Can iPhone Developers Make a Living on the App Store's "Long Tail"? - TiPb of the Iceberg
("Unique" by Hamed Masoumi, licensed under Creative Commons)
[Introducing TiPb of the Iceberg, our new, bi-weekly column from TiPb Senior Editor, and all-around Smartphone Expert, Dieter Bohn.]
The recent news that development house Tap Tap Tap is breaking up has me thinking about the App Store and developers again. Partially it's because Tap Tap Tap has previously been mentioned here at TiPb as an example of developers raking in the cash and as an example of developers being open about how much they're making and what they think of the industry. The break-up is interesting for a few reasons in this context.
After the break, some ruminations and thoughts on the State of the Apps from this layman's point of view. Warning: as you can see from the title, this post includes hackneyed references to the Long Tail
Firstly, the details of the breakup include a new way for developers to make money off of applications -- by selling them completely. Tap Tap Tap's "Where To?" app is now on the market for a buyer, having made around $200,000 up to this point. I'm doubting that we'll hear what the final selling price is, but I have a hunch that it's not going to be sky high. The reason for that, though, is wrapped up in the Long Tail.
The standard business model when people talk about the Long Tail goes like this: niche software products (or blog posts, or what-have-you) never really go away, instead they generate a small amount of revenue for a long time after their initial sales surge. Taken together, this 'long tail' of sales can add up to real money -- eBay makes more money selling millions of niche products than they do selling big ticket items, for example. You see this in other mobile ecosystems -- There are plenty of software shops on Windows Mobile that push out all sorts of apps year after year. And, of course, the movie, music, and publishing industry rakes in untold millions in practically passive income every year based on their huge back catalogs of DVDs, CDs, and Books.
So the idea applied to the App Store would go thusly: Instead of developing one or two blockbuster apps that make beaucoup bucks, we may see these developers feeling pressure to keep creating new applications for that initial sales bump and a diversified Long Tail strategy of revenue instead of focusing on a single app and trying to keep it in the Top 50.
Setting aside the question of whether or not producing and maintaining lots of niche apps is even feasible for a single developer or a small software house, there are three ways that I can see the Long Tail theory applied to the App store. One is pessimistic, the other two a bit more hopeful:
1. The Long Tail doesn't apply to the App Store because it's just such a gigantic freaking money maker. It's an order of magnitude larger than any mobile software economy we've seen before and it therefore needs an entire rethinking of how to make money with mobile apps. In essence, the right side of the tail for even a single moderately popular app is large enough to support a developer.
While I do think that the App Store is qualitatively different than other mobile app ecosystems, I'm not sure that I think it's as crazy good as the 1st possibility there. Even if it were, it's a little to optimistic for a business plan, so let's look at the latter two.
2. The Long Tail works -- niche apps are able to maintain enough publicity on their own merits within the App Store over the long run to collectively make enough money to support a developer.
Right now I'd like to think this is the safe bet -- if you don't think you have a blockbuster on your hands, develop as many apps as you can reasonably maintain and hope they add up to a living. However, I suspect the situation might be turn out to be like the third possibility:
3. The Long Tail doesn't apply because once an app falls off the Top 50, its sales plummet. In essence, the right side of the tail is so small that no amount of niche apps added together will ever be able to support a living wage. The only safe strategy is to make an application popular enough to stay high up in the sales charts (and provide enough marketing to keep it there) or find ways other than the App Store to drive sales.
Here's the nut of what I'm saying: My hunch is that it may be tougher for applications to develop a "long tail" on the iPhone than it is for other platforms. The reason I think this is that it looks like the real driver of sales on the App Store are the top lists. As John Casasanta previously noted:
It’s worth pointing out that our sales have dropped significantly over the past few days. We were teetering around the 50th rank for Where To but then slipped under it. It seems that once you drop past that, you’re on a free-fall since the App Store on the iPhone only shows 50 in its top list, compared to 100 in iTunes on the computer. [...] I’m willing to bet that it’s a quick ride into oblivion once you fall off the Top 100 chart and I’m really hoping we don’t get to find that out anytime soon for Where To.
The idea here is this: if your app can't keep itself in the top rankings, it's going to quickly become lost in the sea of applications in the App Store. Unless you have a very unique niche (or several of them), it will also be difficult to find via search. Unless you're able to effectively market it via means other than the App Store, it simply may as well not even exist there. The effective long tail for an App with no visibility approaches zero, in other words.
It's not the fault of any particular app if it can't keep itself in the top 50 long-term. There are going to be too many apps and too many newly popular apps for a top list strategy to be viable for any but the most popular programs. Keeping any given application in the Top 50 long-term would likely require a mammoth marketing effort.
As Ars Technica points out in regard to the Tap Tap Tap situation, there does seem to be a genuine concern that the marketing of an app is as important, if not more important, than the design of the app itself. That's definitely a concern I would share were I looking to make a living developing iPhone apps.
It might be possible (or even necessary) that some sort of structural change to the App Store could help non-top-list apps maintain a revenue stream long-term. I can't say exactly what that change would be, to be honest, but I suspect it would need to involve a more robust and sortable reviewing system to help the cream rise to the top of categories and searches.
In the meantime, it would behoove most developers to consider what their marketing strategy for their application is going to be long term. Even great apps like Where To? are not likely to get a ton of visibility in the App Store over the long haul (again, through no fault of the app itself), so making apps like it part of a diversified long tail strategy is going to require some serious thought.
We've already called the iPhone app development a goldrush and even suggested that it's a living. That last part may be a little more difficult than it has looked for the past couple months. Apple does have an obligation to help make quality apps more discoverable in the App Store, but not the sole obligation. As with any industry, iPhone Apps (at least the ones that aren't in the top 50) aren't going to sell themselves.