Tuesday, December 14, 2010

Switching an iPhone app from Free to Paid - postmortum

A little more than a year ago, I created a free iPhone app called Tunemark Radio. After more than a year of being a free download (with no banner ads), I decided to see how the app would fare if I switched it to a 99 cent app. It has now spent 2 months as a paid app and I detail the results in this post.

Background

Tunemark Radio is, as the name implies, and Internet radio stream playing app. It includes support for browsing and playing all the stations in the SHOUTcast database (over 30,000 of them!) as well as the entry of custom URLs for any mp3 or AAC stream you might happen to have which isn’t in the SHOUTcast database. The “tunemark” part of the name was intended as a play-on-words for bookmark, but applied to music. The app supports the concept of “tunemarking” songs that are playing - you can save the artist/title info to a list for later reference, look for it to purchase on iTunes, send the song info via email, share it on Facebook, Twitter, or Last.fm.

When I originally released the app, it did not included all of the features it includes today. The initial release was pretty barebones. I figured I’d release the app for free, hoping it would be good publicity for my iPhone app development business. I had a focus on developing iPhone apps for radio stations and thought this app might be a decent demonstration vehicle for future clients. They could see whether they liked the performance of the audio streaming code I wrote, and even would be able to enter the URL for their own station to test how their audio stream would behave in their own custom app.

Over time, I added more and more features (a music visualizer, iPad support, the social sharing aspects for Facebook/Twitter, and Last.fm scrobbling support are some examples). Even though the app was free, I also vowed to never have any ad banners. As the app matured, I began to get occasional email messages and app reviews on iTunes where someone would say something like “I can’t believe this app is free!”. But still, since the app had evolved over time, I still thought of it not having enough features to justify a paid price.

Even though the app was free, the download numbers were fairly modest - for the first 3 months, the average download was about 150 copies per day. Then, after the Christmas bonanza of new iDevice owners, average downloads increased to about 250 copies per day for the next several months. Slowly, the app was gaining in downloads, perhaps as a result of the iPhone user base itself growing. After the first 6 months, average downloads had climbed to 500 per day and were still climbing.

Then, in late July 2010, Tunemark Radio was featured in a special Radio Apps category on iTunes. This initially caused daily download numbers to more than double. The Radio Apps category was on the iTunes desktop app, on the iPhone, as well as on the iPad. After about a month, Apple revised the iPhone Radio Apps category and cut the number of apps featured down from 30+ to 17, and unfortunately Tunemark was dropped from the iPhone special feature. It was, however, still featured in the shortlist of 11 Radio Apps for the iPad.

Tunemark continued to be available for free, and after a couple of months of the Radio Apps category hanging around in iTunes special features for iPad, the average downloads for Tunemark had appeared to be fairly steady at 700 copies per day. About a month later, as the special Radio Apps category migrated to the end of the list of special features, the downloads were slowly falling. By mid-October, the download average was closer to 500 copies per day and was still falling.

The Switch to a Paid App

It is at this point in time, after getting a few more “I can’t believe this app is free” messages, I decided to switch Tunemark to a paid 99 cent app. I was mainly curious what would happen. Daily downloads as a free app were falling anyhow. How much would daily sales drop as a paid app? Surprisingly, for an app which had been free already for a year, the numbers weren’t too bad, as can be seen by the following graph.


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Initially after the switch from free to paid, the daily downloads dropped from about 500 to 100. I found this number surprisingly good. The day after setting the 99 cent price, I had feared I’d be seeing a number more like 10 downloads on the following day. Seeing the numbers drop to 20% of the free numbers was OK with me. Sure, an 80% reduction in sales is significant, but 100 paid sales per day is still pretty good.

Granted, the app did still have an artificial boost of being featured in the Radio Apps feature which appeared on iTunes for the iPad. That feature was finally rotated out of iTunes by Apple in mid-November as can be seen by the drop in numbers in the graph. But still, the drop was not as dramatic as I had feared and for an app now with absolutely no advertising, averaging more than 60 downloads per day, after having been available for free for a year, they seem like good numbers to me.

The Paid Effect on Ranking

What I found especially interesting was as a paid app, Tunemark Radio ranked far higher in the Music category than it ever did as a free app. You can see this with the following graph from AppAnnie.com:
Safari1-2010-12-14-22-47.png

As a free app, it was ranked around 200 in the music category. When it switched to a paid app, there were a few days initially where the app had no rank, since you do not carry over your sales or ranking info when switching from free to paid. After 2 days of sales at 99 cents, it began to appear in the paid rankings and quickly climbed within the top 100 paid music apps.

Best I can tell, the free music app category is much more competitive than the paid app music category. Is this true for all app categories in iTunes? Unfortunately, I have no definitive answer. I suspect that would be the case, but it could be a unique situation with the music category. Perhaps someone else can shed some light on this.

Another interesting data point in the above graph is in late November, a day after I posted a new update of Tunemark on iTunes, the app was cracked and posted to various app pirate sites and there were several tweets made with a link to the cracked ipa. As far as sales go, app downloads dropped 36% that day. While sales recovered the following day, the app had the most dramatic ranking drop ever. I can’t really tell for sure if this is a direct cause of the app piracy, but it is suspicious. It was also the day before Thanksgiving here in the US, but this graph is showing app ranking, not sales, so if app downloads in general on iTunes were reduced around Thanksgiving, I would have suspected all apps would maintain their relative rankings.

The Paid Effect on App Ratings

One other benefit of switching from free to paid is the quality of app reviews. For the prior year, as was the case with most free apps, Tunemark Radio had an average rating of 3 stars. The vast majority of written reviews were 4 or 5 stars, however there were plenty of ratings that were 1 star, mainly due to the pre-iOS 4 feature of “rate-on-delete”. After switching to a paid app, the app’s average rating is now 4.5 stars with its most recent update from a few weeks ago. It has 17 five star reviews, 2 four star reviews, and only 1 one star review.

Conclusion

Overall, I can’t really think of any negative from switching from a free to paid app. When the app was free and was bringing in no income (other than a few iTunes referral commissions), it was not practical to be spending money on the development of the app. I was happy to spend some of my own free time, but I couldn’t justify the cost of paying “real” money to make other improvements to an app that was essentially a hobby.

Now that the app is earning decent daily income it will help justify spending more time on future feature enhancements. There are a lot of new features I have on the wish list and these features will require some significant code writing in the coming months. I also hope to at some point hire a graphic artist to improve the look of the app. I am not a designer, and the user interface for the app could be greatly improved. And finally, even though the app is only available in English, it has been surprisingly popular Japan. I hope to pay someone to assist with a Japanese language localization of the app, and perhaps some other languages.

I’ll be sure to follow up this post with more analysis of how the app does in the coming year.

Monday, August 23, 2010

iPhone App Piracy - a direct noticeable affect on niche market app sales

I've had a niche market app, called Artificial Life, for sale in the iTunes app store for over a year now. As the name implies, it's a simulation of artificial life. Given the subject matter of the app, I never expected to make a lot of money from it. There's a limited audience of the type of people who find the topic interesting (mainly tech people), and a smaller number who own iPhones and would enjoy watching such a sim on their phone.

But, there was a small niche market, and those who used the app tended to use it on average for about 45 minutes per day! The app had been slowly gaining sales over the past year increasing from single digit daily sales to over 20 sales per day. Then, back on April 18th, the app was cracked by pirates and was posted on a web site for jailbreak users to download for free.

I discovered this piracy when a saw a huge spike in app usage (via Google Analytics stats). The stats showed an increase in app usage by about 13 times the normal usage in just one day (over 3200 daily users vs. the previous days average of about 250).

At first, I assumed this would have a negligible effect on my daily apps sales - I was only selling 20+ copies a day and general wisdom say says the piracy numbers are people who would never buy your app in the first place anyhow. Well, sad to say, several months later I can say this general wisdom appears to be wrong, at least for my market.

Here's the graph of daily sales for the past year (you can click on the image for a larger view):



The red line denotes when the app was first cracked and posted on a pirate website. As can be seen, app sales had been steadily climbing, however shortly after the app was cracked app sales began to decline and now are back to single digits for daily sales. It could be coincidence, but it does seem fairly compelling that a couple weeks after the app was pirated, the sales for the app were more than cut in half.

One other interesting point that can be observed from the graph: Up until early April, the app included anti-piracy code to try to make the app a bit more difficult to crack. When I published an app update in early April, I discovered I had introduced a critical bug which was causing a false positive for the piracy detection on some devices. I immediately pulled the app from the store to prevent any existing customers from getting the new update and I was able to get Apple to push through an emergency bug fix the next day. This can be seen in the graph when there was one day in early April with zero sales. Because I wanted to get the bug fix out as quickly as possible, I simply disabled the piracy detection.

Much to my dismay, it only took a week for someone to then pirate this new app update since it no longer included any anti-piracy measures. And then a few more weeks and daily sales were cut in half. And the rest is history.

Saturday, July 24, 2010

Apple currently featuring "radio apps" and Stormy Productions has a strong presence on the list

I was pleasantly surprised this morning to discover Apple currently has a list of featured radio apps on the iTunes store, and Stormy Productions was involved in the creation of 10% of those apps.

There are two lists, one for iPhone apps and one for iPad apps.

The iPhone list contains 30 apps, and I've had a hand in the creation of 4 of those apps. Specifically, I wrote all the code for both the Tunemark Radio and JAZZ.FM apps. I also wrote all the radio streaming code and the "now playing" portion of the user interface code for the Public Radio App. And finally, I wrote the radio streaming code used by the PRI app. (A good friend of mine wrote the rest of the code for the PRI app - congrats Rob!).



For the iPad list of featured radio apps there are only 11 apps listed, and Tunemark Radio is one of them!



As an iPhone developer, one always hopes to some day have an app make Apple's "featured" lists on the front page of iTunes, so I am unbelievably happy today to have several make one of Apple's lists.

As for what effect this exposure has on app downloads, I only have access to the stats for the Tunemark Radio app (the rest of the apps are under other developer accounts), but I can say, for my Tunemark Radio app, after one day being on this featured radio app list, the number of downloads have more than doubled. The average daily download count jumped from 500 to over 1100.

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