There’s a new discussion out around revenues for independent app developers. I jumped into it via Marco.org and have a few minor points to make below these quotes. The two apps that stood out to me in the discussion (though there are many viewpoints (not many perspectives) listed in Marco’s post) are Unread, an RSS reader, and Overcast, which I recently reviewed and am still using as my primary Podcatcher.
For Unread, its developer Jared Sinclair writes:
Unread for iPhone has earned a total of $32K in App Store sales. Unread for iPad has earned $10K. After subtracting 40 percent in self-employment taxes and $350/month for health care premiums (times 12 months), the actual take-home pay from the combined sales of both apps is:
$21,000, or $1,750/month
Considering the enormous amount of effort I have put into these apps over the past year, that’s a depressing figure. I try not to think about the salary I could earn if I worked for another company, with my skills and qualifications. It’s also a solid piece of evidence that shows that paid-up-front app sales are not a sustainable way to make money on the App Store.
He’s right, that is depressing, though I have some notes about it in a short while.
For Overcast, Marco writes:
It’s too early to know, but I doubt Overcast will have the financial success that Instapaper did. Instapaper rode the App Store boom because it was in the right place, at the right time, solving the right need — and Instapaper 1.0 only took three months to develop, even as my first Objective-C app and with the relatively primitive iPhone OS 2.0 SDK. Overcast has taken over a year of work to make a 1.0 that could be competitive in a much more crowded and narrower market, and there’s still a lot I need to do.
Efficiency is key. And efficiency means doing more (or all) of the work yourself, writing a lot less custom code and UI, dropping support for older OSes, and providing less customer support.
On Efficiency, Benjamin Mayo also has a few telling words:
You have to be efficient with your time to make good ROI’s on the App Store. … If you want to maximise your profitability, make small apps that do a few things well. The amount of effort you put into an app has very little to do with how much of the market will buy it.
After all of these smart viewpoints (not necessarily different perspectives), here’s my view about it. All of these are individual cases highlighted by some pretty prominent independent developers. They are not by themselves a commentary on app development, except that people can learn from that and perhaps do things different.
Yes, efficiency is important, but lean development and management only goes so far, at some point spending money creates money and saving money results in lost opportunities. In any kind of development, software or other, you really always have two choices: you focus on small and repetitive or you focus on large and bombastic.
The first, I would call the franchise model. You build a model that you can replicate, whether it’s Starbucks, website development, or app development. Starbucks is just a wire-frame, lacking in atmosphere (somewhat) and you repeat in on every corner in every city. That means many small revenue streams that together add up to a lot. This is the so-called ‘efficiency’ mentioned in Marco’s and other’s posts.
The second is what I would call radically innovative or hard to replicate innovative products. It requires unique resources and perhaps a unique market to exist and gives both a tremendous advantage and represents a tremendous risk, because it often requires a singular focus and not a risk-reducing portfolio approach. Examples of these are rare, because those that we know have essentially already been mass-produced and probably have many competitors (iPhone, Toyota Prius, etc.).
Taking Overcast, I last wrote that I was impressed with the production quality of the app and I consider Marco an innovative developer. He also dedicated over a year to the development of Overcast, which I understand is a very long time relatively speaking. Is his market unique, no, and that will without a doubt reduce the ROI of his investment.
The same for Unread, which is an RSS readers in a market busy with RSS readers since Google Reader shut down. Is it innovative? I understand it to have a clean, minimalist reading interface (which is part of a trend in all things readers). But that does differentiate it from other readers, though every app should technically have differences with competing apps. As sorry, as I am to say it, because every developer loves their app the most, I think this falls more into the franchise model of apps.
There is the matter of unique resources, which are important in differentiation. Every developer has their unique skill-set and perhaps not unique access to resources. Apple opens up its development platform to the public, so technically everyone works with the same tools. I don’t know what Jared Sinclair’s background is and I sort of know Marco Arment’s pedigree prior to this app. I believe that programming and design can be unique, as can functionality, so it should be possible to create differentiated apps on the app store. At the same time, the universal access also facilitates the franchise system, allowing for ease of replication and lot’s of smaller revenue streams.
The general point is that while people may cry about the app store being to populated, this is a universal truth for most markets. There was a time where America had a gold rush, where gold diggers came to a river and fished gold out with their hands. Then more came and gold became sparser. So innovators focused on new technologies or new markets and got rich there. There’s nothing different here, except that the iPad / iPhone technology and OS is not mature yet, and that should still represent new possible functionalities for new development.