The Market for iPhone Apps is Dead…

Recorded on 2011-11-24

I once read a book where there was a group of guys who ran a publishing house. This publishing house was not in business to market books to the public but to market publishing to those who wanted to be published. They edited and printed manuscripts sent to them by authors who wanted to be published and 100% of the books published were purchased by the authors.

I once submitted a poem to a publisher of poems who only accepted “the best works”. Those works were incorporated into an anthology and the anthology was offered to those who were published “at a special price”. In addition to the anthology the creators of the poems were offered special deals on custom plaques, bookmarks, and a bunch of other items featuring their poems. I was about 12 years old and my mother was proud that I was published, so she purchased both the anthology and a plaque featuring my poem.

…Or, How to Make Money Building Apps

There is a business model for this. Not marketing to the public, but marketing to those who want to be marketing to the public. If you want to make money building apps, market yourself as builder of iPhone apps for those who want an iPhone app.

I think this is about the only opportunity people have these days to create apps for iPhone (specifically, but possibly mobile apps in particular). I’m not sure that a business model based on creating and selling apps is sustainable 99.9% of the time. I think most people have the mentality that an app is an app; it’s a minor part of their lives. In the best case it’s an entertaining gadget that distracts them for a bit. For a lot of people that doesn’t seem to even be worth 99 cents.

The Other Option is to Build a Valuable Service, With App Access

So I had a look at the most popular and best-selling apps in the App Store (excluding games, they are a whole other beast), and a pattern revealed itself to me. The apps that people download (and sometimes pay for) the most are simply access points to a service that provides them with some value. The app itself provides value by giving them mobile access to a service that provides value. In most cases the mobile access is not a source of revenue for the service and the app is free.

Look at Facebook’s business model. A large part of it is selling advertising. On the desktop version of their website users see ads in just about every page they are on. On the iPhone app they see none. To get the iPhone app users don’t pay anything.

Look at Evernote. It is a freemium service model (free basic service, paid premium service). The app is free, but advanced features are unlocked in the app if you have a premium subscription.

I Hear You, Market

Personally, I believe that most of the apps that I create provide some value. Whether that value is a mobile budgeting tool, an iPhone Bible tool, or a basic navigation tool themed to match a game that I (and millions of others) enjoy, these apps all provide some value. I feel that the value is a meager $0.99 for each. For some I feel it is a little higher.

But the market doesn’t agree. They would rather have free mobile access to a valuable service they are happy to pay for. Fair enough. The upside is that it is much easier to effectively market a valuable online service than it is to effectively market a product that nets $0.70 in profit for each purchase. It can be very difficult to market an app in a profitable way with only $0.70 available to try to acquire a customer.

My advice? Don’t focus on creating a remarkable app if the market believes that generally apps are throw-away distractions. Focus instead on creating a remarkable service that people find valuable. Then give them mobile access.