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The Almighty Buck Apple

Is the Apple App Store a Casino? 542

Posted by Unknown Lamer
from the dulcinea's-life-makes-ten-billion dept.
An anonymous reader writes "Fast Company takes a look at the Apple App Store and concludes that it's a casino where most developers are making tragic losses and a tiny few are striking it filthy rich. The article discusses a new book exposing the App Store millionaires, called 'Appillionaires,' which compares the psychological effects of a hit app on a programmer to a gambler's high. One millionaire programmer explains the intense feeling of being in the top-ten: 'The App Store had established some kind of intravenous connection to my body and was pumping me full of Apple-branded heroin.' But, the piece warns, the majority of developers fail to make any return on their app."
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Is the Apple App Store a Casino?

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  • by SharkLaser (2495316) on Wednesday November 02, 2011 @12:07PM (#37922322) Journal
    This is how it works. Tiny few become really rich, most barely make a living. Some better, some worse. It's not a casino, and it's not limited to app store.
    • by ArrowBay (2326316) on Wednesday November 02, 2011 @12:17PM (#37922466) Homepage

      Exactly so. If I remember my economics properly...

      • The average new small business closes shop in two years or less. Most of the rest close up within the first five years. Anything after that is likely to be a success.
      • There are thousands of new products introduced every month in stores across America. Better than 80% of them are failures. Most of the rest might achieve niche success.

      OMG! The free market is a casino!

    • Re: (Score:2, Interesting)

      by errandum (2014454)

      Do not compare this to other software distributors. The 99$ tag that you HAVE to pay per year to have your app in the appstore make it extremely hard for anyone to be able to make a profit (especially when apple will take 30% of anything they sell). I won't go into the top-app lists that are most likelly rigged or anything like that, but if I make a software, host it on github and publicize it on facebook, I won't be loosing anything other than my time...

      In this case people loose actual money. And the "filt

      • by grub (11606) <slashdot@grub.net> on Wednesday November 02, 2011 @12:27PM (#37922636) Homepage Journal
        If you sell your app for 99 cents, you only need sell ~144 copies in the year to break even on the $99 developers' program cost.

        That's small peanuts. Even moderately cheap webhosting would cost you that much for a year.
        • by errandum (2014454)

          what % of the apps on the market do you think sells anything near that? Most don't ever come close to that and not everyone works for a company that can spend the 99$ or is even trying to make a living out of the app. I'd say the majority would be students and hobbyists spreading their work and trying not to be on a loosing side...

      • by 0123456 (636235)

        Do not compare this to other software distributors. The 99$ tag that you HAVE to pay per year to have your app in the appstore make it extremely hard for anyone to be able to make a profit (especially when apple will take 30% of anything they sell).

        So if you're selling your app at $0.99 you need to sell about 130 copies a year to break even on the fees. That's a little more than two per week.

        That doesn't sound too rough to me.

        • by PIBM (588930)

          After a week you won't be selling any more copies, BTW, unless you are in the top 50. One of the game I published with some friends even got some awards, which pushed us some more people. We had both a pay for it game, and a trial with an upgrade path release. We made some money over the 99$, but then you have extra fees that are added by apple to move the money out and such, and, in the end, we only lost our time and money. It was only a 1 week project for the fun of it, but still the quality was on par wi

          • by 0123456 (636235)

            After a week you won't be selling any more copies, BTW, unless you are in the top 50.

            Then the $99 is irrelevant.

            People start a business without a business plan and most of them don't make money. Full story at 11.

          • by coinreturn (617535) on Wednesday November 02, 2011 @12:55PM (#37923070)
            Perhaps that is true if your app is a flaming piece of shit. My apps continue to have sales after nine months despite never breaking into the top 200 in Games/Word subcategory. $99 is a pittance considering that the development software is FREE. Extra fees to move the money out? Ridiculous. I get my straight 70% auto-deposited every quarter.
            • development software is FREE.

              Wow, Apple charges you $99 a year subscription, and then gives you the access to their API's, the free software GCC toolchain and an IDE for free. Then they only take a 30 percent cut of everything you sell on top of that. How generous.

      • I'll give you the $99 if you stop your whining. Then what will you lose?

        And you're complaining that others have done a good job on their app, so you have to do a better job on your app? Oh, the humanity!

        And why is it Apple's job to market your app? They already host it, deliver it, take care of all billing.
        It's not like there aren't app review sites all over the web already.

      • by xaxa (988988) on Wednesday November 02, 2011 @12:33PM (#37922740)

        Do not compare this to other software distributors. The 99$ tag that you HAVE to pay per year to have your app in the appstore make it extremely hard for anyone to be able to make a profit

        If $99 is the difference between profit and loss, was it really worth trying to make any money anyway? That's 0.5-1-2 days work at minimum wage in most developed countries.

        Better to put your time into a free app, and feel good about it, rather than stressing about your $99.

      • by romanval (556418)
        If your business or hobby can't shell out $99 a year... then you don't have a serious business/hobby.

        Heck, there are people that spend many thousands of dollars on things that have a very low chance of a return; such as being a successful artist/musician, sports, or auto racer.
      • by BasilBrush (643681) on Wednesday November 02, 2011 @12:47PM (#37922952)

        The 99$ tag that you HAVE to pay per year to have your app in the appstore make it extremely hard for anyone to be able to make a profit

        Good grief! The only way that charge would stop you making a profit, is if your profit was going to be less than $99 a year. Which would already be a failure, unless you're a schoolkid wanting to buy the occasional candy bar.

        It amounts to 143 apps at 99c. Per year. If you can't sell that, then you're wasting everyone's time with your shitty app.

        $99 per year isn't any barrier to anyone who is selling an app. It's only a barrier to people that want to do free apps. And of them only the subset who don't have any other financial incentive for the app.

        I make a software, host it on github and publicize it on facebook, I won't be loosing anything other than my time...

        Which apparently is worth less than $99 per annum.

        Meanwhile back in the land of reality, outside school kids bedrooms, real for profit developers consider $99+30% take to be a bargain. Anyone who's actually had any experience of the old ways: credit cards, chargebacks, hosting, programming reg-code systems, issuing reg-codes, reminding people of reg-codes. It's all a bore, and distracts from development. With the App Store, once you've sent it to Apple and got it approved, you just wait for the money to come in. And fix any bugs that come along.

        Final point: If you're taking it seriously, $99 will be far less than you pay for a designer for an icon and other app and website graphic assets.

    • by geekmux (1040042)

      This is how it works. Tiny few become really rich, most barely make a living. Some better, some worse. It's not a casino, and it's not limited to app store.

      Exactly. Equating this to a casino is rather stupid, although given the complete and utter breakdown of regulation within the financial sector, I can see why people of all ages and investment risks would consider Wall Street nothing but a huge gamble these days.

    • by rwv (1636355)
      But if you think of Apple as "The House" and the Apple Application Developers as "The Gamblers" the saying that "The House always wins" resonates. As opposed to Windows Application Developers who don't directly add to the bottom lines of the controllers of their Operating System vendors or Linux Application Developers who don't have typical OS vendors.
      • by ThorGod (456163)

        But if you think of Apple as "The House" and the Apple Application Developers as "The Gamblers" the saying that "The House always wins" resonates.

        The correct term would be "the market creator always wins", which isn't necessarily true. If no one wants the devices your app store is available on then you're definitely not winning by any measure. (I suspect the Kobo bookstore will go this route eventually, even though I love my kobo.)

        This "it's a casino!" rhetoric is entertaining, but it is only rhetoric.

      • But if you think of Apple as "The House" and the Apple Application Developers as "The Gamblers" the saying that "The House always wins" resonates. As opposed to Windows Application Developers who don't directly add to the bottom lines of the controllers of their Operating System vendors or Linux Application Developers who don't have typical OS vendors.

        Wow, I didn't know that Microsoft was giving out copies of their development system, aka Microsoft Visual C++ (or whatever). The $99 includes the dev environment. The 30% more than covers what would have been distribution, hosting, billing, credit card, etc costs.

    • All that's really happening here is that millions of low-selling software applications, instead of being sold in the far-flung corners of the internet, have now been gathered into one place: the Apple App Store. So the fact that most applications are not actually all that successful is just more visible now than it once was.

    • That's pretty much what I was going to point out. This happens all the time: someone makes some money doing something, a mass of people get the idea that they've discovered a sure-fire way to make a fortune, lots of people try to get into the market, and in the end only a few really succeed. That's the formula for events like the tech bubble, and the housing bubble. What's funny is that the article headline says "It's More Casino Than Gold Mine". Well IIRC the gold rush was about the same deal: lots of

    • by jopsen (885607)

      This is how it works. Tiny few become really rich, most barely make a living. Some better, some worse. It's not a casino, and it's not limited to app store.

      This is probably true for most software mainstream software companies... But for other industries, where sales is bounded by a finite supply, the free marked is less of a casino. So you might wonder if pay-per-download is the right licensing model (maybe there should be an upper bound on how much you can make).
      If you want a healthy app ecology you might need competing apps...

  • by 0racle (667029) on Wednesday November 02, 2011 @12:08PM (#37922338)
    Sounds like the results of putting an App for sale in the App store is like putting an App for sale anywhere.
  • by MachineShedFred (621896) on Wednesday November 02, 2011 @12:09PM (#37922344) Journal

    If John Q. Wallet invents some must-have widget which is easy to manufacture, cheap, and available everywhere; and suddenly sells millions of them, I'll bet he's feeling pretty good about that too. However, if he invents something that is a piece of crap that no one buys, he's going to have just as much of a loss.

    This phenomenon is hardly new, and certainly not localized to the iTunes App Store.

    • "Must-have widget" vs. "piece of crap" isn't perfectly correlated to "sells millions" vs. "no one buys". As I understood the article, what people end up discovering to buy is a matter of chance, not merit.
      • by phantomfive (622387) on Wednesday November 02, 2011 @12:22PM (#37922542) Journal
        Just because you don't understand why one app succeeds and another fails doesn't mean there is no reason. It is a complicated equation, and usefulness is only one variable.
        • Could you please help explain the variables other than usefulness that both MachineShedFred and I missed?
          • by The Moof (859402)
            Marketing.
          • Uniqueness, usability, price, marketing, functionality, competition, to name a few.

          • Well, spill overs (if we both have the same App, interact in the App, share the experience, share knowledge), buzz (when is the last time that you decided that you HAD to see a 10 year old movie THIS WEEKEND), advertising quality, sometime people like the "less useful" App with the simpler interface, ...

          • by mr1911 (1942298)
            Do you realize there are thousands of people marketing consumer goods that are chasing that exact same question for their entire career? Even those that are wildly successful once have little chance of doing it again, and every success has hundreds of failures around it. If anyone had the magic answer boiled down to a cheap talking point they damn sure wouldn't tell you here.
        • Neither does that mean that the reason is meaningful or useful for predicting future success. The signs seem to point to taste as being chaotic; as soon as you identify a trend and try to exploit it, that trend falls out of fashion because everyone is trying to exploit it. To be a success, you have to invest in a trend before anyone could possibly know that it will be a success, which is nothing less than gambling.

    • by errandum (2014454)

      The problem is not mediocre apps that get no sells, it's the extremely good apps that cost a lot of money to make and get no visibility anywhere (its really really hard to make it to a top list), making it a big gamble. Unless your app is exceptional and word of mouth makes you rise, you have a very little chance of getting anywhere near a profit. Not all low-selling apps are crap...

      • The problem is not mediocre apps that get no sells, it's the extremely good apps that cost a lot of money to make and get no visibility anywhere (its really really hard to make it to a top list), making it a big gamble. Unless your app is exceptional and word of mouth makes you rise, you have a very little chance of getting anywhere near a profit. Not all low-selling apps are crap...

        So? How is this different from a non-app store program? You are certainly allowed to advertise your app, market it in any way desired.

        There are plenty of excellent programs that have never achieved commercial success. There are no guarantees. You plops your money down and takes your chances.

        And don't go whining about the $99 dollars. That's less than you pay for Mountain Dew and Cheetos.

      • Re: (Score:2, Insightful)

        by NatasRevol (731260)

        So, you have to make a good product, price it well, and market it well?

        Why, that's almost like ANY FUCKING PRODUCT.

    • If John Q. Wallet invents some must-have widget which is easy to manufacture, cheap, and available everywhere; and suddenly sells millions of them, I'll bet he's feeling pretty good about that too. However, if he invents something that is a piece of crap that no one buys, he's going to have just as much of a loss.

      This phenomenon is hardly new, and certainly not localized to the iTunes App Store.

      "Just as much of a loss" is a bit of an overstatement. I doubt John Q. Wallet invested millions into an app. At most, John Q. Wallet's real loss was a couple Saturday morning cartoons making his piece of crap.

      Also, "is easy to manufacture, cheap, and available everywhere" doesn't apply to a digital store.

      On the other hand, there are game companies that make excellent games for thousands of dollars, but can't make it to any front page because there are thousands of companies just like them pouring in thous

  • by hansamurai (907719) <hansamurai@gmail.com> on Wednesday November 02, 2011 @12:11PM (#37922372) Homepage Journal

    Isn't the developer fee like $100 a year? That seems incredibly removed from tragic. Yes, a developer or team might spend some of their own money to develop an app or advertise it, but that money is going elsewhere, and not Apple (except for buying the required Macs to actually develop). So it doesn't seem like a casino to me, just inexperience or bad reading of the market.

    • I've read comments in past stories about the iOS developer program from people who own a Mac but still can't develop because the Mac is too old to run recent Xcode. So you end up having to depreciate the Mac and the iPod touch on which to test as annual expenses just like the developer fee.
      • Only Macs that are more than half a decade old (PowerPC) can't run the iOS version of Xcode. But, yeah, that's not already depreciated?

        • But, yeah, that's not already depreciated?

          Some people have posted comments to previous articles about the iOS developer program claiming that anybody should be able to afford $99. They appear to treat the required hardware as a one-time expense and forget that one needs to replace both the Mac and the iPod touch with the current model every few years.

          • And how is this different from any other software development platform?

            Newer computers have newer features - speed, memory, storage, usb3, etc. that you may have to upgrade for your program. Can you do Xbox programming on a Pentium 4? No? Then what's the difference? Can you do Xbox programming without Visual Studio? No? Then what's the difference?

    • by errandum (2014454)

      Do you really think every app is done by a single person stuck in their basement? If you want quality you need at least 2 or 3 people (I'd say a good programmers and a good artist AT LEAST, nevermind sounds and whatnot). Most apps will require a bit more than that. Then, if you're a team, you need a place to be. A place costs money, so does electricity and maintenance. (etc etc)

      Then you get your shiny app to the store, where you get no visibility whatsoever and where getting to a top list is almost impossib

      • Like any other gold rush, the first people in make a ton and everyone who follows them goes broke trying to match it. Unless you just have an amazing idea that hasn't been done before by anyone and doesn't require you to run a server to make the app work--I'd think twice about diving in with both feet this late in the game.

    • There can be significant costs in acquiring/licensing art/music assets for games for a start. But perhaps even more insidious is that all of the most useful apps I can think of have some sort of cloud component--which means that someone, somewhere, has to have a server to support to the app. That means monthly bandwidth/hosting cost obligations into the foreseeable future. If your app sells, great. If not . . . you're kinda screwed. And then, of course, there's the fact that you're only allowed to deve

  • by astrokid (779104) on Wednesday November 02, 2011 @12:11PM (#37922374)
    Some people make apps for the same purpose of going to a Casino.
    "Fun" :)
  • I see it more like a mining boom. Apple sells the picks and shovels. In 10 years their platform might be a ghost town. Let's see, how much more can we beat this dead horse of an Old West analogy...

  • by MobileTatsu-NJG (946591) on Wednesday November 02, 2011 @12:14PM (#37922428)

    'The App Store had established some kind of intravenous connection to my body and was pumping me full of Apple-branded heroin.

    Gee, you think this is the sentence that got this story approved for Slashdot?

  • by master_p (608214) on Wednesday November 02, 2011 @12:18PM (#37922474)

    Success in a Casino is about lack.

    Making a successful application is about ability.

    Make a good and fun game, and you will profit from it.

    Make an exceptional game over an original idea, and win a fortune.

    Make a mediocre ripoff of an idea already implemented a thousand times, have a loss.

    It is nothing like a Casino.

    • Yes, lack of luck is what we're all talking about here.

    • Make a good and fun game, and you will profit from it.

      Not if next to nobody finds your good and fun game, or even your exceptional game over an original idea, because all the median user is looking for is a specific Rovio product.

      • by lgarner (694957)
        If nobody knows about your app, that's your failure, not Apple's. It's called "marketing," and it's usually a precursor to "sales."
      • The people who make quality apps and aren't a success: their mistake is thinking that they don't need to market it. They think word of mouth will market it for them. Word of mouth is great, but it needs a kick start.

        But most apps that fail aren't quality apps. They make the more fundamental mistakes of:
        1) Not realising that UI design is a specialism, and that programmers usually aren't good at it.
        2) Not realising that they have to hire a graphic artist to design icons and other graphic assets.

  • Success in a Casino is about luck.

    Making a successful application is about ability.

    Make a good and fun game, and you will profit from it.

    Make an exceptional game over an original idea, and win a fortune.

    Make a mediocre ripoff of an idea already implemented a thousand times, have a loss.

    It is nothing like a Casino.

    (repost in order to correct silly grammatical error that resulted in a different meaning)

    • by aarku (151823)
      I can only speak as a game developer, but I have yet to be pointed to a game on the App Store that didn't make any money but had all the pieces together to be a commercially successful game.
    • A quality app alone does not make it profitable. The biggest challenge is marketing your app so that people know about it.

  • The winner in the casino is fundamentally deterministic, whereas with the app store, it's mostly a matter of luck.

    • by Greyfox (87712)
      Oh it's deterministic in the app store too. No matter who wins and who loses, Apple wins.
  • by pablodiazgutierrez (756813) on Wednesday November 02, 2011 @12:31PM (#37922694) Homepage

    If you develop yet another puzzle game, you're up to compete with the Zingas of the world, and chances are you'll hit the wall. On the other hand, if you focus on solving real problems and using the advantages of the platform to improve your customer's life, you might be onto something. Case in point, Appfluence (disclaimer: I co-founded it). We make Priority Matrix, a productivity app for a niche market that highly values time savings and clarity of mind. We're nowhere near top 10 (although we've been close at times), but it's consistent income with a lot of potential.

  • by Eggplant62 (120514) on Wednesday November 02, 2011 @12:31PM (#37922702)

    I don't know what anyone's crying about. This is how it works. You put your product out there and hope someone sees it and likes it. If it's good enough it will succeed. If not, oh well.

  • by brusk (135896) on Wednesday November 02, 2011 @12:32PM (#37922728)
    The reason this is such a bad analogy has nothing to do with whether an app succeeds because of luck, or how much the annual fees are. It has to do with where the money comes from. The money a developer gets comes, ultimately, from customers buying the app. Yes, the middleman takes a lot (but perhaps not more than more middlemen), but that doesn't make it a casino. In a casino, all the money coming in is from the gamblers, and all the money you win is from other gamblers (minus the house's cut). The same is true in a lottery. But an app store is completely different. Sure, it's unpredictable whether you will make big, medium, or no money, but the source of that money is not your fellow developers' entry fees.
    • by ThorGod (456163)

      Yep, all life's a set of games, and the rules, parameters, and players change from game to game. Any 'random' game can be approximated with a flip of a die or some other game a casino might host, but that doesn't make every game a casino game.

  • Don't lose a lot (Score:4, Insightful)

    by HalAtWork (926717) on Wednesday November 02, 2011 @12:41PM (#37922850)

    the majority of developers fail to make any return on their app

    The majority don't lose a lot even if their app fails, unlike a gambler who must constantly bet a lot. Apps can be coded in your spare time, and if a concept becomes popular enough, you can follow it up with something a little more fleshed out the next time and keep iterating until you reach the point of diminishing returns. Then start putting out concepts again until you find your niche, and start iterating again.

    • That can depend on what you're trying to do.

      Apps can be coded in your spare time, I agree. But, as I've often said, there's a difference between a "project" and a "product." I have a little app that I wrote for my iPhone that checks the GPS and tells me my approximate address. It was a fun little project. But it's not a product. It's occasionally flaky, the back-end is owned by someone else who might get a bit offended if 100,000 people start banging on his server, and the interface is pretty ugly--I a

  • Newsflash! Software products require good marketing, film at 11:00.

    Seriously. If you have a great product, you need a business plan to sell it, even if it's a smartphone app. "Stick it on the app store and hope for the best, because some guy made a million bucks with a fart simulator" isn't a business plan.

  • by tylersoze (789256) on Wednesday November 02, 2011 @12:48PM (#37922970)

    I'm reliably making money from the App Store, $75000 (on the side, in addition to my day job) in the last year and half actually. How? By writing apps for all those people that think they're going to get rich from App Store. I'd say probably 10% of my clients have made any money from their apps. Personally I don't try to feed their notions, I just produce the best product I can for them, and they can worry about making money from it, I'll take my money upfront for the coding thank you very much. I always turn down the projects where they want to do "profit sharing".

    I do laugh at the guys that make me sign an NDA before they show me their super secret idea. Dude, ideas are a time a dozen, somebody's probably already thought of whatever idea it is you have.

  • The odds aren't good enough to be a casino. It is more like a lottery, hundreds of thousands to one against making any decent money.

  • by shadowrat (1069614) on Wednesday November 02, 2011 @12:59PM (#37923128)
    Please point me to the market where i am guaranteed to profit.
  • Whether you like Apple or not, whether you agree with their walled model or not, and whether you think it makes sense (or not) to be an iOS developer - where is the tragedy here?

    Choosing to use the word "tragic" in this context was a completely bizarre decision.

  • by drb226 (1938360) on Wednesday November 02, 2011 @01:05PM (#37923224)
    It's an app store, idiot. When they describe a "gamble", smart developers will typically not work for shares, they will work for wages. So developers aren't really gambling anything: if you are the one who is dumping money on developers so that they can turn your dumb idea into an app, it is you who is taking the foolish gamble. If you are a lone developer making an app on your own time, then hopefully the time spent making your own app is valuable to you (learning experience, etc), whether or not that app is actually successful. What, you actually thought your one-off app was going to make you filthy rich?
  • by tekrat (242117) on Wednesday November 02, 2011 @01:09PM (#37923292) Homepage Journal

    These were the same dorks who pushed the "internet boom" in the 90's, claiming that every new startup, no matter how fucked their business plan was, was a "gold mine". We even had a parody called "F*cked Company" which daily documented all the businesses failing in Silicon Alley (NYC) during the bust period of 2000 to 2002.

    They have a lot of nerve to call the App Store a "casino", when they are the lapdogs of the stock market.

  • by MikeMo (521697) on Wednesday November 02, 2011 @01:35PM (#37923606)
    Most application developers don't make any money *outside* the app store, either. Never have. Most fail. The thing with the app store is that many, many more get to try.
  • by i_ate_god (899684) on Wednesday November 02, 2011 @02:06PM (#37924050) Homepage

    I recently bought an ipad2, and I was shocked at the fact that there doesn't really exist a free app for most of the common things one expects to do with a computer or computer-like device.

    And since the majority of these apps don't work, or don't do what they say it will do, with absolutely no possibility of a refund, well...
    the gamble isn't for the developers. it's for the consumers.

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