev to get attention is to cut the price of an app, but that only further encourages users to avoid expensive apps. And I believe point 3 means we can't count on Apple to do anything to fix this.

If we don't fix it, I don't forecast doom and gloom. I'm not suggesting devs are going to flee the App Store in droves. However, I do think we'll see less interesting apps and less indie devs, as the excess risk scares away the people who can't deal with it and causes risky ideas to be shelved before they are developed. Meanwhile, the big players like EA and Rovio will churn out mostly bland, risk-adverse titles. I think that would be a shame.

Devs could play a part by sticking to their guns and refusing to lower premium prices, but realistically I suspect that ship has sailed. Another option is greater exploration of what freemium can offer, as this thoughtful post from David Barnard (yup, him again!) outlines. This is where I really do hope we see Apple play a part: I'd like to see more flexible monetization options added to the App Store, including paid upgrades and trial/demo modes.

As for users, the people who ultimately stand to lose the most if the vibrant, lively App Store we all know and love declines? What can we do? I don't see an easy answer, sadly. I'm going to do the only two things I can do: publish this post and hopefully get people talking, and be the change I want to see by buying apps that I want immediately -- not waiting for sale pricing to come around.

Sincere thanks to the people who took the time to respond to my interview requests: Michael and Camille Sikorsky, David Barnard, and Brian Akaka.

Making money in a crowded App Store: it's dog eat dog and Spy vs Spy originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 04 Sep 2012 19:30:00 EST. Please see our terms for use of feeds.

Making money in a crowded App Store: it's dog eat dog and Spy vs Spy originally appeared on TUAW - The Unofficial Apple Weblog on Tue, 04 Sep 2012 19:30:00 EST. Please see our terms for use of feeds.

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Just when you thought that Digg had faded into the obscure fog of irrelevancy, the company comes out with a new Digg app for iPhone (free). The app is getting a lot of buzz, perhaps just because many users have moved on to other ways of getting their top news.

The new app features a "clean mobile-friendly view" that has been described by some reviewers as not providing a whole heck of a lot of content to look at. Sharing with friends via Facebook, Twitter and email is built in, as you'd expect from a modern iPhone app.

If you want to read stories offline, the new Digg provides full support for saving stories. The app has support for Instapaper and Pocket and has geofencing capabilities built in; you can set your home location, and a "Paperboy" function automatically updates the app with the latest stories when you leave that location.

The app comes after a reboot of the 8-year-old news site, which has re-titled itself as Digg v1.

New Digg iPhone app available originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 01 Aug 2012 14:00:00 EST. Please see our terms for use of feeds.

New Digg iPhone app available originally appeared on TUAW - The Unofficial Apple Weblog on Wed, 01 Aug 2012 14:00:00 EST. Please see our terms for use of feeds.

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Travelers and city-dwellers in the U.S. have been using Taxi Magic (free) for a few years now, and a new update to the app released today makes it even easier to book a taxi with a few taps.

Taxi Magic 3.0 has a redesigned user interface for faster booking of taxis. If you know that you'll be needing a ride later in the day, a "Pick Me Up Later" button lets you schedule a taxi well in advance for worry-free transportation.

The developers of Taxi Magic, RideCharge, Inc., have also improved the taxi tracking feature to provide faster updates and more attractive visuals. If you frequent certain favorite locations, they can be named and saved in the app for even faster booking in the future. And in those cities with a variety of taxi fleets, you can now save your favorite taxi companies for future use.

The "Magic Booking" service provided by the app is now available for 75 taxi fleets in over 40 U.S. cities, while tap-to-call fleets are available in over 4,000 cities in the U.S., Canada, and Mexico.

Continue reading Taxi Magic 3.0 adds new magic, more taxi fleets

Taxi Magic 3.0 adds new magic, more taxi fleets originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 26 Jul 2012 15:00:00 EST. Please see our terms for use of feeds.

Taxi Magic 3.0 adds new magic, more taxi fleets originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 26 Jul 2012 15:00:00 EST. Please see our terms for use of feeds.

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Users of social networking app Path have a few new features this morning that should make them very happy. The free app, which allows sharing only to a few (150) good friends, is quite popular as it serves as a gateway to posting on other services such as Twitter and Foursquare.

To start with, users are now able to share movies they're watching and books they're reading. A tap on the "music" button now shows movies and books as well, with popular current films listed and shareable with a tap. It's the same with books -- bestsellers and popular titles are listed so you can tell your friends that you're finally catching up and reading "The Girl with the Dragon Tattoo".

Taking photos with Path has gotten better. The camera is now changed and takes square images and videos in portrait orientation. Four new tools are available for photo editing: Glo, Depth, Zoom, and Crop. Glo is used to "fix and enhance details in dark or bright photos." Photos and videos are displayed larger, photos can be snapped with a tap of the volume button, and video now has its own red button for one-tap recording.

It's now easier to invite your real friends to Path with a personal note or recorded audio message, and it's possible to "nudge" your friends to send photos and make check-ins. The update just makes a great social networking app better.

Continue reading Path gets new sharing features, better camera

Path gets new sharing features, better camera originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 26 Jul 2012 13:00:00 EST. Please see our terms for use of feeds.

Path gets new sharing features, better camera originally appeared on TUAW - The Unofficial Apple Weblog on Thu, 26 Jul 2012 13:00:00 EST. Please see our terms for use of feeds.

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