App Store Pricing and Top Charts: A Lesson on Apple’s Priorities

Marco Arment wrote there are three problems with the “Top Charts” list in the App Store:

  1. It encourages shallow apps with really low prices
  2. It’s easy to game
  3. The rich get richer

For the most part these simply aren’t true.

It encourages shallow apps with really low prices
This argument falls apart quickly if you look at the reviews of apps that are ranking well.

I just scrolled through the 300 currently Top Grossing apps on the iPhone. Going through all those apps it’s apparent that 75%%2B of those apps have 4 or more stars. And the vast majority (all but two!) had 3 or more.

(For the curious the two offenders were Zoosk with 2.5 stars, ranking #22, and MS Office Mobile, ranking #113 with 2.5 stars.)

Glancing through individual categories you see the same trend. Many (most?) of the apps ranking the highest in Top Grossing have 4 or more stars. Practically all have at least 3. Whatever the problem, the people reviewing these apps seem quite satisfied. I don’t think a bunch of 4- and 5-star reviews shout “shallow.”

There are a few spammy apps here and there that are making decent money. I think that’s to be expected in any lucrative and hot marketplace. But it’s not nearly as prevalent as say, Twitter spam, which is currently an accepted part of that ecosystem that users simply must deal with.

It’s easy to game
I’ve spoken with developers who paid for downloads in the hopes of “sticking” in the Top Charts. They all told me it was not worth it. In fact, they said that while they ranked in the top 200 for a day or two they immediately fell off the charts.

My hunch is that gaming the App Store with directly purchased downloads would require a significant budget of 6 figures, minimum. It would have to be enough to rank in the top 20 or so apps. Of course some companies with deep pockets are paying these large sums to rank well.

But even so, doing this is not “easy” and definitely can’t be done by spammy developers looking to make a quick buck. (Whether you’d classify some social gaming companies as spammy is a separate debate.)

The rich get richer
This is the most true of the 3 assertions. But it’s also true for capitalism in general. Life is a hits-based business. If you win you’re going to be there for quite a while.

All that said, we still don’t actually know whether top ranking apps receive materially more downloads because of their ranking. Marco sums this up well in a footnote that I agree with 100%:

“This is all just speculation based on fuzzy data, since developers still don’t have another important metric: where buyers came from. It would be extremely helpful to even have a simple breakdown between three huge channels: browsing the App Store, searching the App Store, or following a direct link […] > > Without this information, we have very little insight into why people buy our apps, which makes it harder to know where to invest our marketing efforts, how to price our app, or how to improve it. (Emphasis mine)

The fact is we don’t know why people buy apps. How can we demand a solution when we can’t even analyze the problem? If anything our current battle should be getting that data from Apple.

No one has a good solution
In the many articles written on this subject there are a few solutions proposed to the App Store discovery issue. Unfortunately they likely won’t work, either:

Use engagement, as measured by # of times an app is launched, amount of time spent in app, etc. This won’t work because apps are not comparable across these metrics. Some apps are “successful” if they help the user perform a task really quickly. Others, like games, are doing their job if the user spends more time in the app.

Other apps are used frequently and throughout the day, like Tweetbot. But banking or movie ticket apps are used only occasionally.

Even the # of launches isn’t great evidence. Some apps like Dark Sky have people so accustomed to push notifications that, while they love and use the app, they don’t ever open it!

Show Gamer Favorites This obviously would only work for games, and would likely mirror the current Top Grossing ranks anyways.

Apps used over long periods of time should be given more weight. This is the best of the three suggestions, but still lends itself towards the “rich get richer.” What if I just launched an app and people love it but have only used it for a few days?

What Does Apple Want?
It’s important to remember Apple’s priority order: 1. Apple 2. Customers 3. Developers

Apple will always put customers before developers. It’s part of what makes Apple great.

With that in mind…

Apps are Complements to iPhone and iPads
Joel Spolsky wrote a great post on the competition between technological complements. Chris Dixon wrote a similar post predicting, way back in 2009, the confrontation between Twitter and Twitter clients.

The idea is that there is a finite pie customers have to spend on the iOS ecosystem. The less customers spend on device complements like apps the more they can spend on Apple hardware.

From a slightly different POV, think of iOS as your mom might see it. A big part of the iPhone is having 100’s of thousands of apps available for < $5.

Imagine how much less desirable an iPhone is if suddenly most apps are $20%2B. At that point the ecosystem is too expensive for casual users. And while we techies frequently forget it, casual users are 95%%2B of Apple’s customers.

For both of these reasons Apple wants to keep app prices as low as possible.

Competition for Developers
Apple does have to compete with Android for third-party developers. But right now that alternative is still not financially viable for most of the developers I talk to. Even at current App Store prices, Apple has more than enough devs creating great apps.

Marco’s request that they “start rewarding great software” is simply not an objective of Apple in and of itself. Sure, it falls under the umbrella of “make a great iOS ecosystem.” But helping developers at the expense of customers is the last think they’ll do if that ecosystem is already running smoothly.