TiPb has been exploring issues surrounding the App Store, especially how developers can earn a living, the various attempts to market apps in a sporting manner, as well the gaming and foul play going on.

In the bright lights category, developer James Thomson (ha! spelled it right that time!) has taken a decidedly humorous approach with the launch of his updated PCalc 1.2 (iTunes link) calculator app:

I think we got off to a bad start last time with version 1.1. It was my fault entirely. I came out with this big release I’d spent months on, sent out my press releases, and not a soul ran a story with the exception of that nice Mr Gruber fellow [Although TiPb did run an interview -- thanks again, James!]. Sales were quite poor and we both said some things we regretted in the morning.

But I understand, don’t worry. You’re tired of the deluge of iPhone press releases, and everything you see just starts to look the same after a while. I didn’t do anything to make it an interesting read and, let’s face it, I’m kind of fighting a losing battle with a calculator which – I’ll be the first to admit – is next to the flashlights and to-do list apps in terms of reaching saturation point on the store.

Not quite. I rock PCalc on my iPhone, with narry a flashlight in sight!

While PCalc chose humor, some others have gone decidedly darker…

Another recent TiPb interviewee, Yellow Pages (iTunes link), has a negative review plastered to the top of their app from someone (iTunes link) who also negatively reviewed a White Pages app, recommending instead the competition (which is “part of the new AT&T“). Strangely, over on phonescoop.com, that userid turns up stating an association with AT&T. D’oh! I think most of us would prefer real users giving us real recommendations, with developers sticking to promoting their own products and not wasting time worrying about the competition. B’okay?

Last up, via Daring Fireball, comes a great post from Andy Finnell of Order N on “How to Price Your iPhone App Out of Existence“. The whole article is definitely worth a read, but the conclusion is killer:

There will be an iPhone app bust. The current prices simply aren’t sustainable. Either developers will crash out of the market when they discover they can’t make a living off their current prices, or the gold rush developers will lose interest and leave when they realize they can’t make a quick buck off the store. The developers left standing will be the ones who set reasonable prices for their applications.

I’m willing to put my money where my mouth is. I currently have an iPhone app in development, and when it comes out, I will price it $9.99 or higher. I’ll let you know how it goes for me.

Dieter has spoken at length about the Long Tail of App Store business, but could the race to bottom really be putting things in short order? I’d gladly pay $10 or $20 for desktop quality apps or PSP/DS quality games, especially if it feeds developers’ families and ensures we, you know, actually get those kinds of apps. What about you?

James Thomson is the acclaimed developer behind DragThing for Mac OS X and PCalc RPN Calculator for the iPhone and iPod Touch. Following up on his recent blog postings about the challenges involved navigating the still-nascent App Store business model for developers, and TiPb’s own look at whether or not there’s a “long tail” potential for the market, James was gracious enough to sit down (virtually) and share his thoughts with us about the issues facing 3rd party iPhone developers going forward.

TiPb: James, you recently blogged about PCalc in the context of a “postmortem”. What was the reaction like to that article, and did it bring about any changes in your current thinking or how you plan to proceed with PCalc going forward?

James Thomson: Reaction was interesting. Many iPhone developers contacted me privately, and via the blog, to say they had encountered similar problems with sales after the recent changes to the App Store.
Some pointed out the “Availability Trick” to change the App Store release date for your software when you do an update, to make it sort higher up in the listings. I talked about that a bit in a follow-up post here. It’s unclear whether it really is a trick, or just what you are supposed to do, but it does seem to work.

I’ve also tried a few other suggestions, like renaming the app to “PCalc RPN Calculator” to make sure it appears during searches for the word “calculator” which it didn’t before. So far, there has been a relatively small boost to sales, but I’m not sure how much of that is due to my changes, and how much is just down to the overall publicity that the article generated.

I’m working on a small 1.1.1 update at the moment to fix a few things, and I’ll likely add some more layouts and themes. The real question is what will happen to sales then. If they remain flat, with all the other changes, then I’m going to have to try some more traditional marketing beyond the Google AdWords adverts we are already running. To a certain extent, the blog itself /is/ a form of marketing – I don’t think I can really deny that, given it is raising the profile of our software.

Read the rest of the interview after the jump…

TiPb has been looking at the App Store and whether or not there is a “long tail” for developer income. Do you think there is currently a long-term business model for developers of niche-apps?

I think it’s a much harder market than it was back in July. It’s well publicised that the store is pretty crowded now, and it’s getting increasingly harder to find things.

I think that when the App Store launched, the initial sales numbers were so high, that many developers – myself included – ended up with cartoon dollar signs for eyes, multiplying the first few months of sales figures out to a whole year. Now that there are many thousands more applications on the store, I don’t think we’re ever going to get back to those early days.

I think it’s certainly possible to have a big “hit” application that breaks the top 50 and stays there for a while, generating significant income, but I don’t think the store is geared towards more substantial applications that will be updated over a long time. Our sales are still non-zero however, so perhaps the level of the tail is just lower than expected.

Also, to be honest, this isn’t happening in a vacuum – the state of the global economy isn’t really helping matters. A lot of the software on the store isn’t essential – PCalc excluded of course – so people might think twice before purchasing if they are worried about their savings. How much of that is a factor, I don’t know, but I can’t imagine it helps sales.

Since Apple and the App Store is the only way for developers to make their Apps available, does this shift some of the promotional responsibility to Apple? I.e., does Apple have some duty to promote Apps and provide as much visibility as possible, or do iPhone developers, like traditional devs, have to take on the marketing aspect for themselves?

I think Apple does bear some responsibility, at least in so far as making the store as easy to use as possible and helping customers find what they want. And more importantly, highlighting the best examples the store has to offer. If thousands of people are buying something, but it has a lot of one star reviews, why should that be more “popular” in the listings than something that has all five star reviews, but only a handful of people have found it?

I’d like it if a new iPhone user was looking for a more advanced calculator, they could quickly see that PCalc has 70-odd five star reviews and a very loyal group of customers. How you would represent that on the phone, I don’t know. But Apple has lots of very talented user interface designers who could come up with something

Of course developers need to do some marketing themselves. But Apple gets 30% of the sales, so I don’t think they are completely off the hook.

PCalc is a $9.99 App, which many have said seems to be the “sweet spot” for paid apps at the moment. However, we see some vendors switching from paid to free and back, or running short-term “sales” to either benefit from volume pricing or drive up their popularity before switching back. Is this a reality in the current App Store model, and is it something developers now all have to consider, both for their Apps and competing apps?

That’s a really good question, I don’t honestly know. Of course, you’ll always get people who say that if your software was just that little bit cheaper, they’d buy it on the spot. How accurate that is, I’m not sure. If PCalc was $4.99, would I sell more than twice as many copies? If it was 99c, would I sell more than ten times?

It’s a little tempting to just try it, and get some empirical data, but if you reduce the price and find that it doesn’t actually help sales that much long term, then you’re just losing out. And if the market tends towards lower and lower pricing, then I think the quality of software on the store will suffer.

I priced PCalc at what I thought was a fair price for what I’ve made, I can’t really do much more than that. As it was there on day one, we didn’t know what the prices of our competitors were going to be, so we tried not to worry about it too much. As it is, there are calculators on the store from free up to twice the price.

I do think it’s equally hard for customers to know whether something that’s priced at $9.99 is ten times better than something that’s 99c…

What steps could Apple take, short term or long term, to help developers gain greater visibility in the App Store?

Short term, I’d add more categories, perhaps add another level below each of the main categories. Put all the calculators in one place so you only need to look at 20 things in a given section, rather than 2000. Perhaps some filtering options, so you don’t see apps with lots of very low ratings. Even just a sorting option to sort by rating would help.

Long term, I think there needs to be a way of presenting what the “best” apps are on the store rather than just those that sell the most copies. I want to see apps ranked by quality, perhaps some combination of sales and rating, maybe with an editorial component. I don’t think Apple has the time to do that right now, given that an app still takes a week or so to show up on the store after submission, but I hope they are thinking about it.

Some way to support limited trial versions in the store would also be very useful for customers. The Xbox Live Arcade store on the Xbox 360 has the right model for this – everything on it is a demo version that can be converted to a full version within the app itself.

The iTunes model for music doesn’t work as well for selling software.

Last question: does “backspace” belong on a virtualized Calculator? (That’s a cheap shot at Apple channeling my counterpart at Crackberry.com… )

Wow, I never even noticed that the Apple calculator doesn’t have one. Yes, it certainly does

James, thanks for your time and generosity in sharing your insights with us and our readers!

Dragthings.com is James Thomson’s website and blog, and his highly-regarded calculator application for the iPhone and iPod Touch, PCalc is available from the iTunes App Store.

On Monday, TiPb Senior Editor Dieter Bohn debuted his new bi-weekly feature, TiPb of the Avalanche, by asking about the iPhone App Store and the “Long Tail” business model.

Looks like he’s not alone. PCalc developer James Thomson (via Daring Fireball) recounted his struggles with Apple’s new policy of listing Apps by original release dates, ignoring update dates, and forcing older Apps to the frozen hinterlands of the last few pages in a list growing well past 5500. Under the old model:

Sales started to slow down over time, but with each of the 1.0.1 and 1.0.2 updates they went back up into the stratosphere as PCalc moved to the front page of the Utilities section again.

And now?

As it stands, the App Store is too crowded to find anything if you don’t know exactly what you are looking for by name.

So while, according to Apple Insider, the App Store may still be climbing faster than iTunes Music did, GigaOm is pishing the posh on the iPhone bump in general.

During Apple’s Q4 conference call, Steve Jobs said that the App Store would reach 200 million downloads today spanning over 5500 Apps in 62 countries. How will Apple’s (continuing?) tweaks on App Store organization help or hinder developers moving forward? And will they, as Dieter is suggesting, have to start putting as much time, money, and effort into marketing as they do coding? Or are there no easy answers?

[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.

image by JSK

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.