The Slow Fade

Last week Ben Thompson of StratÄ“chery wrote Open Source Apps, where he explained the “inevitable” shift from paid-up-front to free apps monetized through other means. From his article:

> “I’m a bit late to the most recent flareup around app store pricing - it’s been a busy week of traveling - but it’s worth noting that the trend towards free is basically inevitable and the expected result in a functioning market. To put it another way, apps want to be free just like apples want to fall to the ground - it’s natural and takes truly impressive efforts to work against the gravitational pull.”

While I unfortunately have no evidence with which to argue the widespread notion that the paid app market is dying, I still take great issue with those who present the impending shift to a free and free with in-app purchase model as beneficial, the natural progression of healthy markets, or both. Rather than continuing to operate under the sustainable, paid model Apple’s App Store currently functions in, recent months have seen that model begin to undergo a disappointing process of reverse-evolution in devolving towards the models employed by marketplaces in their infancy, such as Google’s Play Store and, although I cannot speak from direct experience, anecdotal evidence would indicate Amazon’s Appstore as well.

A young space relative to Apple’s established one, the vast majority of apps on the Play Store are free and, famously, of extremely dubious quality and value. Although I could devote an entire article to the discussion of whether a nonexistent price point begets a lack of quality or if a lack of quality begets a nonexistent price point, the root cause does not change the end result: as the proliferation of low-quality entrants chip away at any faith Android’s users have in the store to provide quality apps in exchange for a nominal fee, an increasingly small subset of developers will achieve any meaningful success focusing on this platform. Nevertheless Android has continued to entice developers, due in large part to its vast user base and continued platform growth. It is worth noting, however, that the only reason Android and, by extension, its app market has sustained growth up to this point is not due to any inherent superiority, but because more people enter the ecosystem each quarter than lose faith in it. This will change both dramatically and abruptly once the smartphone market reaches saturation and Android’s growth ceases though, which Horace Dediu predicts will occur between 2015 and 2020 in the U.S. and a similar time frame for the European Union. For those developers who threw their hat in with Android, this adage will prove painfully applicable: you lose your fortune in two ways: gradually, and then suddenly. So, too, will Android’s marketplace begin to lose users after the platform reaches saturation: slowly, and then very, very quickly.

As a brief and hopefully succinct aside, the same could be said for not only its app marketplace, but the Android platform as a whole as well. Although I did find some potentially useful figures detailing both Apple and Android’s retention rates, Android’s growth rate, and the iPhone’s growth rate, I am not Horace Dediu; making sense of those numbers, percentages, and trends in service of the point I intended to make on a whim would prove much more difficult than I have both time and energy for at the moment. Therefore, I picked arbitrary numbers to illustrate this point: suppose Android loses 5% of its existing user base each quarter. Over the same period, however, that same user base grows by 20% due to new user adoption; thus, it experiences a net gain of 15%. Setting aside the complexities of a decreased growth rate Horace illustrated in his graphs as the smartphone market approaches saturation, at some point Android’s quarterly growth will decrease from 20% to 0. However, it will likely continue to lose that 5% steadily.

Unlikely to move back down market to an antiquated flip phone or purchase another Android phone — see the aforementioned retention rates for more on this — the logical third option for Android users dissatisfied with the platform is to move upmarket. Specifically, to purchase an iPhone. All hyperbole aside, the general populace considers the iPhone the gold standard. Right or wrong, this is the reality of the industry we live in today. Given its phenomenal retention rate, the iPhone would likely be their last stop. Although one could paint a similarly dystopian picture in regards to the iPhone’s future, a stronger retention rate combined with its position as the industry’s highest-end offering make both steady user loss and a downgrade back to Android infeasible for the same reasons the dissatisfied Android customer would not go back to a flip phone.

With that aside out of the way, back to app stores. Before embarking on that tangent, I had outlined many of the issues Android’s app market faces. Namely, unsustainable pricing; unstable growth; and undefined identity, by which I mean whereas Apple’s App Store fostered a reputation for apps of the highest quality, the Play Store has not only failed to do that but also has yet to develop any sort of reputable status quo. These are not characteristics of a developed and mature store, yet it is the direction we seem to be marching with grim solidarity. To say that this transition, then, that this farcical goal we are slowly moving towards is in any way beneficial boggles my mind. Further, as evidenced by Android’s eventual implosion, the free(mium) model is not only the wrong goal to strive for, but a fatally unsustainable one as well.

Buckle up, folks; you’re almost done.

Like all of its products, Apple designed the App Store and its associated business model in an incredibly opinionated manner. Clearly a result of the company’s overarching design philosophy, even Apple’s detractors cannot argue against the App Store’s phenomenal success, nor could they make a valid case refuting the exceptional quality present in most of its offerings. Apple built its entire mobile platform atop a reputation for excellence, after all, and that prestige continues to serve as a key reason many continue embracing Apple’s ecosystem. Rather than the natural progression of healthy markets then, as Ben Thompson portrays this devolution towards the largely unsuccessful models Google and Amazon implemented in their respective stores, this shift is instead wholly the product of shoddy entrants diluting app categories and eroding the App Store’s overall quality. By no means a new phenomenon, crude apps have always held the potential to devalue Apple’s platform; in fact, since day one they have. Until now though, exceptional quality and polish put forth by hallmarks of the ecosystem have collectively slowed and masked this glacial depreciation of value. Recent weeks, however, have finally seen those adverse effects become widely perceptible as the number of mediocre apps began to outpace the cumulative merits of the App Store’s elites. Unfortunately, it will take truly momentous efforts to right the scales: not only will developers need to perpetuate the high status-quo of quality, they must simultaneously raise that bar to counteract the current state of Apple’s App Store in order to assure its longevity as a viable platform in the future.

Sadly, I have my doubts. I fear we may have already moved too far in the wrong direction to do an about-face, much less regain lost ground. Talk about a sign of the times when Marco Arment, famously opinionated especially when it came to the creation and marketing of his apps and services, considers releasing his next app for free. That does not, however, mean that all is lost. Even Ben Thompson alluded to some shred of hope as evidenced by his concluding line in the aforecited paragraph: “[it] takes truly impressive efforts to work against the gravitational pull.” Just as with significant effort one can overcome gravity’s overwhelming force, so, too, could developers beat back the seemingly irresistible pull towards a free app market with some old-fashioned hard work and a bit of elbow grease. For both their sake and for the continued growth of Apple’s app ecosystem, I sincerely hope they do.