IPhone App Store Developers Aren't Getting Rich(newsweek.com)
newsweek.com
IPhone App Store Developers Aren't Getting Rich
http://www.newsweek.com/id/216788/page/1
19 comments
I'm at StackOverflow DevDays in Boston, and Dan Pilone gave a great presentation on the iPhone environment. The iPhone isn't really a gold rush, but there is money to be paid. Figures show that the top grossing apps were $50, even though $.99 sell more. The fact is, you're not going to be able to make a $.99 app and expect to make it rich. If you put in hard work, you can get paid. If Pilone's presentation was online, I would link to it.
He is wrong on the facts.
Only Three of the top hundred grossing apps cost $50 or more. These three apps are all from big companies and the apps are iPhone versions of their current products.(Two of the three apps are MobileNavigator from Navigon and TomTom's navigator)
I'm surprised that anyone can get away with saying that "Figures show that the top grossing apps were $50". The top grossing apps list is easily verifiable in itunes <g>
Only Three of the top hundred grossing apps cost $50 or more. These three apps are all from big companies and the apps are iPhone versions of their current products.(Two of the three apps are MobileNavigator from Navigon and TomTom's navigator)
I'm surprised that anyone can get away with saying that "Figures show that the top grossing apps were $50". The top grossing apps list is easily verifiable in itunes <g>
He had data to back his claim. He has not posted the slides yet.
An example: Omnifocus ($20) has sold 50,000 copies, and made the company $700,000. It is selling at a consistent rate, no race to the bottom or gimmick app. It rivaled (if not beat, i can't remember now) Flight Control in profits
Also, I was not saying "All $50 dollar apps were top grossing", I was making a point that you do not have to make the next flight control to be able to make a reasonable profit (thats not to say that you don't need a good product to make a profit)
An example: Omnifocus ($20) has sold 50,000 copies, and made the company $700,000. It is selling at a consistent rate, no race to the bottom or gimmick app. It rivaled (if not beat, i can't remember now) Flight Control in profits
Also, I was not saying "All $50 dollar apps were top grossing", I was making a point that you do not have to make the next flight control to be able to make a reasonable profit (thats not to say that you don't need a good product to make a profit)
I'm really happy to hear you enjoyed the talk. To be clear, it's the top grossing app in Sept 09 that was $50. My information for that statistic comes from the Sept. Distimo report available here: http://distimo.createsend4.com/t/r/l/hllhtd/yuldzkhi/r
Thanks for the clarification. There is a big difference between saying that one $50 app did well and saying that "Figures show that the top grossing apps were $50"
As itunes stats show (today), in the top 100 grossing apps list, only three apps are $50 or higher
As itunes stats show (today), in the top 100 grossing apps list, only three apps are $50 or higher
Thanks Dan for clarifying my post, boy I feel like a fool.
Great presentation at SO DevDays
Great presentation at SO DevDays
I am just surprised by the number of articles written with the exact same tone. Its like saying, I opened the first coffee shop in XYZ place and made a heck of money than 10 more coffee shops opened and most of us are barely making enough money to sustain ourselves. Yes, if you come up with an insanely good idea which is new and cannot be replicated easily for example: what smule is doing, no matter what, you will do extremely good. The probability of being a lucky 1 hit wonder is diminishing because of big brands now in the foray with a total of 85k+ apps on appstore. Now only the best of the best will survive who are in it for the long haul and have the patience, persistence and vision to stay there and develop a business and not looking to hit a jackpot kind of a mindset.
I think there's something that's different about the App Store, which is basically the same as on the Internet: the barrier to entry is very low.
In something like the Console gaming business, there is a huge barrier to entry. Making a copycat game happens, but they are few and far between. It takes a lot of time and money to create a game. Since it does take such an investment, everything is generally thought out much more and markets are analyzed carefully before moving in.
On the iPhone, the barrier to entry is much lower, allowing copycats to crop up very quickly and flooding the market and driving down prices. With a coffee shop there is at least a significant barrier to entry, while it isn't as much so with the App Store.
The same thing has happened on the Internet. It is very hard to make a for-pay site because there are so many others which are willing to offer similar services cheaper. This has lead to most sites on the Internet being free or mostly free. For example, look at on-line newspapers. Many of them aren't able to turn much of a profit on-line because they have to compete with many many other sources of news that are free.
You could argue that the more expensive items are better and so will attract users, but I think the Internet has taught us that a lot of people will settle for a lot less as long as it is cheaper.
In something like the Console gaming business, there is a huge barrier to entry. Making a copycat game happens, but they are few and far between. It takes a lot of time and money to create a game. Since it does take such an investment, everything is generally thought out much more and markets are analyzed carefully before moving in.
On the iPhone, the barrier to entry is much lower, allowing copycats to crop up very quickly and flooding the market and driving down prices. With a coffee shop there is at least a significant barrier to entry, while it isn't as much so with the App Store.
The same thing has happened on the Internet. It is very hard to make a for-pay site because there are so many others which are willing to offer similar services cheaper. This has lead to most sites on the Internet being free or mostly free. For example, look at on-line newspapers. Many of them aren't able to turn much of a profit on-line because they have to compete with many many other sources of news that are free.
You could argue that the more expensive items are better and so will attract users, but I think the Internet has taught us that a lot of people will settle for a lot less as long as it is cheaper.
It's a gold rush. The first prospectors do pretty well. The later ones starve. It's the people selling auxilliary stuff to the prospectors that make a killing.
Except selling auxilliary stuff to the prospectors is also a gold rush...
I wonder if anyone's done any old-west historical fiction with a mild-mannered, quiet, but well respected general store owner who is actually a scheming Machiavellian underneath?
I wonder how right you are? I suspect you're probably spot on.
If that's the case, who's rushing for gold now that we're paying attention too?
If that's the case, who's rushing for gold now that we're paying attention too?
The longer the iFart apps remain the top selling apps and hard-working apps get rejected the less interested I am in developing for iPhone.
I've been publishing to the store since Nov. 08 (started in Aug 08). We've had marginal success but it's certainly a very challenging road. There are a number of pains that bother me but that's to be expected, Apple did a HUGE thing breaking down the mobile software barrier and opening the doors to international sales. We would not being doing as well if we relied solely on app sales, fortunately we're building an app for a Comedy Central show and it's compensating us well.
There are a few things to be aware of regarding iFart apps, and it starts by looking at the top charts in Movies and Music. Take a peek — it's all pop culture likely driven by returning customers between the ages of 12-26. Why would the AppStore be any different? It's not. The second thing to be aware of are the big boys. For the first few months it was mostly an indie market but that has long past. Third issue are spammers but I'm not going to go into details, everyone is familiar with them.
When you combine those three issues, along with poor search functionality, Top 100 Charts (out of the entire store) is extremely difficult to hit for 95%+ of the developers. This is where the big-money buying activity occurs. But here's the good news that keeps me optimistic about the future, and hopefully more stable/predictable revenue:
With the recent changes in iTunes 9, I'm most excited about the Top Earners chart. Currently the Top Earners chart is only available based on the entire store, but with a quick hack to the URL you can view Top Earners by category. Top Earners are correlated to app revenue (price), not simply volume which is how the Top Paid charts function (ie: pressure to .99)
Link to Top Earners in Social Networking: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewTop?id...
We're still in Top 100 Earners by category whereas in Top Paid we're nowhere to be seen. My hope is that sooner or later Apple will make this information accessible to all customers on a per-category basis... and your affluent shoppers, who are avoiding AppStore unless by referral, will be able to find the real gems a little bit easier. If nothing else, improve the margins of "niche" apps because $.99 is simply not sustainable.
There are a few things to be aware of regarding iFart apps, and it starts by looking at the top charts in Movies and Music. Take a peek — it's all pop culture likely driven by returning customers between the ages of 12-26. Why would the AppStore be any different? It's not. The second thing to be aware of are the big boys. For the first few months it was mostly an indie market but that has long past. Third issue are spammers but I'm not going to go into details, everyone is familiar with them.
When you combine those three issues, along with poor search functionality, Top 100 Charts (out of the entire store) is extremely difficult to hit for 95%+ of the developers. This is where the big-money buying activity occurs. But here's the good news that keeps me optimistic about the future, and hopefully more stable/predictable revenue:
With the recent changes in iTunes 9, I'm most excited about the Top Earners chart. Currently the Top Earners chart is only available based on the entire store, but with a quick hack to the URL you can view Top Earners by category. Top Earners are correlated to app revenue (price), not simply volume which is how the Top Paid charts function (ie: pressure to .99)
Link to Top Earners in Social Networking: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewTop?id...
We're still in Top 100 Earners by category whereas in Top Paid we're nowhere to be seen. My hope is that sooner or later Apple will make this information accessible to all customers on a per-category basis... and your affluent shoppers, who are avoiding AppStore unless by referral, will be able to find the real gems a little bit easier. If nothing else, improve the margins of "niche" apps because $.99 is simply not sustainable.
Can you provide a link for education and medical categories or pm me about them? Thanks.
I'll just tell you how to do it:
1. Right-click and copy the link to the Top Paid chart under said category. The Top Free chart does not work, has to be TP.
2. Replace the popId=30 to popId=38 in the link, then paste it in your browser.
Tada. :) Here's medical: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewTop?id...
1. Right-click and copy the link to the Top Paid chart under said category. The Top Free chart does not work, has to be TP.
2. Replace the popId=30 to popId=38 in the link, then paste it in your browser.
Tada. :) Here's medical: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewTop?id...
Thanks and the links work on the iPhone too.
The common iFart example isn't a reflection of the store, it's a reflection of culture.
In 2007, "Pirates of the Caribbean 3" grossed nearly a billion dollars while "There Will Be Blood" never even got to 100 million. "Two and a Half Men" is a hit TV show and Arrested Development is off the air. The Arcade Fire were lucky to go gold with "Neon Bible" while Fall Out Boy went multi-platinum the same year.
Given your logic, nobody should bother creating anything of quality. Sometimes quality is successful, sometimes its not. But it's always regarded.
In 2007, "Pirates of the Caribbean 3" grossed nearly a billion dollars while "There Will Be Blood" never even got to 100 million. "Two and a Half Men" is a hit TV show and Arrested Development is off the air. The Arcade Fire were lucky to go gold with "Neon Bible" while Fall Out Boy went multi-platinum the same year.
Given your logic, nobody should bother creating anything of quality. Sometimes quality is successful, sometimes its not. But it's always regarded.
Not exactly. I would say that most people have a highbrow, but highbrow has a zillion different niches. Everyone's lowbrow is basically the same - farts, boobs, various impacts to a male crotch, beer, etc.
"There Will Be Blood" isn't exactly a good example, I think.
That movie was horrible.
braces for downvotes
That movie was horrible.
braces for downvotes
Sturgeon's Law Corollary: 90% of people will buy crap.
Disney drank PTA's milkshake.
I was tossing around iPhone app ideas with some non-techie friends a while back. Everyone had a hyper-specific need for an app, but then I mentioned the Daily Show bit about the fart apps that was on a while ago and it seemed to have the most traction amoung the diverse group. I guess it comes down to people being willing to pay a buck for a cheap laugh, thus, there is a market.
I have this hypothesis that there might be a market for apps that cater to a more female market. Most developers being guys, I figure anything a male would be interested in has been created, whereas female-oriented apps might still have a market. Anyway, just a thought.
I have this hypothesis that there might be a market for apps that cater to a more female market. Most developers being guys, I figure anything a male would be interested in has been created, whereas female-oriented apps might still have a market. Anyway, just a thought.
Female oriented apps with what, pink unicorns and fluffy bunnies?
That's a pretty silly statement no matter how you take it. Remember the myth (or the myth of the myth) about nobody needing more than 640K of ram? There will always be opportunities for novel applications, more user friendly applications, applications which take advantage of new technologies, etc.
However if you do market research or usability testing, dependent on the use case please do with both genders and perhaps different ages - for example, soft thumbboards may be perfectly fine for someone with one size hands to use and ridiculously hard to use with another. That's an obvious example, and there are other things not so obvious that may come out from that.
That's a pretty silly statement no matter how you take it. Remember the myth (or the myth of the myth) about nobody needing more than 640K of ram? There will always be opportunities for novel applications, more user friendly applications, applications which take advantage of new technologies, etc.
However if you do market research or usability testing, dependent on the use case please do with both genders and perhaps different ages - for example, soft thumbboards may be perfectly fine for someone with one size hands to use and ridiculously hard to use with another. That's an obvious example, and there are other things not so obvious that may come out from that.
"Most apps take at least six months of full-time work and cost between $20,000 and $150,000 to develop, according to Forrester Research"
So here the strategy is simple: just develop stupid things that takes a few days. If you check the top apps, half are not hard to code at all but stupid things that people are willing to buy.
So instead to write a smart, interesting application that costs 100,000$ it's better, I think, to write 20 applications costing 1000-3000$ each.
So here the strategy is simple: just develop stupid things that takes a few days. If you check the top apps, half are not hard to code at all but stupid things that people are willing to buy.
So instead to write a smart, interesting application that costs 100,000$ it's better, I think, to write 20 applications costing 1000-3000$ each.
Interesting, but not really surprising. Artists & musicians aren't "getting rich" either.. Is there some reason a normal(ish) distribution wouldn't apply to iPhone earnings?
It seems the same as with any "hit" driven environment. Getting a top-40 song, a top blog, the next NYT bestseller, or top iPhone app takes a lot of work and a little luck. There are those who are suited to it, persevere and get that big break. Then there are a few who just don't get lucky and thousands of wannabes who fail to execute, be it on minor flaws or epic levels.
I think the best description of the process comes from an editor explaining why so many manuscripts fail: http://nielsenhayden.com/makinglight/archives/004641.html#00...
It's harsh, but has given me insight into how the startup world, including iPhone app startups, works.
I think the best description of the process comes from an editor explaining why so many manuscripts fail: http://nielsenhayden.com/makinglight/archives/004641.html#00...
It's harsh, but has given me insight into how the startup world, including iPhone app startups, works.
Apparently, even being a drug dealer works the same way.
http://www.freakonomicsbook.com/thebook/ch3.html
http://www.freakonomicsbook.com/thebook/ch3.html
I don't have statistics to back me up, but I'm fairly certain the odds of survival are considerably higher for iPhone developers.
Yes, but the pyramid structure of wealth (concentrated at the top) definitely applies.
With the right binoculars, you can see Steve Jobs standing way up there on top. I do get what you mean about that, but it seems smaller pyramids can be built next to the big ones, even if they do pay taxes (so to speak) to the bigger ones. Maybe the iPhone isn't the best environment for that? Or maybe the real money is in building apps for other companies who need their services extended to a new platform.
I strongly suspect your last sentence is the key!
The survival rate for both groups is exactly 0%.
The problem doesn't lie with the curve.
It's that even those on top aren't winning big. Why play the lottery when the top prize is modest, and the risk is high?
It's that even those on top aren't winning big. Why play the lottery when the top prize is modest, and the risk is high?
What you meant is Pareto Distribution, not Gaussian distribution. They are completely different.
Maybe you're right. Apparently Pareto originally used his distribution to describe wealth allocation & intuitively it seems fair to assume that 20% of the developers account for ~80% of the earnings. But are you sure?
Btw, if developer talent is normally distributed (talent, it seems, usually is), shouldn't developer earnings also be? I'm not a statistician but it's an interesting question..
Btw, if developer talent is normally distributed (talent, it seems, usually is), shouldn't developer earnings also be? I'm not a statistician but it's an interesting question..
The impression I learned in my statistical mechanics course 20 years ago is Gaussian distribution works well in the case similar to Random Walk. If the system has restrictions on microscopic behavior, then Gaussian distribution will not apply. I think the benefit of talent may not be in normal distribution. The distribution of probability depends on the case and conditions that we pay attention to.
For example, a talented chef can only serve similar amount dishes in a night as less talented chefs. But the dishes they made taste much better than those and charge more.
At the same time, a talented plumber or a talented doctors can not serve more customers or patients than a less talented plumber or doctors.
It seems when the benefit of the talent scales, the distribution of their influence is Pareto distribution. So it seems developers, musician, artists, physicists fall into this category.
For example, a talented chef can only serve similar amount dishes in a night as less talented chefs. But the dishes they made taste much better than those and charge more.
At the same time, a talented plumber or a talented doctors can not serve more customers or patients than a less talented plumber or doctors.
It seems when the benefit of the talent scales, the distribution of their influence is Pareto distribution. So it seems developers, musician, artists, physicists fall into this category.
Btw I submitted this news report yesterday, but I titled the submission with Newsweek's title/headline for the article - "Striking It Rich: Is There An App For That?" (Hardly anyone noticed that submission :-).
--
On other posts, I've seen some commenters suggest that hn submissions should keep the original title of the article and not editorialize by typing in a new title, but as this this submission shows, sometimes, re-titling a news report makes it easier for people to understand what the news report is about.
Sometimes the original titles are just not very informative. So in those cases it may be a good idea to change the title. But I still think that one should not editorialise -- i.e., one should try to use a title that faithfully summarises the article.
When I submitted it that was the default title that came up (and what is in the title of the web page) so I didn't re-title it deliberately, but I agree a change in title can often make a big difference.
Newsweek picked two really bad examples for this article. One is flat out profitable and the other is making ~$100k. From my perspective that's rich in this economy where many talented and qualified people can't even find a job. I'm sure there are lots of real examples of people losing money on the App Store but Newsweek couldn't be bothered to find any.
Where are these talented and qualified people without jobs?
Given the nation's ridiculous unemployment rate, and especially given California's even larger numbers? Probably everywhere, actually.
The unemployed people I know of aren't people I would describe as "talented". Talented people generally aren't unemployed unless they want to be.
Anecdotal evidence isn't exactly an irrefutable argument.Not to mention you're begging the question as to how many unemployed people you actually know.
Finally, talented people with preference for working in a system than designing one out of scratch may be out of luck when looking for employment in a low-yield market. I don't think either of us are talking about talent as a static, singular or sole factor of employment probability, after all - and like it or not, there's such thing as Plain Bad Luck for some folks.
Finally, talented people with preference for working in a system than designing one out of scratch may be out of luck when looking for employment in a low-yield market. I don't think either of us are talking about talent as a static, singular or sole factor of employment probability, after all - and like it or not, there's such thing as Plain Bad Luck for some folks.
There are so many of these 'iPhone development doesn't automatically make you rich' articles that make it to the top of HN. I tend not to look at the comments for those articles, so forgive me if this is a common question, but can anyone tell me why there are so many? You'd think this is something we'd all know by now.
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I'm convinced that on these new anyone-can-make-an-app platforms (e.g. facebook, iphone, android), your best shot to make money is to be one of the first out with a product, then with that experience go freelance.
The markets become saturated too quickly. After a while, your problem becomes advertising rather than product quality. The only way I see to survive somewhat reliably later on is to diversify and become a portal/aggregation company.
The markets become saturated too quickly. After a while, your problem becomes advertising rather than product quality. The only way I see to survive somewhat reliably later on is to diversify and become a portal/aggregation company.
If not iPhone, how is a web-hating programmer to strike rich?
Striking it rich aside, a "a web-hating programmer" is going to have a lot of trouble these days. No matter what project you start on, completely avoiding the web is one way to make sure that your competitors will one day get the best of you.
If you're talking about simply avoiding 'web apps,' there's still decent money to be made in desktop applications. But, as with almost all industries, there are two ways to strike it rich: get really lucky, or work really hard.
edit: now that I think about it, you might be able to get a couple years out of µC work without dealing with the web, but that's more hardware than software.
If you're talking about simply avoiding 'web apps,' there's still decent money to be made in desktop applications. But, as with almost all industries, there are two ways to strike it rich: get really lucky, or work really hard.
edit: now that I think about it, you might be able to get a couple years out of µC work without dealing with the web, but that's more hardware than software.
Of course, I meant developing for the web (beyond static web sites). I hate the accidental complexity of web apps and, frankly, that's not where my expertise is.
My languages of choice are Python for prototyping and (modern) C++ for the actual development. I enjoy working on machine learning types of projects and thinking about algorithms.
My languages of choice are Python for prototyping and (modern) C++ for the actual development. I enjoy working on machine learning types of projects and thinking about algorithms.
This sort of article always struck me as silly. Is it really that surprising that not all developers on the iPhone are wildly successful? Or even that most aren't? Welcome to capitalism -- not everyone will be rich.
Not all developers on [insert platform here] are getting rich. But some are. Not everyone who starts any type of business will strike it rich. But some will. Why is this news?
Not all developers on [insert platform here] are getting rich. But some are. Not everyone who starts any type of business will strike it rich. But some will. Why is this news?
One of the more interesting points was that even the developers who everyone thought were getting or had gotten rich seem to be struggling to maintain/repeat their success or got rich for other reasons (such as the guy who bought shares in Palm from the revenue of his game).
I'd hope at this point, anyone looking to get into development is grounded in the reality of the market.
This isn't going to change anytime soon and it's going to play out across ALL platforms. The AppStore just gets the attention because it has the biggest "easy success" potential to a developer. A crappy app that nobody wants is a crappy app that nobody wants on any platform.
This isn't going to change anytime soon and it's going to play out across ALL platforms. The AppStore just gets the attention because it has the biggest "easy success" potential to a developer. A crappy app that nobody wants is a crappy app that nobody wants on any platform.
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Anyone telling you that the App Store is still a gold rush is trying to sell you something.
This Cubby guy's biggest expense was the $29k he blew on programmers. It's crazy how many people are trying to make money on the iPhone and are either not programmers, or don't have the drive to actually learn how to write code.
Bjango wrote what I thought was a good, brief response to this on their site. http://bjango.com/articles/golddigging/
Articles about how iPhone developers aren't getting rich won't make you rich.
It will help prevent you from becoming poor if you were thinking about iPhone development.
This article tells the reader nothing except 'The App Store isn't a free ticket to millions of dollars'.
If that realization is the only thing keeping someone from going broke for having tried iPhone development, they'll soon be broke from some other idiotic scheme. Bridge ownership, perhaps.
If that realization is the only thing keeping someone from going broke for having tried iPhone development, they'll soon be broke from some other idiotic scheme. Bridge ownership, perhaps.