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Selling through Web Stores vs. Mac App Store (MAS)

For developers, however, there are quite a few cons to the Mac App Store, when compared to selling on our own. To rattle off a few of these, there appear to be no trials, no paid upgrades, no access to customer information, no coupons, and no ability to ship updates outside of the store. As well, the list of allowable software is quite narrow and the fees (Apple's 30%) are much higher than developers currently pay to payment processors.

Paul Kafasis, Rogue Amoeba

Mac App StoreThe feedback we've received about MAS so far is that most developers view it in a similar light to their view of Apple®'s retail store channel: as a new distribution channel that complements their web store and any other existing distribution channels.

Most Mac® software firms plan to keep their own web stores open for business indefinitely (rather than giving the reins over entirely to Apple and closing their own stores). As one developer pointed out on the Macintosh Software Business forum, "In the scheme of things, the additional work to setup and maintain an online store through a provider like FastSpring is negligible."

Feedback to Date

Here is a collection of feedback we've seen and heard from Mac publishers and bloggers about why most Mac software publishers will keep their web stores running as always:

Percentage Costs

The 30% owed to Apple. Software publishers want to keep most of that large portion of their revenue going into sales, marketing, and as profits, as opposed to paying it out to Apple.

Pricing

Product prices will be driven significantly lower than existing web store prices for the same products, especially based on how things have gone on the iPhone® store (i.e. $2.99 apps).  I can charge a price much more commensurate with value for my app via my web store.

Ranking & Findability

I'd like to do what I can to get high on Apple's rankings, but I won't be able to compete with my $19.95 product against all the $1.99 apps that will surely be appearing soon and will in time take over a lot of the most popular app rankings.  99%+ of apps, including so many great ones, will never get high on or stay high on the top rankings, so it's not a wise business move to have a strategy dependent on being right at the top drive your overall company's direction.  When the iPhone store launched, I was in the top 30 for a long time, but by 9 months, I was about 125 and dropping and my ranking never got high again thanks to the endless new apps that  launched since the early days.  The same thing will happen on the MAS, those at the top will be bumped far down the list as all the new and cheap apps get introduced.  In fact, on my iPhone the top apps are almost all now games and freeware, leaving out most high quality software products from the top of the charts altogether.

Complementary not Primary Channel

Most apps will get lost in the shuffle among thousands of other apps, same as on the iPhone. Other than for a tiny number of software publishers, the MAS will not be a primary revenue source, but instead it is a new channel to complement existing channels.

In-App Purchasing / Embedded Store

Two key end user benefits of the Mac App Store are easier purchasing and easier licensing, but one doesn't have to rely on Apple to address those issues. Having to go out to the Web to purchase is an added step customers shouldn't have to take. In-app purchase is the solution there, and that's an option offered by independent e-commerce services. Regarding easier licensing, serial numbers are just awful dealing with for everyone. In-app purchase helps here as well, by automatically entering them.

Updates & Security Patches

If Apple continuously fails to update software containing critical security patches to the App Store in a timely fashion, users might be wiser getting their software via a more conventional route – such as (in the case of Opera) a direct download from the vendor's own website.

Discounts

No discounts will be available for large volume, bundle, or educational purchases.

Metrics & ROI Evaluation

There is no way to measure ad campaigns. This restriction can throw off metrics, budgeting and calculation of ROI on PPC and other online/offline campaigns.

Real-Time Reporting

The MAS does not provide real-time sales reports.

Customer Information & Relationships

Developers are not granted access to user information. Practically, they are stripped of the crucial relationship with customers, which goes beyond one-time purchase. Specifically, they are unable to retain or monetize existing trial users and to provide ongoing communications to customers through mailings, coupons and newsletters.  Don't give up your relationship with your Mac software customers! You can't build a real business if you don’t own your own customers and have the ability to interact with them.

Competition & Categorization

There are obvious downsides to getting listed alongside competitors and further downsides to being listed alongside $.99+ apps. The MAS puts your products up against countless others, so when a user searches for an app in a particular category they will be comparing it against many similar apps at potentially widely-varying price-points. This is clearly not the case when a user visits your own website dedicated to your products alone.

Free Trials

The MAS does not allow full-featured, time-limited free trials. Offering a free trial is particularly critical for apps that cost $10+ since users will most likely want to try your product before they spend the money. Apple itself is encouraging developers to send their users to the software publishers' own website to download trial versions, and that's where you can get users to go through your embedded store in-app or your web store, avoiding paying Apple's 30%.

Recurring Revenue

The MAS' terms and conditions do not allow developers to charge for upgrades. This constraint effectively cuts out recurring revenue from committed customers who tend to follow upgrade paths. In addition, bug fixes or incremental version updates take time to appear in the store, which can be frustrating to you and your end customers as well as cause security issues.

Cross-Selling

The MAS does not support cross-selling and thereby further cuts down the average order size by cutting off up-selling revenue potential. For many software publishers, cross-sells, up-sells, and cart add-ons make up 35% or more of their average revenue per order.

Recurring Billing / Subscription

There is no recurring billing/subscription support.

PayPal

Without a PayPal purchase option, companies will likely lose a segment of potential customers. FastSpring's checkout forms include the popular PayPal purchase option.

Corporate Sales

Some Mac developers need to be able to sell to corporate customers who want to buy using volume licensing or using a purchase order method, features not currently supported in the MAS.

Requirements & Restrictions

Some applications get rejected by Apple due to their highly restrictive requirements. Some key popular and industry-leading Mac apps won't be available for sale anytime in the near future due to the new requirements. Also, some developers want to be able to introduce features that Apple does not allow.

Ecosystem vs. Gated-Community

Many Mac-focused developers are already weary of Apple's growing 'Gated Community' hold on its ecosystem. The MAS expands the gated community, enclosing an ever-wider portion of this traditionally thriving ecosystem. This trend, while purporting to serve developers, can be seen long-term to actually do them a disservice.

Dependency on Apple Policy Decisions

Selling independently provides protection against MAS policy decisions that could affect a developer's apps.

Selling Older Versions

There is no support for older versions, creating a poor customer experience for some customers.  Existing customers may feel left out in the cold, as Apple doesn't provide a way for users of software registered outside the Mac App Store to integrate with that ecosystem. This means that if your customers already own your product, they'll need to repurchase it if they want to use future major versions.

Additional Benefits of Selling Outside the MAS

The lesson I'm drawing from this: the MAS is just another sales channel and having an app there does not relieve you of your obligations to market it properly… I realize that a few apps have caught fire in the MAS, and congratulations to those developers! For them the App Store is a home run and I am happy for their success. But for most of us, I suspect, the App Store will not prove a game-changer.

Kevin Walser, Code By Kevin

Further Reading

"The Mac App Store isn't for today's Mac developers" by Marco Arment
http://www.marco.org/2010/10/29/the-mac-app-store-isnt-for-todays-mac-developers

"Mac App Store ‘disruptive,' say experts" by Gregg Keizer
http://www.macworld.com/article/155090/2010/10/mac_app_store.html

"Quick Thoughts on the Mac App Store"
http://rogueamoeba.com/utm/2010/10/20/quick-thoughts-on-the-mac-app-store/

"The Mac App Store: The devil will be in the details"
http://www.macworld.com/article/155120/2010/10/mac_app_store_devil_in_the_details.html

"Developers have hopes, questions for Mac App Store"
http://www.macworld.com/article/1155061/developers_mac_app_store.html

"The Mac App Store, The Good & Bad"
http://www.baekdal.com/opinion/the-mac-app-store-the-good-and-the-bad

"Releasing Outside the App Store"
http://mattgemmell.com/2012/08/24/releasing-outside-the-app-store/

"Sandbox of frustration: Apple's walled garden closes in on Mac developers" by Ellis Hamburger
www.theverge.com

Apple®, Mac® and iPhone® are trademarks of Apple, Inc. The Mac App Store (MAS) is not yet trademarked, to our knowledge.

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