Yesterday I wrote about how the current incentives of the Apple iPhone App store are leading developers to price their apps at $.99 to maintain popularity. Yesterday afternoon I read a post on Mobile Orchard called
Price and Popularity - they statistically estimate who is making the most money in the app store. In a opposition to John's argument that only low priced apps have the popularity to make money - almost all of the top ten games making money cost at least $2.99 and the average is about $5.99. However, there are more than just numbers behind why these apps are making the top $. Eight of the top ten are big brands or games from large developers. Branding (advertising) seems to be working effectively in the current system.
So what needs to change? Do we need change? I'd say yes. Mobile Orchard's evidence shows that you don't have to have a $.99 app to be popular if you have the marketing or the brand to back you up. However, I think there are a lot of really great applications out there that aren't getting their time in the spotlight or Apple isn't providing the correct incentives for them to succeed.
I've come up with a couple of steps to transition the app store (and music, movie, etc.) into a place where the playing field is a bit more fair and creativity and quality are rewarded. I don't believe in a single easy fix for complex business problems, especially when dealing with human behavior.
Step 1
Make more lists. Staff favorites, popularity, free, best selling, random 25, New in the last week, Quality, revenue, etc.
Apple can just keep coming up with different ways to show us new apps. The problem with this is revenue seems to be tied to just 1 of those lists - so the other lists don't really matter much.
Step 2
Change the algorithm of the Top Paid Apps list. This is a pretty generic list right now and it seems (as John pointed out) that it is tied to volume. Changing the algorithm to be based on revenue would change the landscape a lot but that isn't the best solution. The solution would be to make this list algorithm more complicated and less biased. This would be done by weighting the various aspects of each application (volume, revenue, customer satisfaction, etc.) and generating a score based on a mix of these criteria. This algorithm changes the store and makes it more difficult for a large company to dominate the store with advertising or branding alone. It still helps but it isn't the only criteria. The same goes for customer satisfaction, price, and volume. None of these measures should be the only criteria the Top Paid Apps list should use. Of course these aren't the only criteria that can be used and I doubt that Apple would get it right the first time (probably very close though). Ideally the algorithm would be transparent to developers but this is Apple we are talking about.
No matter what it would change the underlying incentives to produce more quality software, allow developers to benefit from higher pricing and popularity, and ultimately help me find higher quality apps in the top 50.
Step 3
Redesign the store. I've seen this comment a lot. This should of course help customers discover new apps, music, movies, etc. I think Apple can be creative and use Genius somehow but this is a long term project. This is step 3 because no matter how good the re-design is the underlying incentives need to be fair and geared toward quality and creative apps or we just go back to where we started. It's all about the incentives.
