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.