App subscriptions are the future according to Apple

App subscriptions are the future according to Apple

Next week is Apples World Wide Developer Conference (WWDC).

One area that appears to be a central focus at this years event as Apple talks to their developer community is apps and the app store.

The reason apps are a big topic is because the marketplace only works for a small overall percentage of the developers and the ones who hit it big seem to be catching lightning in a bottle.

Well the app store model of download and pay once for an app might be coming to an end real soon according to Peter Kafka at Recode in an article titled The app boom is over:

"People are still making plenty of apps, of course. And many people are still downloading them. But the go-go growth days are gone. If you are an independent app developer or publisher, you have probably known this for a while, because you have found it very difficult to get people to download your app — the average American smartphone user downloads zero apps per month."

He goes on to say that even the large app publishers are experiencing significant slow-downs:

"Last month, the top 15 app publishers saw downloads drop an average of 20 percent in the U.S., according to research from Nomura..."

That same report indicates that outside of the U.S. the top 15 apps grew by only 3% last month and the overall global app economy is growing but just barely.

Considering the hundreds of thousands of apps this is pretty bleak news.

Well, hang on a second because Apple apparently has this figured out and in an interview over on The Verge by Lauren Goode with Apple's Phil Schiller they have a plan to help all of their developers in this time of app decline.

Schiller, Apple's VP of worldwide marketing, told Goode that the company will modify their revenue share with developers so that after the first year the well known 70/30 split will change to a 85/15 split.

That change of course is dependent upon that developer establishing and maintaining a subscription with their app owners.

So how will this subscription concept work?

In its most basic form it means a developer would set up their app to be a subscription based cost so instead of paying once for it and your done you the buyer would have a recurring cost to obtain the app for use.

Of course, this means the developer has to figure out the value added proposition for their app and if it can sustain a subscription model. I imagine this would be easy for things like games with In App Purchases (IAPs) and maybe, just maybe, subscribe to receive all future app updates but it is hard to find many other avenues to justify a subscription model.

Personally, I think in this free app economy we live in these days users would revolt over the idea of paying a recurring fee to get updates when an app is released.

Now not every developer has to go with this concept and I expect many will stick with the pay once and your done model. That will mean continuing the 70/30 split of profits with Apple past that one year mark but that increase in profit sharing of 85/15 might be enough of a draw for some to jump on the bandwagon.

What do you think? Is this a sustainable option for an app store and developers?

But, wait...there's probably more so be sure to follow me on Twitter and Google+.


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