The App Store is not a free market

The App Store is not a free market

Summary: In previous installments I've blogged about Craig Hockenberry's (Icon Factory) and David Barnard's (App Cubby) thoughts on the economics of the App Store.Hockenberry bemoaned the proliferation of "crapware" that higher-priced apps are forced to compete with while Barnard posted actual numbers from the App Cubby bank account.

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TOPICS: Apps
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salesIn previous installments I've blogged about Craig Hockenberry's (Icon Factory) and David Barnard's (App Cubby) thoughts on the economics of the App Store.

Hockenberry bemoaned the proliferation of "crapware" that higher-priced apps are forced to compete with while Barnard posted actual numbers from the App Cubby bank account.

In his latest installment, Barnard expresses his frustration with the artificial market forces that are driving down the price of apps, which in turn drives down the perceived value of his products – which he has invested significant time and money to create.

Many developers are not pricing their apps at a sustainable price, or even a fair value for their app, they are using price as a marketing tool.  In a competitive free market, price is one of the ways to compete, and heavy competition generally leads to lower prices, but price isn't the only way to compete. Apple itself proves that a premium product can be wildly successful.

As with Barnard's other post, it's a good read and an excellent insight into the App Store.

Topic: Apps

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8 comments
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  • Free

    It is funny to see people complaining. The FSF guys wanted
    a world where software was free. In this day where people
    go to work at their IT job and create free software on the
    side is now the world we live. Open Source and Free
    Software guys have successfully killed an industry. I think
    we now have to live with FREE and now try to live in that
    world. Games and Educational software will make money,
    everything else is going to be free on the iPhone.

    The way you make money is not by adding ads to your
    application, but building an "iPhone or Android" Studio.
    You contract your services to GM, McDonald's and other
    companies that want a presence on a device. That is where
    the money is --- not in the application itself.
    jmussman
    • Its a cycle.

      In many ways, the app store is a like a modern day gold rush - low barrier to entry for perceived easy and high rewards.

      Of course, the sheer numbers make this impossible. They'll all pack up and go home, and those left with the dedication to actually build high quality, useful and useable apps may eventually make a living here - if the whole this is shelved by Apple as a disaster.

      The bottom line is that the 80/20 rule works here. 20% of the effort to get an 80% complete app. One guy and his dog typically can manage that 20%, but its much harder for them to hit the 100%, which is where more commercial oriented teams come into it.

      Unfortunately, I think the Apple app store doesn't provide sufficent means for the quality producers to differentiate themselves from the noise. Ultimately, Apple will suffer when the App Store becomes understood to be a respository for dross, and the quality producers move elsewhere, becasue they have NO OTHER CHANNEL for distribution.
      TheTruthisOutThere@...
      • Marketing Matters

        Without marketing their apps, the developers are putting
        all their eggs in Apple's basket. As Veiled Games noted
        "App Store placement is still the kingmaker." However,
        there can only be a few kinds in this market.

        If the other developers want to be princes, they need to get
        out there and do some basic marketing. Our site
        (AppBeacon.com) along with several others like us and app
        review sites are a great way for the developers to freely or
        inexpensively spread the word about their apps.
        AppBeacon
        • Kings not Kinds

          However, there can only be a few kinds in this market."

          should have been

          "However, there can only be a few kings in this market."
          AppBeacon
    • And?

      [i]Open Source and Free Software guys have successfully killed an industry.[/i]

      The automobile killed the buggy whip industry. The computer killed the typewriter industry. The internet is killing the newspaper industry. So what's different about about this paradigm shift other then being on the receiving end? ;)
      MisterMiester
  • If it's crapware

    then it shouldn't be that hard to compete against. Unless, of course, your stuff is equally crap and you're just trying to charge more money for it.
    frgough
    • Well Said!

      Price isn't the only place to compete, no question about it. The other place to compete is quality. If two apps are of equal quality, then the lower cost version will win. If there is a quality difference, and the price difference is proportional to the difference in quality, then consumers will choose based on their priorities. This is not rocket surgery, this is reading the back of Marketing for Dummies. I guess the problem is that the programmers slept through marketing, which is coming back to bite them in the rear now that they need it.

      Joey
      voyager529
  • Actually, it is a free market

    Not to pick nits here, but unless the government is somehow regulating the Apple Store, it's a free market. Apple owns it, so they set the rules; that's part of the free market. Sellers are choosing prices voluntarily, and buyers are buying voluntarily. That's a free market.

    Maybe you're confusing "free market" with what conventional economists call "perfect competition". But "perfect competition" is an entirely artificial construct that has nothing to do with reality, because it makes assumptions that are never true in the real world, despite what conventional economists say or think.

    Eric
    johngalt_0705