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Who's Really Winning in the App Store?

top paid appsI’ve been fascinated by the developers of apps in the iTunes app store. Pricing seems to be a big issue with developers. I often wonder who’s right.

A recent post at FingerGaming names the top paid games and points out that major franchise titles are having trouble competing with cheap no-name games.

The thing to consider when talking about higher priced apps competing with the $0.99 crew is that the $0.99 folks are only just beating them out in terms of volume, but not dollars.

For example, for every copy of Resident Evil ($6.99) sold, StickWars ($0.99) needs to sell seven to make the same amount. I don’t think that is happening. So which app is truly more successful?

While it seems the cheapies may always have a place high in the Top Seller list, it doesn’t necessarily mean they’ll be beating out the higher prices competition.

And even if it ends up the case that $0.99 games start making more, it might just mean it is time for the big names to revise their sale’s models. Though it seems that will be happening already with Apple’s new in-app purchase system.

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Are iTunes App Store Prices Too Low?

I just read an article asking a question I’ve been wondering about myself. It asks if iTunes App store prices are too low. App Developer Craig Hockenberry is worried that customers are being trained to want it all for $0.99 or less. To a degree this is a legitimate problem, but only to a very small degree. People want things are cheap as they can get them, this is always true. If you sell something for $100 people will say it should be $90 you can sell the same thing for $90 and people will say it should be $70. That is life.

What I don’t like seeing is developers whining:

We have a lot of great ideas for iPhone applications. Unfortunately, we’re not working on the cooler (and more complex) ideas. Instead, we’re working on 99¢ titles that have a limited lifespan and broad appeal. Market conditions make ringtone apps most appealing.

Before commencing any new iPhone development, we look at the numbers and evaluate the risk of recouping our investment on a new project. Both developers and designers cost somewhere between $150-200 per hour. For a three man month project, let’s say that’s about $80K in development costs. To break even, we have to sell over 115K units. Not impossible with a good concept and few of weeks of prominent placement in iTunes.

But what happens when we start talking about bigger projects: something that takes 6 or even 9 man months? That’s either $150K or $225K in development costs with a break even at 215K or 322K units. Unless you have a white hot title, selling 10-15K units a day for a few weeks isn’t going to happen. There’s too much risk.

Don’t make excuses. Produce apps that are worth more than $0.99 and people will buy them. Not as many people, of course, but that is just simple supply and demand. At $1 people who may not have any need for an application will buy it anyway, just to check it out or “just in case I need it one day.” But at $4 dollars you’ll lose nearly all of those folks.

I would hope that a developer would understand that they can’t sell the same quantity at higher prices. How many people own the free application Firefox? Everyone needs a browser and it is free. It gets downloaded like like it is porn, as of July 2nd Firefox 3 was downloaded 28,340,281 times. How many units of Adobe’s $1,800 Design Premium do you think have sold? Is ten percent of Firefox’s downloads (2,234,028) too optimistic? I think so. How many people need a full design suite? How many need it badly enough that paying almost $2000 is necessary? If the price was $20 I bet you a Zune that Design Premium would be sitting (unused) on way more computers.

But this is old news. What’s the real problem? The answer is simple. Most of the apps in the iTunes store are crap. People are hesitant to pay $10 or more for an application that has only screen shots and a few shoddy reviews after seeing so much garbage. Applications are not mature on the iPhone / iPod Touch yet. Worse is that developers don’t seem to have many worries about releasing (and often charging for) applications that are still in beta stages. Worse still is that many of these stay in beta stage.

I finally purchased my first game for my iPod Touch. At $8 I Love Katamari seemed like a steal. However after downloading it I discovered the game has bugs that make it unplayable and now I see that it is the developers who were stealing, not me. On the other hand, even though it has its flaws I feel that the $20 I spent on the Japanese dictionary called (you guessed it) Japanese was worth it. Though even that application is not to the standard that I would ask of a desktop app. I bought it because it was the best option and has the potential to be worth the price I paid.

My challenge to developers like Craig Hockenberry, put up or shut up. Don’t give us excuses why you are putting out crap. Don’t blame users and talk about us like we are pets that need to be trained. Put out something that is compelling enough to buy.

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Lonely Planet Getting it All Wrong

Today I decided I’d like to buy a Lonely Planet travel guide. I’m looking at the Japan guide. At Amazon I can get it for $19.13. I have an iPod Touch now so I though, maybe since they have all those snazy phrase books as apps for the iPhone / Touch they have PDF’s of their books. They do, but they dropped the ball completely. The PDF’s cost the same as the suggested retail price of the physical book— almost $30. Considering how much cheaper it is to sell an electronic file it should be at least as cheap as the physical book on Amazon. Or even better, those buying the book should get free PDF’s. I’d sign up for either of those, but who in their right mind would pay more for something that should cost much much less?

As a result I’m going to look elsewhere. I may end up buying the paperback, but I’ll freeze in hell before being squeezed for some jacked up PDF.

It is also worth noting that the aforementioned iTunes Apps have received somewhat poor reviews. To me this is a signal that Lonely Planet is not ready to make the next digital leap and that a smarter more savvy company has a golden opportunity laying in front of them.

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Remove the Arrows in iTunes

terminal application
There used to be a preference to remove the arrows that linked to the iTunes store. That option disappeared from the preferences in iTunes 8, but you can still reach it through the magic of the terminal. And don’t worry it is easy. Open the Terminal application (look in the applications folder, then the system utilities folder). Then just paste this line into the terminal and hit return:
defaults write com.apple.iTunes show-store-arrow-links -bool FALSE

Want those goofy annoying arrows back? Easy.
defaults write com.apple.iTunes show-store-arrow-links -bool TRUE

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Tentative Review of Hulu

NBC broke away from iTunes to offer its shows through Amazon (which only works on a Windows PC— no iPods etc) and through their new venture Hulu. It is a flash based video offering meant to compete with YouTube (event though YouTube was never meant to compete with NBC). The folks at MacRumors offered a glimpse of the new service, which is still in private beta. You can watch (sort of) an episode of The Office from there, as well as a few other shows like Airwolf.

At first glance there will be plenty of commercial breaks (indicated by dots along the video’s timeline), something I’m not interested in. But more importantly, the video stutters to the point that it is not watchable.

So far it looks as if NBC has shoved away iTunes and YouTube for crap. Viewers don’t want to be hassled with shoddy services and they don’t like having to go to many different places to find those services. This move is bound to push more folks to the legal use of DVR and the (likely) illegal use of bit torrents. Apple offered NBC a revenue stream, free promotion, free bandwidth and an attractive and simple delivery package— it is hard to see how spending hundreds of millions of dollars to try and feebly push customers back into an old business model will work out well.

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mac, music, technology

iPod Touch, Ten Million Apple Geeks Collectively Groan

After years of a rumored touchscreen iPod Apple finally unveiled the iPod Touch. Trouble is $400 dollars only gets you a tiny 16gb hard drive. Pay $300 and you’ll get a microscopic 8gb hard drive. The nerds are not happy.

The macrumors forums say it all

only 8gb and 16gb??? come on. I need more than that!!!

16gb?? Not big enough for me….I’ll be going with the 160gb ipod classic

For the first time in my Apple life I am actually angry with an announcement….

Not even going to consider this one until it gets at least 60GB of storage.

You have to wonder what Apple was thinking. Surely there must have been some sort of focus group that would’ve told them people didn’t want something that small. If the technology isn’t there or is the hardware cost is prohibitive a person could understand the rationale, however the thing isn’t going to sell very well considering it’s not any better than an iPhone and comes without cellular service. And some silly wifi music store isn’t gonna be pushing sales, so stop beating that drum Steve.

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boneheads, business, mac, technology

NBC Wants People to Stop Buying TV Shows

On the heels of iTunes getting rid of DRM in music NBC says they want more. NBC would also like to re-negotiate pricing and bundle shows. So far NBC has declined to renew its contract with Apple.

First issue: pricing. The pricing is fine. No one else really thinks it is too much or too little. Done.

Second issue: bundling. Users don’t want to be forced to buy a bundle and won’t like a change that removes a freedom of choice that they once had.

Third issue: DRM. Okay, more and more people are starting to agree that DRM is bad for consumers. Just look at Microsoft’s PlayForSure (which even the Zune doesn’t support) and Sony’s ATRAC (which has been dumped, leaving owners of those music file holding the bag). DRM limits how legitimate owners can use their purchased content and creates a situation in which it is likely that users will be locked out of different devices or just plain lock out of ever using the content again. The good thing is that many people just won’t purchase DRM burdened files. A user on one forum wrote a response to NBC’s demands:

Either I can buy a season of Scrubs and the Office when it starts again or I can find it in some other manner that will not benefit NBC at all.

Your call, NBC.

This exemplifies the main issue with DRM, that is that it agitates the problem it seeks to solve. By demanding an increased cost and adding DRM NBC simply pushes customers towards peer2peer sites and of course that will be far worse than unbundled slightly DRM’ed $1.99 TV episodes.

update: NBC and Apple are splitting ways. Apple has announced that they will not carry NBC shows because NBC wanted each episode to sell for $4.99 which is more than double what they cost now. We’ll see how NBC likes it when their own service fails and people turn to the peer2peer networks. It will be especially interesting to see how this effects the popularity of its shows, considering it was iTunes that saved the award winning show The Office from certain death.

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music, technology

The New DRM Class-System

Originally it looked like Apple and EMI would get rid of DRM altogehter, but now the facts are out. You can get DRM free tracks for $1.29 or DRM-laden tracks for $0.99. So, what does this mean? It means you have to pay $0.30 per track to purchase back some of your rights as a consumer. Removing DRM from music is a step in the right direction, but the precedent of charging more is step in the wrong direction. It is anti-consumer, but it is also creating a class system for music.

File quality. We can ignore the fact that the DRM-free mp3’s are better quality. Why? Because it’s a red-herring, meant to trip people up, there is no added cost for EMI to offer better quality files and only a margin added cost for Apple. It has nothing to do with the increased cost. It is important to remember that you aren’t paying for the file itself, you’re paying for the rights to play the music. And that is part of the problem— intellectual property, and how its owners want to manage it.

Imagine a company selling t-shirts sold two versions of the same shirt one for $20 and another for $26. The company says you could only wear the $20 to the supermarket, but if you pay $6 more you can wear it wherever you’d like. What do you think of that company? What do you think of that business model? Isn’t intellectual property awesome?

But now let’s consider who it is that buys the different versions. The rich suburban kid buying the $26 shirt is the same one that is going to be able to buy the DRM free music, while the people in a less financially position will be forced to choose DRM burdened music. If you have the money you can listen to your music, which you bought, under your terms. However, if you are not so lucky then  you are forced to listen to music, which you bought just like wealthy people, under the arbitrary terms of record and software companies. Doesn’t being rich have enough perks, do we really need to create a class of products that controls how lower and middle class people use the things they buy?

If you pay for something than any personal use should be fair game. Companies don’t want you to believe that you have that right. People need to tell them what they want doesn’t matter. Just say “no” to DRM and “up yours” to paying more for the right to say no.

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technology

iLAS 1.0beta

iLAS iconHey people, iLAS is back and better than ever… seriously, I know it isn’t amazing, but it can still be “better than ever.” It’s better because I fixed it up. There might be a couple more things getting tossed in soon, but I vow to keep iLAS as simple & basic as possible. I mean, it just uses Lame to make mp3’s using iTunes so how complicated does it need to be? The only known Bad News™ is that things won’t work right if you don’t have “Copy files to iTunes music folder…” checked off. But that isn’t so bad, and it is what might get fixed soon. Anyway…

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    changes:

  • there shouldn’t be anymore of the “jlink” business
  • you can make up whatever crazy genre you’d like, iLAS doesn’t care
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