I think it'll be interesting to see how apple deals with making developers play fair in terms of in app purchasing. With the ability to charge for access to parts of an app, consumers will no longer be able to trust that they're buying a fully functioning app — instead they might be buying an app that hits them up for more money as soon as it launches!

Jonathan

>>The crucial thing to note is that, despite ranking methodologies, the intrinsic nature of an application is still of foremost importance.”

I definitely see your point here: ideally an app has a unique and valuable function and the user buys it for that functionality. IMHO the ranking methodology is more of an issue with games which exist in overwhelming numbers. Games all essentially serve the same purpose: to entertain and pass the time. They're all kind of interchangeable. None have a real unique selling point that helps them stand out from the crowd. Would you agree?

But even for unique apps like Airsharing or Ocarina, they have to rise above the noise (and the games) to even be noticed in the first place. A great product is one thing, but it needs marketing to go along with it. And the most effective form of marketing right now is getting to the bestseller list..which is accomplished by dropping the price.

It is very interesting to hear you talk about other traditional marketing methods — and hear that these are best for apps targeted at a niche or certain demographic. Would you say that the apps targeted at niches are under less pricing pressure as a result?

Jonathan

The crucial thing to note is that, despite ranking methodologies, the intrinsic nature of an application is still of foremost importance, in executing a successful business model. For example, we've talked to developers who have released high-priced, “premium” apps that rely on a niche, and hence *more easily-targeted*, target audience (in some cases, b2b apps). Broad ranking is not necessarily as relevant in such a case.

On the whole, developers are coming out with all kinds of interesting business models, and we've seen many succeed, despite the App store's structure. That being said, it is still tough; depending on the app, ranking does have a substantial effect, and the pressure to price downward after release is there.

I'm personally very excited to see how things develop with OS 3.0. Totally agree with you on subs model; it's time is long past due, and a ton of developers I have spoken with over the past few months have been clamoring for it. This is especially relevant for larger brands/content-providers that have traditionally relied on a subs model for content (magazines, etc.). Very excited to get a pulse on the in-app purchases market as well, once it starts to take form. It'll be fun to track and watch, given its potential.

Great article Jonathan!

Azeem
Pinch Media