App Store Day 4: Observations coming out of the smoke
A boss once told me that launching a business is a lot like Indy car racing – with no sleep of course. Aside from a roar at the start, there are also a lot of crashes and mechanicals – (see where I’m going with this). The thing is, when there’s a big cloud of smoke ahead, you have to have the resolve to trust your team, your dashboard and your telemetry, grip tight, and drive through it.
Did I make any money?
That’s the question on everyone’s mind. How did my app perform? How has it done vs. others overall? In my category? How about with others of the same price or vs. free apps? What’s the big picture?
We’ve been gathering and crunching away at data all weekend long, and here are some of our observations and analysis.
Yes. It’s behaving like a market.
Prices are falling as more apps are added. We learn in Econ 101 that as more competitors enter a market, the more likely we are to see price compression for an unlimited resource. We’ve been reviewing the App Store more or less hourly since it became available on-line, and (barring some ‘mechanicals’ from Apple), the trend over time seems to indicate that this may already be happening (Chart 1). I say “may” only because these are app owners’ initial bids into the market – we have not seen much activity in terms of price changes yet, but are less than 100 hours into it.
Is a proliferation of free apps driving this pattern? Chart 2 indicates that it isn’t. In fact it is a very similar pattern.
Competition can be “ugly.”
If you’re not the lead dog, the scenery never changes. People are taking advantage of weak points in the App Store process to get noticed. You will see the same behaviors if you look in the Yellow Pages. Here are the top 10 app names in alphabetical order as of around 7pm last night:
- !! Solitaire City !!
- !FLOverload!
- “CubicMan Deluxe”
- “Whack The Groundhog”
- “Jam’
- “Jirbo Break’
- “Jirbo Jive’
- “Jive’
- “Marble Mash’
- “Paper Football’
Strong desire for transparency.
How much money did I make yesterday/to date, etc.? For a while, the App store was publishing number of downloads, so you could directly see the performance of your application. If you were scrappy enough, you could benchmark vs. other apps. Which we did. Until Apple shut the counter down after about 15 hours. I can’t blame them. Where I come from, publishing real-time revenue for a publicly traded company leads to unemployment. However, now that Im on the other side, like many others, I’m pushing for price transparency – I want to see where the market is going.
The next best thing, we think, is to measure download activity by proxy using number of reviews posted. It does not give us insight to revenue, but it may be able to give us relative perspective on volume as a benchmark. The thinking is that the more an app gets downloaded, the more likely people will post reviews. I’ll let you figure out the math to interpret this vs. the 10 Million downloads Apple reported this morning. In the meantime, here’s a snapshot of one of our leaderboard tables that we have started publishing and updating 4 times a day (and boy are our fingers tired!).
Free is “Better”
At least that’s what the stats coming out of the first 3 full days of operations are saying. Using our volume proxy of reviews submitted, Chart 4 shows that free apps generate anywhere from 24% – 29% more reviews than paid-for apps do.
The obvious follow-up question is “OK, but are they of similar quality as paid-for apps?” We tested this, and were actually surprised to see that the average rating (on a 5 point scale) was higher for free apps (Chart 5).
It’s Your Market, Too
To carry on the racing analogy, we haven’t even reached the first turn, and there already are some smoke patches to drive through. At Medialets, besides providing specific metrics for our application development partners, we are trying to help the market become more efficient in general. We’d love to get your thoughts on some of the data we are publishing. Let us know how we can make this better or other ways you might like to understand the changes in this market and we’ll get our pit crew right on it!
July 14th, 2008 at 12:13 pm
Great analysis… I think you guys will win the race.
July 14th, 2008 at 2:37 pm
[...] been growing quickly over the weekend. Close to 250 applications have been added since Friday. As Medialets reports, at the same time, the average price of those applications has dropped. Interestingly, free [...]
July 14th, 2008 at 9:48 pm
Great work on the numbers. On the average price/# of apps charts it would be useful if could break down the apps by categories (games, productivity, utilities, etc). If you group all the apps together the analysis may overlook the possibility that certain applications experience a price drop (like games, for example), while business apps may not, despite the number of total apps there are per category.
July 19th, 2008 at 8:10 am
[...] been growing quickly since last weekend. As at Monday, close to 250 applications had been added. As Medialets reports, at the same time, the average price of those applications has dropped. Interestingly, free [...]
July 19th, 2008 at 8:23 am
[...] been growing quickly since last weekend. As at Monday, close to 250 applications had been added. As Medialets reports, at the same time, the average price of those applications has dropped. Interestingly, free [...]