Dec 30

The German site ifun.de noticed that Apple recently changed their iTunes Terms and Conditions for several (all?) EU countries. The changes include several new paragraphs related to “right of cancellation” and it mentions a 14-day period within which you can cancel your order and receive a refund, without giving any reason.

9to5mac seems to have been the first U.S. site to pickup the story and they ran with the headline “Apple introduces 14-day no questions asked refunds for App Store & iTunes in EU countries”. This was quickly picked up by many other sites and caused a lot of buzz on Twitter.

So it must be true then?

The iTunes T&C were indeed changed for EU countries on December 16. You can read the new U.K. version here. The new paragraphs in question are conveniently placed at the very beginning of this very long legal document. Here’s the smoking gun:

Right of cancellation: If you choose to cancel your order, you may do so within 14 days from when you received your receipt without giving any reason, except iTunes Gifts which cannot be refunded once you have redeemed the code.

Compare that to the U.S. version which succinctly says:

All sales and rentals of products are final.

Very interesting. And a significant change to how business is currently done on the App Store. Could this finally be the introduction of free trials that so many developers have asked for? But if that is the case, why introduce it as a change to the T&C and do it during the holiday season? Apple is certainly not known for being proactive in their communication with developers, but this borders on the Christmas Eve document dumps that governments like to do when they don’t want anyone to notice.

But if you bother to read a bit further into the T&C document, you quickly find this paragraph:

Exception to the right of cancellation: You cannot cancel your order for the supply of digital content if the delivery has started upon your request and acknowledgement that you thereby lose your cancellation right.

Given how the App Store works with downloads beginning immediately when you purchase an app, this change is really only interesting to lawyers and EU commissioners who are pushing a new directive on consumer rights.

Nothing new here. You can go back to your holiday vacation and glögg.

But since I have your attention, let’s do a thought experiment: What would happen if Apple suddenly did implement a 14-day no questions asked return period for iTunes?

Who would benefit from this?

Consumers obviously. But I also think that many developers would make more money as a result of such a change. If you have an app that is expensive, it seems very likely that more people would be willing to give it a try if they know that they can easily get a refund if the app is not right for them. This is the argument put forth by proponents of time limited trials in the App Store.

When you shop in the App Store you know that you are inevitably going to buy some duds: apps that were not what you expected, apps that are buggy, apps that were totally misrepresented in the App Store description, etc. When apps only cost $0.99 it’s easy shrug off the bad purchases. The total price you paid to find an app that you end up using is still pretty low. However, if the risk of purchasing a “bad” app is taken away, then that could lead to an overall increase in App Store prices. The difference for developers is that the good apps will get all the money instead of it being spread out accross several not so good apps. This is a good thing in my opinion.

Who would become the losers?

Developers of bad apps are likely to suffer economically as a result of easy refunds. Their refund rates will skyrocket and the business model of flooding the App Store with crap will crumble. I would not cry for them.

Unfortunately some really good apps could fall victim to this change as well. Think of apps that you “finish” within 14 days. Many casual games fall into this category. Event specific apps too. Perhaps some travel related apps, e.g. after your short vacation trip you may not “need” a city guide app anymore. Of course it’s not right to fully enjoy an app for 13.9 days and then request a refund. But some people would of course abuse this.

Open questions

  • If an app is refunded, would it be removed from the customers iTunes account or can the customer continue to use the app?
  • Would this only affect the initial app purchase, or In-App Purchases too? I’m guessing only the initial app purchase as it would be impossible for Apple to “roll back” purchased features and benefits inside apps.
  • Would this change only pertain to apps? The Terms & Conditions are for all of iTunes, not just the App Store portion. What about ebooks, music and movies? I think movies would be especially vulnerable to a 14-day return period. It’s unlikely that it will take you 14 days to watch a movie. And if you “didn’t like” the movie is that reason enough to get a refund?

How would this affect you?

If Apple were to implement a more liberal refund system, then you should keep an eye on  your refund numbers in iTunes Connect. In the sales report you can set a filter for Transaction Type = Refund. You have probably seen some of these in the past as Apple has always had a limited refund policy in place, it was just a lot more difficult to use.

In all likelihood you would see the refund number increase initially after a new refund system was introduced. I wouldn’t panic immediately. People are probably going to try this new system in the beginning to see if it really works. Then I think many people are going to promptly forget about it.

Should you pull your app from sale in the countries where the refund policy was introduced? That seems like a foolish reaction. Even if your net sales after refunds is lower than your sales were before, they would still be greater than the $0 you’ll make from no apps for sale in those countries.

If my guess above is correct and IAP would not be subject to refunds, then maybe a change will finally push you over to switching your apps to free download with IAP to unlock all features. Interestingly the reverse is also true: if it turns out that apps that are paid up front convert better than free + IAP, then it should be worthwhile launching a paid app as well.

Why is Apple not doing this?

A Machiavellian approach would be to implement this under the guise of “EU is forcing us to do it”. And if things don’t go well, then they can blame the EU directive. If it’s a success, then they can take credit and roll it out to other countries too.

If nothing else, rolling out a new return policy just in the EU would make for a controlled experiment to determine if trials are a net positive for apps: You can compare your net sales in the EU before and after this change, and you can compare with other regions of the world that do not yet allow for easy refunds.

Apple should view this as a good change for consumers, and Apple usually takes the side of consumers, especially when they can use that club against their competitors. As far as I know the Google Play Store still only offers a 2-hour return window for apps.

As this news flash showed, the thought of instituing a 14-day return period caused a lot of anxiety among developers. But overall I think this would be a positive change for the best developers. And that would definitely be in Apple’s long-term interest.

written by Nick

Nov 14

Right after WWDC I wrote a short note about a new feature in iTunes Connect that allows you to request promo codes for app updates and how you could use those promo codes for testing the final app binary before it’s released on the App Store.

With the release of the new iTunes Connect UI almost everything looks different, but the same features are there. So here’s a follow up with screen images and step by step instructions.

1. Manually release the app

iTunesConnect Manually Release App

You should always, always release your apps manually instead of having them be released automatically as soon as they are approved. Odds are that your app will be automatically released on a Friday or Saturday evening and then your weekend may be spent answering support emails. So for your own sanity, release apps when it’s convenient for you. Manual release is also a requirement for this promo code testing trick to work.

2. Submit your app for review as usual

Nothing new or different here. If you forgot to select manual release you can still change this while the app is waiting for review.

3. Pending developer release

iTunesConnect App Pending Developer Release

When the app has been approved it will be in the state Pending Developer Release. At this point the Promo Codes link appears at the bottom of the app details page.

iTunesConnect App Promo Codes Link

4. Request one or more promo codes

This is the same old process you have probably used in the past to request promo codes for press contacts. Make sure you read the rules so that you do not violate the contract governing how promo codes are to be used. I’m not a lawyer, so I cannot provide advice here.

5. Download your app using one of the promo codes

Downloading an app using a promo code is usually a straightforward process. But in my experience when the promo code is for an update, iOS sometimes gets confused. It’s not consistent. But sometimes the App Store app shows an Update button right after the download is complete. It’s not clear to me if tapping the Update button will download the update you really want, or if it will “update” to the latest public release available on the App Store. Sometimes the whole process fails and my update is nowhere to be seen. So don’t be dismayed if need to burn more than one promo code to get the binary you want downloaded onto your device.

If your app saves any data you should test the upgrade scenario where you have a prior version of the app installed on the testing device. Upgrading from the App Store in this way is what your customers will experience and this is very different from when you are running and upgrading the app from Xcode.

6. Reject or release

If all testing goes well you can release the app at your convenience and in coordination with your release campaign. Tap on the Release This Version button at the top right of the app details page.

iTunesConnect Release This App Version

If during your testing you find any showstopper bugs you can reject this binary instead of releasing it. Click on the Cancel This Release button in the Builds section of the app details page.

Remember that Apple keeps a detailed history on all status changes of your apps. So don’t reject the binary after it has been approved by app review unless it’s really necessary. When you cancel the release you’re telling the app review team that they just spent time reviewing your app for no good reason since that version they reviewed will never see the light of day.

So don’t use this method as your early stage QA. Use it as your final, final confirmation that nothing went horribly wrong in the very last build step. Give yourself the peace of mind knowing that your customers will not face a botched binary when they go to update your app.

written by Nick

Jun 13

Every year at WWDC I make a point of having a meeting with the App Store team. If you are selling apps on the App Store, then nurturing personal connections with this team is one of the most profitable activities at WWDC in my opinion.

Every year as far back as I can remember I’ve asked the App Store folks if they are going to implement a way to test the final app binary before it’s released to the public. For the past two years they have hinted at an upcoming feature that will allow you to request promo codes for app updates. This year they surprised me by answering that this feature is now available.

Why is this a big deal and how is it useful to me?

Since promo codes were introduced for apps, you have been able to request and distribute promo codes as soon as an app has been approved by app review. Promo codes work even before the app is publicly available on the App Store. The business reason for this is so that you can send promo codes early to the press and have them write reviews that can be published on the day that your app goes live.

But you can also send yourself a promo code. This will allow you to do a round of final testing on the actual binary that customers will see when they download the app from the App Store.

No more crossing your fingers and hoping that the very last build and code signing you do before uploading your app to Apple didn’t introduce some odd error.

Previously promo codes were only available for new apps and not for app updates. That made the promo code testing trick less useful because you could only benefit from it once in the lifespan of your app. But now you have a way to test the final binary of all your releases.

written by Nick \\ tags:

Jan 31

Ouriel Ohayon of AppsFire watches the App Store for trends like a hawk. Recently he noticed that a single indie developer had the #1, #2 and #6 top positions on Top Free iPhone Apps.

The #1 app is called Flappy Bird and is a not so subtle variation on Tiny Wings. Or as Georgia at iMore puts it: “the game which is what remains when you suck the fun and joy out of Tiny Wings”. Ouch. But since when does the App Store reward fantastic games that hard core games love? For proof, look no further than Candy Crush and the many successful IAP games.

How does an indie developer beat out Candy Crush and other publishers who spend hundreds of thousands of dollars per day to maintain their top positions in the App Store?

Elaine Heney of Chocolate Lab Apps appears to be the only one who has managed to get an interview with the developer Dong Nguyen. In the interview Dong Nguyen claims that he did not “use any promotional methods”.

Carter Thomas has analyzed the historic rankings of Flappy Bird and the other two apps, and his conclusion is that something fishy is going on.

Paying for downloads is nothing new in the App Store economy. The top free to play games do this all the time. A crucial component to make such a campaign profitable is that your app is finely tuned to extract the most money from the players. The big guys have this down to a science. But even with all that in-house knowledge, a common strategy is to launch the app in a smaller market (e.g. Australia or Canada) to tweak and tune the IAPs before launching on a larger scale.

Flappy Bird has none of these characteristics. The only monetization is AdMob banners. This is hardly an optimized monetization strategy.

The darker side of paying for downloads is using bots to inflate your numbers. Since Flappy Bird is ranked high in 50 stores around the world at the same time, it would require an immense botnet to achieve this. The larger your efforts to cheat are, the larger your risk of being exposed becomes. It seems unlikely to me that an indie developer would get his hands on such a weapon.

Many people have pointed out that the reviews in the App Store for Flappy Bird look fake. But when did people suddenly start writing quality reviews in the App Store? Another explanation could be that there’s a meme on Twitter where people try to one-up each other with writing and finding wacky reviews for Flappy Bird.

I’m not going to pass any judgement because we don’t know all the facts.

In my mind the most suspicious part is how did the other two apps climb to the top of the App Store when there is no cross promotion of these apps in Flappy Bird. Do that many people really make an effort to go to the App Store and search for other apps by the same developer and download them?

If there was anything shady going on in the sudden rise to the top, then it’s a sad day. Yet another way to game the App Store. Or as some people would say: business as usual in the app economy. If there is one, I hope Apple finds and closes that loophole quickly.

If this is genuinely a viral super nova for Dong Nguyen, along the lines of Temple Run’s rise to fame a couple of years ago, then that makes me very happy. Congratulations to Dong Nguyen for hitting that perfect combination to make his apps go viral! This means that there is still hope for indie developers to hit it big time in the App Store without a mega budget.

written by Nick

Jan 10

This is a great idea. Start with the apps on your first home screen page. That should keep you busy for a few Fridays. Then go down your list of apps that you use every week. Also reward developers with a new or updated review when they update an app.

If you prefer to read other peoples’ reviews instead of writing your own, you can still help by clicking on the “Was his review helpful? Yes” link for the reviews that are truly helpful. (You can do this in the iTunes desktop app. Remember that one?) So few people seem do this up-voting, that just a few votes will have an impact.

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Dec 16

Per their annual tradition, Apple will shut down iTunes Connect over the Christmas holiday. This year the dates are December 21-27.

During this time period you cannot and should not

  • Login to iTunes Connect.
  • Update your app descriptions. Make sure you add any special holiday or sales messages ahead of time.
  • Change app prices. Furthermore, do not schedule any price changes to occur during this week as that will remove your app from sale until the 28th.
  • Don’t submit any last minute app changes. If you make a mistake the expedited review option will not be available to you, and you’ll sit on the sidelines during the lucrative holiday sales season.
  • Don’t wait until the last minute to make meta data changes. iTunes Connect is a vary large system spanning many time zones. Don’t rely on it working with perfect timing for you.

What still works

  • The App Store ranking lists are still updated during this period.

How to get your daily sales reports during the shutdown

  1. Log into iadworkbench.apple.com to establish your session.
  2. Then go to reportingitc.apple.com to get your sales data.

Update: This year I saw several app updates published during this time. Not sure if this means that the app review team is working as normal during this time, or if these were just a few apps that were left in the review queue and they wanted to clear it out.

written by Nick \\ tags:

Nov 25

Apple has discouraged developers from annotating their screenshots in the App Store beyond just a plain screenshot. However many developers have found that it’s helpful (and profitable) to tell a story with their screenshots, explaining the main benefits of the app. And I have yet to hear of any app rejections due to annotated screenshots.
 
With the introduction of the Apple Store for iPad app, Apple decided to go with annotated screenshots for on of their own apps for the first time. They did it in an interesting, and unusual way, by showing an image of an iPad running the app below a headline that explains the benefit or feature shown in each screenshot.
 
You could argue that the UI of an app should be so self explanatory that a quick look at a screenshot conveys all the information you need to know about the app. But I think it can be very beneficial to use annotated screenshots in the App Store, when they’re done in a tasteful way. However, I wouldn’t use Apple’s approach of displaying the outline of the iPhone or iPad device as this takes up way too much real estate in the screenshot. And it also opens up a big minefield that you have to navigate when you use images of Apple’s products in your marketing. See the first link above for more details.
 
 

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Nov 22

Clumsy Ninja is the featured app in the App Store this week. What’s noteworthy about this is that the App Store listing includes a video. Yes, a video inside the App Store!

It’s well known that most people don’t take the time to read your carefully crafted app description in the App Store. Since the screenshots are more prominently placed (no need to tap a tiny more link, for example) that is probably the primary way most customers make up their minds to download your app or not.

Having a video here would be awesome. With a video you can really tell a story and show off the great features of your app.

But it will also open up a whole new level of competition, as Marco points out.

Right now Clumsy Ninja is the only app on the App Store that has its own video. Hopefully Apple will roll out this feature to all apps in the future. To begin with I’m guessing that they will use videos just for the featured apps. This will allow them to gauge the popularity of videos and work out the initial kinks. (For example: Did you notice that the Clumsy Ninja video only plays in portrait mode on the iPhone, but it looks like the design of the video was deliberately made so that all the vital information actually fits in portrait mode when you tap on the full screen vide button?)

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Nov 20

Ever since the iPad was launched Apple has heavily encouraged developers to create Universal apps that have two separate UI:s in one binary, instead of having two separate apps in the App Store.

This week Apple finally launched their Apple Store for iPad app, and interestingly it’s not a universal app. It’s an entirely new app just for iPad. The old Apple Store app (for iPhone) is still available. Note that the iPad app requires iOS 7 while the older iPhone app still works on iOS 6. So maybe this release was just an artifact of separate development timelines and the two apps will merge in the future.

Since Apple has opened the topic for discussion, I think it’s worthwhile to consider the pros and cons of each approach:

Benefits of one universal app

  • Customers only have to purchase and keep track of one app.
  • Higher likelihood of being featured by Apple in the App Store. (Anecdotally)
  • All your app downloads are aggregated for the purposes of ranking in the App Store, instead of being split across two separate apps.

Benefits of two separate apps

  • You can make two sales to your customers who use your app on both types of devices.
  • You can price the two apps differently.
  • Reduced size of the app binary when you remove all the image assets for the other device type.
  • One release will not tie up the other. Say that you are working on an iOS 7 UI update and you complete it for the iPhone version first, then you don’t have to wait to also finish the iPad UI update before you can release the app.

written by Nick

Jul 12

This week marks the 5th anniversary of the launch of Apple’s App Store. It’s been quite a ride!

On launch day I was fortunate to have 5 of the 552 available apps be ones that I had developed for my clients. Being involved in 1% of the total App Store inventory was an amazing start to a new career, and crazily enough I was able to keep up with the pace of the App Store growth, for a while. Then things quickly began growing exponentially.

Looking back it would have been impossible to predict that in just 5 short years the 552 apps would grow to over 900,000. One of the first App Store best sellers was Super Monkey Ball by Sega, and they netted $3 million in the first month. Today the best grossing apps take in almost as much per day.

 

Today

Perfect for games

I don’t think Apple set out to create the perfect marketplace for games with the App Store. But looking at the App Store today, that is what has happened. With a few exceptions, all the top grossing apps are games. What makes the App Store so perfect for games is the lack of friction of downloading (mostly free) apps and then making micro payments inside the apps. This combined with the genius idea of consumable in app purchases, which are practically tailor-made for games.

The ongoing revenue generated by these purchases can fund ongoing app development and serious marketing budgets.

Great for brands and non-app businesses

Companies that don’t rely on app sales or in app purchases for revenue also love the App Store. They enjoy the frictionless, and free distribution of their apps. To the company, building an app is often a marketing expense. And in many cases it’s relatively cheap compared to their other brand advertising.

What about other app categories?

The App Store of today is not so great for productivity apps that require ongoing development and support, while at the same time they can only charge a one-time fee for the sale of the app. Consumable in app purchases are in most cases not appropriate for these types of apps. Apple even restricts the IAP business models that they allow on the App Store, making it difficult to innovate in this area.

Consumer acceptance is another challenge. It’s widely accepted to pay for shortcuts, power ups, virtual candy and all sorts of items inside a game. But a productivity app that tries to eek out a few more pennies beyond the initial purchase is often panned in reviews.

But is it in Apple’s interest to help these “poor” developers? In the short term it will probably not lead to more hardware sold. But if the best developers leave the platform because their business model was not compatible with the App Store, then there will be fewer “Only on the iPhone” apps, and Apple will suffer in the long term.

See Ben Thompson’s excellent blog series Why doesn’t Apple enable sustainable businesses on the app store? for more on this topic.

 

App Store is just a feature

When the App Store was launched five years ago it was a brilliant innovation (or if you will, a brilliant execution of several existing ideas). The success of the App Store has spawned a $10B+ industry. But today, launching an app store is not enough to achieve success.

Any new technology/gadget platform needs to launch with an app store. That’s what customers expect today. The app store is a feature on a checklist that has to be checked off. The bigger picture is the platform ecosystem. Here is where Apple still has an advantage with its integrated software and hardware, and a rabid following of developers.

Maybe this helps explain why Apple this week withdrew their lawsuit against Amazon for the use of the term “app store”.

 

The Future

Based in the past five years it’s impossible to predict what’s going to happen with the App Store in the next five. So like a good Internet pundit, I’ll expand my views on the obvious…

What is good for Apple?

Apple initially stated that their goal with the App Store was for it to break even financially. As Horace Dediu has shown, the iTunes Store is now clearly in the black, contributing about $2 billion to Apple’s bottom line. That would be a fantastic business for most corporations. But when compared to the billions that Apple makes from iPhone hardware sales, the App Store is a very thin layer of icing on top of the large hardware sales cake.

So when predicting how the App Store will evolve, I think it helps to keep this question in mind: Will the change help Apple sell more hardware?

Discovery

With over 900,000 apps in the App Store, everybody is in agreement that app discovery is a huge problem. It is also a problem that is impossible to solve to everyone’s satisfaction, because obviously each app developer wants it to be easy to discover their apps.

There was a brief flicker of hope earlier in the week when suddenly all the Top Charts disappeared from the App Store apps and in iTunes. But this was probably just a temporary glitch, and we’re stuck with the top charts for a while longer. Even though there are many good reasons to abolish the top ranking lists and replace them with something better, the inertia of the marketplace that has grown around them will make any radical changes difficult.

Let’s look at app discovery from Apple’s point of view: Will fixing this problem help Apple sell more hardware? In the short term I would say no. Apple can brag about the hundreds of thousands of apps in the App Store and all the apps that are exclusive to the iOS platform. This helps sell hardware. A customer can search the App Store for almost any conceivable task and find something to download. So for the most part the iPhone customer is happy.

The party that loses is of course the app developer that had developed the perfect app for the customer’s query, but it was not found, resulting in no sale. The number of potential customers for each app that the App Store brings is so large that many developers still make enough money to stay in the app business. But over time, many will call it quits because they are not able to sell enough apps. So in the long term, app discovery is something that Apple has to address or they will risk the App Store turning into a marketplace for just the top 100 developers.

More platforms

Apple wants to sell more hardware to their existing customers. Since most customers only upgrade their phone every so often and they only use one at a time (developers excepted of course), Apple has to launch new device platforms. As stated above, these new platforms are very likely to launch with App Stores.

They way a customer will interact with an App Store may differ if the device is an iWatch or and Apple TV. But it’s in Apple’s interest to provide a marketplace for app developers to make money on these new platforms.

Capture more payments

In app purchases was a genius idea when it was introduced 4 years ago. (At the time I optimistically predicted that in app purchases would add a mere $1B to the App Store business for Apple…) However it remains limited to purchases that enhance apps. And there are probably very good business and liability reasons for this limitation.

But since Apple sits on one of the largest hoards of credit cards on file in the world, and one of the more efficient systems for processing micro payments, it would be tempting to also handle payments outside the scope of apps. To take on PayPal, Square and other payment processors head on.

Would this help Apple sell more hardware? Not directly. But once you get used to using your iPhone for all your daily payments why would you switch to a different brand?

Note that this does not have to depend on NFC, which seems to be stuck forever in chicken-and-egg mode. More thoughts on this in a future blog post.

Always changing

The App Store and the app business around it, are always changing. What created success five years ago, doesn’t work today. Some of the cutting edge techniques from just a few months ago, don’t work today. This is what makes this business so exciting. But it can also be a bit overwhelming. If you need help or some coaching, get in touch.

I can’t wait to see what exciting things the App Store will bring us in the next five years!

written by Nick