Tuesday, April 19, 2016

Apple might start charging for App store placement

Apple's app store is a strange beast. App store placement drives discovery, and is a key channel for companies to get downloads. If your game is in the "top 10 free games" list on the app store, it will be downloaded.

This mechanism is programatic, and companies "game" it by spending a lot of money to drive downloads. Once they have driven enough downloads to get into the top 10, it's much cheaper to keep the game there as organic downloads will spike, meaning you need fewer paid downloads to maintain your overall download number (and therefore, rating).

However, Apple will not accept money for driving a download, so developers pay Facebook instead. Facebook is the best, scale driver of downloads for mobile apps, so the money developers want to pay to market their app on the Apple app store is instead going to Facebook because there is nowhere else for it to go.

Ironically, Apple's attempt to break this dynamic is to promote apps on their app store homepage editorially -- editors pick what's great and showcase it. However, customers think that those (legitimate, free, editorially driven) choices are in fact paid placement. So Apple tried to take the high ground, doesn't get credit for it from customers, and sends a lot of money (inefficiently) to Facebook.

Maybe that will change
Apple Inc. has constructed a secret team to explore changes to the App Store, including a new strategy for charging developers to have their apps more prominently displayed, according to people familiar with the plans
The app store  isn't broken, but app discovery is. There is no reason why the best way to get your app infant of the right potential customer is to pay Facebook to market it based on look-alike's amongst cat pictures. If Apple cracks this but, it will be a huge business, potentially AdWords huge, and most of that money will come from Menlo Park.


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