Merging the Apps, Merging the App Stores

Apple’s recent World Wide Developer Conference revealed many exciting new software technologies, about which I will surely write more at some point. One interesting thing is that there is much better integration and communication between iOS and OSX on the horizon.

This got me thinking: why are there still two Apple App Stores?

(Why are they so awful is another question, and out of scope for now.)

Right now you can make an app for iPhone; or for iPad; or for both iPhone and iPad; or for the Mac. You would usually use the same tools to make any of these.

Why not merge the stores, and also merge the apps?

Merging the stores is a fairly obvious idea. It would mean using the "normal" (Mac) App Store to buy and manage mobile apps on your Mac. That might be a nice opportunity to get mobile devices out of iTunes once and for all, but again: out of scope.

Merging the apps is perhaps less obvious, but more and more iOS apps are spawning Mac versions. Wouldn’t it be cool if the developer could sell all three versions as one package? From the developer’s point of view it would probably involve uploading separate apps and simply merging them administratively. OSX and iOS are not likely to be the same thing any time soon, so in terms of binaries we are still talking about two apps.

But in terms of user perception we are talking about one app with three incarnations. I think people would get used to this very fast, and come to think of a good app as being available on all their devices automatically.

Not every developer would take advantage of this at first. Consider the Omni Group, one of the best independent software companies in the Apple ecosystem. They make some great software and they are not shy about charging real money for their products. I have one of their apps, OmniFocus for iPhone, iPad and Mac, and I paid three times for the privelege. Now they have released a new version as a paid upgrade (still pending for iPad) and I will probably, sooner or later, pay them three times again, because I believe I get sufficiently premium value from these premium products to justify their premium prices.

But for smaller developers looking to maximize their users’ engagement, it could be a big win. Or for Silicon Valley startups trying to metabolize their large injections of venture capital and desperate for eyeballs lest their Social Meatball World be overtaken by Meatball Cloudface LLC. You need to get on as many devices as possible, and get people to use your software as much as possible, before the Samwer brothers come out with Wolkenfleischball Sozial Total and lock you out of the German market.

As a user and a customer, I would like that. I want all my apps in one place, at least administratively. I want one "Purchased" tab. I want things that interoperate between my devices. I want to open iTunes as infrequently as possible.

Apple wants 30% of everything. Should be an easy match, no?

As a developer, however dilettantish my engagement with XCode may be, I find it exciting to think about making apps that are integrated out of the "box," as it were. Imagine, for example, an online banking app. Some things you really want to have available when you’re out and about, and some things are much easier to do on a "real" computer. Or think about all the things you can do (soon) with Apple’s new Health app. This begs for a desktop/laptop companion app.

I think Apple will merge the stores at some point. I have no idea when, and it would be silly to speculate considering I’ve seen iTunes as a dead man walking for years now. But sooner or later I think we will have one app store, at least for Macs.

Will they allow the apps to be merged as well? I hope so. I see a lot of benefit to it. But I could also imagine this waiting until some day, probably at least five years from now, when the operating systems themselves merge and you could have a three-platform app (or four, with the TV) that really is a single app.

Merged or not, I think the future of a lot of app categories is tight interaction between the phone, tablet and desktop/laptop versions. Doing this across platforms is much more challenging, and I have a hard time imagining the integration ever being very good. That might give Microsoft a much-needed boost to its mobile business, because at the moment only Apple and Microsoft are capable of tight integration throughout their respective ecosystems.

If I’m going to be so rash as to predict something, then it's this: by this time next year there will be a bunch of indie apps offering a unified user experience on iPhone, iPad and Mac, and at least a couple will be popular enough that the conversation in the developer community will be largely about that integration.

How Third-Party Apps Should Use Siri

Apple’s Siri is a “digital assistant” for iPhone 4S and, presumably, various other products to be released in the future. I expect it will come to the Mac at some point too.

I haven’t used Siri, but I have been following the developments because I think she (in the UK, apparently a he) will become a very big deal once there is an easy way for third-party applications (App Store apps) to take advantage of the voice recognition and natural-language processing Apple runs on its servers.

There has been a lot of discussion online about how this could be done without various apps stepping on each other’s toes. If I say “Siri, remind me at six about Tarkan’s birthday party,” which calendar program will it use for the reminder?

In this case, it will obviously use Apple’s. You could make that configurable but I really doubt Apple would.

I think the answer is as easy as it is obvious, and easier than it is awkward. Apple controls (approves) the name of every app in the App Store. It can easily allow developers to choose a “Siri Name” for an app, also subject to central approval. Keeping these unique should not be hard.

Then you simply tell Siri whom to tell (or ask) what. Much like you did in Applescript, if you had a Mac in the 90’s (or are a total masochist today).

For an app named “Candy Store,” it might go like this:

HUMAN TO SIRI: Siri, ask Candy Store if they have blue gumdrops.
SIRI TO CLOUD: <...sends audio...>
CLOUD TO SIRI: Parsed OK for "Candy Store" : "find 'blue gumdrops'"
SIRI TO APP:   find 'blue gumdrops'
APP TO SIRI:   OK, in stock, $6/dozen.  Options: order, view.
SIRI TO HUMAN: Candy Store has blue gumdrops for six dollars per dozen.
               You can view them or order them if you like.
HUMAN TO SIRI: Order six dozen please.

Siri would of course know the context of that last command, because Siri is tracking a conversation and not just individual commands. You could also be very direct:

HUMAN TO SIRI: Siri, tell Candy Store to cancel next week's shipment.
...
SIRI TO HUMAN: Your Candy Store shipment of four hundred mixed jellybeans
               for Monday, January 16 has been canceled.

If I were Apple I would start this with a very, very simple API, supporting only the simplest directives like “find” and “order” and “do,” but also sending the original text to the app in case the app wants to do its own parsing.

But that’s probably way too utopian of me. Apple will no doubt wait until there is a huge NSDigitalAssistantRequest API and statically-typed conversations and 30% of any digitally-assisted sale going to Cupertino, and start with three hand-picked third-party apps for a year-long trial run before mere mortals are allowed in.

Even then, it could of course be huge.

Notes on Apple’s Subscription Billing

Update: Read Tim O’Reilly’s take.

Tech publisher Tim O’Reilly has just posted a very thoughtful case against the 30% number in Apple’s subscription model. He thinks it should be more like 5%.

The post and the comment thread are very informative, and I highly recommend reading them if any of this interests you. Here it is on Google Buzz, incidentally proving that Google Buzz has a few actual users. Who knew?

One minor point on which I disagree with O’Reilly, but in which we’re both just wildly speculating: I don’t think Apple is arrogantly trying to price the competition off its platform (e.g. Netflix vs. iTunes). Rather, I think they have considered those businesses and, perhaps just as arrogantly, assumed they should be smart enough to make a profit while still coughing up 30%. I sort of imagine Tim Cook saying, “Well I could do it in a weekend, so why shouldn’t Reed Hastings?”

Apple, which still has nothing like a viable competitor to its ragingly popular iPad tablet device and happens to also make most of the profit in the smartphone world, recently announced new rules for in-app content purchasing, particularly for magazine and newspaper subscriptions.

In a nutshell, they are:

1. For anything bought inside the app, Apple gets a 30% cut.
2. You can’t sell anything outside the app that you don’t also sell inside the app.
3. You can’t charge more for in-app purchases than for their out-of-app equivalents.
4. Collection of subscriber data is limited, optional (opt-in), and revokable (by the user).
5. Subscriptions may be cancelled at any time, inside the app.

I’ve been following the reaction online for a while now. As you might expect, publishers and various other middlemen, as well as a typical assortment of irrational Apple-bashers, are raising a stink. Or at least trying to; with Rupert Murdoch on board, it’s hard to argue there isn’t money to be made by publishers.

I see the arguments against Apple’s new policy falling into three main categories, which I will briefly address below. My gut feeling is that this new model will work in most instances, and in a few instances will fail so utterly that exceptions will soon be made.

“Apple Will Destroy Publishing”

This argument usually has little to do with the 30%, which after all isn’t that much compared to traditional printing and distribution costs. Instead, the big fear is that publishers have built a business on selling subscriber data – usually to people who turn around and try to sell crap back to the subscribers. Ever wonder where all those catalogs come from?

If Apple limits what data you can collect, and requires it be easy to opt out, what becomes of this revenue stream?

Well, in fact a good part of it will probably go away. I expect people will still happily provide enough personal data that you can reasonably prove the value of your “demographic” to the advertisers.

But according to what logic, exactly, should a business be allowed to harvest as much of my personal data as their little database elves know how to, without my consent and directly against my better interest? I understand that this helps keep subscription prices low, but then making sandwiches out of your customers’ own flesh would keep sandwich prices low. How is that good?

So Apple is in effect forcing the publishers to be honest if they want to be on Apple’s platform. We’ll see how it goes, but I mostly expect that they’ll grumble but give in, exactly as far as they absolutely must and no further.

There is also some minor echo on the Innernets suggesting that easy subscription cancellation is an unfair burden for publishers, to which the only reasonable response is a much simpler blow me.

“Apple Will Destroy Kindle”

Here the argument is very much about the 30% cut. Content resellers tend to have fairly low margins, thanks in no small part to Amazon. I would expect that a large portion of a la carte content sales, particularly books and essays, simply can not survive a 30% reduction in sales.

This would effectively force someone like Amazon to raise prices, but how will the market react to that?

On the one hand, the market probably wouldn’t much care. Books in Europe cost a lot more than books in the US, and people don’t read less as a result. Steep discounts are not a requirement to secure readership, at least not if your content is any good.

However, with the same-price stipulation for in-app and out-of-app purchases, Apple is sending a very clear message: if you want to sell content on our platform, the content had better be of sufficiently high quality to be priced above a 30% cut in revenue.

Or it had better be sufficiently dirt-cheap that all the money’s in the resale. This is probably not what Apple has in mind, and it’s already a problem in the iBookStore as well as the App Store.

I expect some retailers, and especially Amazon, will feel their backs are to the wall, and will try to find a way out. That might well be regulatory: changing the contract terms on your direct competitor, effectively denying them shelf space in your store, may not go over well at all in the EU, especially regarding cultural goods.

But I think it’s more likely that some folks will try to give you an upside to purchasing outside the app, and Apple will generally not approve those apps except in the cases where they sorta-kinda have to. For example, what does Apple do if Amazon lets you buy content in-app that is tied to that app (i.e. to your various iDevices), but lets you "buy once read anywhere" if you purchase outside the app?

A lot of publishers also bundle digital and dead-tree editions. In Germany, publishers charge a lot for subscriptions but usually offer gifts (a toaster, a Zune, whatever) for new subscribers. (Jetzt Prämie sichern! they shout at the consumption sheep.) Does that mean physical items purchased through the app also have to give Apple a 30% cut? Or that you can’t run a different promotion in each store? What about eBay? Does Apple get 30% of your auction price, or 30% of eBay’s premium?

Here I think Apple has once again failed to address the inevitable grey areas that exist or will soon exist in the app ecosystem. I expect that a combination of regulatory challenges, untenable implications of rules (e.g. the eBay case), and market nuances will force Apple to revise the rules, and possibly the percentage, several times over the next year.

If I had to guess at an outcome, I would guess they’ll allow you to sweeten the deal however you like as long as the part that goes on your iDevice costs the same in-app or out. And I think they will clarify that they don’t expect a cut of anything that doesn’t go on the device; and maybe even clarify that you can sell Kindle for iPad for $20 while giving away Kindle for Android free, if that’s your best solution. And finally that yes, you can sell your newspaper for half price on Android as long as the Android subscription doesn’t give you iPad download rights (at which point I think most smart product managers would give up the 30% instead of taking on the engineering challenge).

“Apple Will Destroy My As-Yet-Unproven Business Model”

This argument is really fascinating, and is being applied not only to fly-by-night startups trying to fill some app market niche that was miraculously still empty an hour ago (e.g. subscription aggregators). The interesting ones here are the purveyors of digital media.

The gist is that streaming media services are built on such impossibly thin margins that it’s completely absurd to give up 30%. The only way to survive that and not go bust is to raise prices, and that’s like raising taxes, and so on.

The problem with this argument is that most streaming media services are built on such impossibly thin margins that they are not, by themselves, viable businesses. That doesn’t mean the 30% cut isn’t onerous, but when the people who created the work in the first place are getting as small a cut as they are from the streaming services, I don’t have a lot of sympathy for the middlemen.

I expect this will be a tempest in a teapot at most. The additional charge won’t invalidate anybody’s fake valid business model, nor will it put any real business in the red. Some startups may go belly-up as a result, but isn’t that why they call it venture capital?

iAds might both “fail” and “succeed.”

I just read an interesting blog post by Mac developer Manton Reece titled I hope iAds fails (via DF).

He makes two very good points:

1. “If you are not paying for it, you‘re not the customer; you‘re the product being sold.”
2. “I don‘t want to see ads in my apps, and I don‘t want Apple to ever lose even a little of what it means to be a product-driven company.”

I agree wholeheartedly with the sentiment, but I think he’s missing an important part of the picture.

When Apple first announced its iAds advertising program, I joined the nerd herd and assumed they were trying to head Google off at the pass. Google clearly thinks that in-app advertising is going to be a big deal, and as the dominant advertising-engineering company (AdEng? AE?) they want to control that market. Google paid $750 Million for AdMob, a company pursuing exactly that aim and one which Apple reportedly also wanted to buy.

Yes, that would be a terrible outcome for users and indie developers alike. If people get used to ad-supported apps, it will be much harder to sell small apps, and small apps are the foundation of the ecosystem. And, of course, the user experience will be severely degraded for most types of application.

But I now think that’s unlikely, and I further think Apple is on to something more interesting (and arguably more innovative) than Google’s subtlety-of-napalm approach to advertising.

There are, I believe, three interesting scenarios where in-app advertising is essential to the very concept, and by no means a bad thing for users. Whether it destroys user experience in these cases depends on the interaction design, not the concept itself.

First: Apps that are really about shopping.

Take, if you will, BabyCenter. Here is a web site that is sort of about community (an online network of people expecting or having or raising children). Maybe it’s even good at that. But this is undeniably also a site that aims to aggregate people who need and want to buy stuff of a certain sort. The web site makes it very clear that this is what they’re about, and they even have an online store of their own. There is nothing wrong with this, and BabyCenter is very open about it.

How should a BabyCenter App make its money? By charging people to download it — people who, after all, are just as likely to go there because they need stuff as for any other reason? Or should they help connect eager purchasers to eager sellers? (The BabyCentrists have two iPhone apps in the App Store already, one paid and one free, but no BabyCenter app per se.)

Have you looked at LookBook? There’s a concept that would be great as an iPad app, and it would be almost criminally negligent to exclude the advertisers. And for their demographic, it’d be smart to make it a free app: the kids need to save money for clothes!

There are many more, but you get the idea already. Some things are simply about shopping, even if they might be complexly about something else too.

Now the question is: what sort of ads should those be? Should they be high-quality, unobtrusive, Apple-style ads? Or should they be ugly, creepily prescient, Google-style ads?

Second: Apps that are ads themselves.

More and more Hollywood movies, TV shows, and other entertainment products have supporting apps these days. It seems to be the horrifically bloated interactive Flash site of the new era. And the kids, apparently, will download such stuff.

It seems obvious that the ad-as-app should also have in-app ads. You already have the brand loyalty, since after all they downloaded your ad-as-app. Why not make an extra buck selling them something else?

The only catch is that you probably don‘t want to sell your competitor‘s stuff. I assume Apple will give you some control over that.

This category of app may seem superfluous, but remember when you were young and fannish yourself. There‘s nothing new about hawking and extra bauble to the already-sated shopper.

Third: Newspapers and Magazines.

Of the three areas where I see in-app ads as essential, one stands out as both obvious and difficult: ”print“ ads.

Consider this: you can subscribe to the New Yorker for under a buck an issue. They sell about a million copies each week. And this would be completely unsustainable without ad revenue.

I think the App Store gives us a chance to finally have high-quality magazines on portable devices, and I‘m impressed with some of the early efforts (cf. Popular Mechanics). But even though I‘m happy to pay for them, I can‘t imagine that business working without ads.

That‘s the obvious part. The difficult part is that, thus far, nobody has made this work. I would even argue that it has not worked for magazine web sites, though the Wall Street Journal has apparently done pretty well with a subscriptions-and-ads model.

This has got me thinking. If you remember the iPad introduction, you will remember that Apple is very keen on the iPad being used as a platform for high-quality publishing. The New York Times had an app available at launch, but it turned out to be a strange and indecisive beast: the ”Editor‘s Choice“ offers very little content, and has highly obtrusive, poorly designed, in-house ads, and costs nothing even though this is the strongest brand in American periodicals.

I believe there are two big reasons why this hasn‘t yet worked out as planned. First, magazine publishers generally lack the technical expertise to make good technology choices (let alone develop software). Second, they have no idea how to approach the new ad market. Their traditional approach is simply too inefficient; and yet they are reluctant to cede any control.

Of these, the first problem will solve itself with time, as there are more people who can design and build a solid app. The Guardian, for example, has a good iPhone app and a good web site, even though they‘re not yet on the iPad.

The second problem, though, requires major partners for the major print media. Google has not yet established itself as a good partner for high-quality ads, and Apple is attacking that market as opposed to the long-tail advertising market Google effectively monopolizes.

It‘s starting to seem obvious, at least to me, that Apple is much more interested in using its ad platform as a profitable carrot with which to bring serious publishers to its devices. I think Apple believes the numbers will speak for themselves, and publishers will be happy with Apple‘s cut if it gives them Apple‘s quality. This is especially important for major lifestyle brands. And if they go in-house or switch to another ad provider later, Apple still wins, with more and better content on iPad.

If small publishers can also benefit from this, so much the better. And if people are going to put ads in random apps, Apple wants to at least have a shot at mitigating the user-experience failure and getting a bit of cash along the way. But I really do not believe Apple is trying for an ad in every app.

Plenty of room left for innovation.

Apple and Google are going to be the big players in app ads out the gate, but there is still room for innovation.

Apple doesn‘t play the long-tail game with any seriousness. And Google doesn‘t do aesthetic quality (in fact they are virulently indifferent to it).

That suggests one clear niche market. And because you can plug in ad content in apps though a variety of technologies, neither Apple nor Google can establish any technical barrier to entry.

Another place I see startups, or at least studios, emerging is around truly interactive ads. Call them ads-as-games. The iPad, and perhaps some day its competitors, give you an amazing level of creative freedom. And that means you can push boundaries, if you know how. The publishers don‘t know how, nor do the traditional ad agencies.

While some people will just churn out multi-platform content from their publishing workflow and use whatever is easiest or that, user experience be damned (cf. Wired), others (cf. Pop Mech) will try to lead the pack through innovation. And they will want advertising content that helps them keep that lead.

The danger & the seduction.

As a loyal Apple customer, I want them to stay focused on products, not ads.

As a potential app developer, I want the App Store ecosystem to remain healthy and profitable for independents who want to sell their best work to real customers.

But as a potential iPad publisher — I‘m thinking seriously about starting an iPad magazine for fun and profit — I want a one-stop shop if possible. I would have to deal with Apple anyway for all financials and metrics of the distribution process. I could save a lot of headache by just plugging into their ad network and having it all integrated.

I‘m still not sure that‘s any better for the consumer. I trust Apple to have high-quality ads, but I don‘t trust them at all to have depth. I definitely trust Google to have the depth, because they will find a way for Aunt Minnie‘s Tin-Can Cookie Cutters to get into the stream at $3 a click, but of course their quality will be uneven. I hope that innovative startups will bridge this gap.

I do think there is already a precedent for high-quality, ad-free, reasonably-priced paid apps in the App Store. And I think there is enough momentum behind that, and so much potential in this class of devices, that it will not be broken by ad-riddled crapware any time soon.

Thus I think it‘s possible, and maybe desirable, for iAds to "fail" in terms of undermining paid apps, while also succeeding for both Apple and publishers in helping finally port the print-magazine revenue paradigm to the digital world.

And I think there are other things besides traditional publishing that would benefit, and whose users would benefit, from a high-quality in-app advertising system.

A strange feeling about Google.

I have this strange feeling about Google. About how they seem dead-set on competing with Apple everywhere they can, even though they're really terrible at the things Apple is good at. And even though Apple isn't particularly good at the things Google is good at. And even though Google has such a mind-numbingly large head start in their two crucial technologies - search and contextual ads - that a company like Apple most likely can't pose any kind of existential threat any time soon, even if they do end up dominating the "rich mobile ad" market. Google was never any good at rich media ads to begin with.

The feeling: it's as if Schmidt went to a board meeting at Apple one day and a lightbulb went on above his confused little head, and he heard a choir of angels on a stack of pinheads say: they're making serious money with this shit! We can do that too!

But the thing is, on the evidence they actually can't.

Google has already proven, with YouTube, that it's perfectly willing to lose billions of dollars, and possibly never recover them, preventing someone else from dominating a potentially lucrative market that might be a good match to Google's talents. But in this case you already have a leader, the market's already proven very lucrative for that leader just as it was for the pack that leader just displaced, and there's very little overlap - possibly none at all - with Google's in-house talent. Not to mention there's a little company up in Redmond that's going to take its gloves off as soon as it can find the laces; and there's a little company in Palo Alto that just placed a small bet on following Apple's lead.

I'm curious what's going to become of Google's efforts here. I could easily see them spending many billions of dollars, which they do of course have, just to somehow stay in the game. But remember, Google makes money on advertising. It would be so much cheaper for them to simply extend their domination of that market into the mobile world.

I suppose it's at least theoretically possible to beat Microsoft and Apple at the same time, each on their home turf. But it's a little like racing your sailboat against Larry Ellison: are you really sure you've got the silicon cojones for that?