We Can Always Go Back to the Old Way of Distributing Software

Yes, the AppStore review system is archaic and out of our control. Yes, the discoverability is frustrating and when the store breaks, we’re out of luck. But would you really want to go back to the ‘old way’ of distributing mobile software? Let’s look at what the AppStore fixed in terms of mobile software distribution.

Yes, the AppStore review system is archaic and out of our control. Yes, the discoverability is frustrating and when the store breaks, we’re out of luck. But would you really want to go back to the ‘old way’ of distributing mobile software? Let’s look at what the AppStore fixed in terms of mobile software distribution.

Developers have been writing and distributing mobile software since the early days when the Newton came out. Then came the Palm Pilot came on the scene, and things accelerated. Back in 1999, when we first released Date Wheel, we released it as freeware. Why? Because there was no good online method for payment. You included in your software, “If you like this, please send me some money via snail mail,” and included your address in the software.

Electronic Software Distributors (ESD’s) cropped up, most famously for Palm Software: Palm Gear HQ. Customers learned this was the central archive to download software for their Palm Pilot. As this took off, others followed. Then credit card payment options appeared on the ESD. Developers were able to sell software on their own sites with PayPal. Mobile shareware started to become more popular. Hobbyists and micro Independent Software Vendors (ISV’s) were listed side by side.

Promotion of software was by word of mouth (you could even “beam” a program from one device to another) and by getting involved in the community. Developers and users participated on forums, contributed to blogs and some even started their own news sites. Developers could communicate directly with their customers via public forums, or via email, since most shareware was fulfilled with “Registration keys” personally delivered by the developer. Up-selling your software was easy because developers had direct contact with their customers via email.

More ESD’s cropped up. Handango and Palm Gear were the top two, but other small ones existed. Archives showing only freeware and free 30-day trials also helped developers spread the word. Software could be uploaded in real time by developers–with only a self-review process and the market to keep buggy software in check. Soon other platforms joined in, like Windows Mobile. Commissions to the ESD’s were low–10-20%. The only bad thing was that, probably due to the proliferation of freeware, prices were ridiculously low– $10 to $40 per title, even though the development of mobile software could be equivalent to a desktop application.

The distribution and fulfillment was messy. The awareness of software was spotty–most PDA users didn’t even know they could add third-party software. Installation was a nightmare. Wireless or on-device purchasing was not possible. In order to browse, buy, install, and use software, you had to:

1) Visit an ESD or developer’s website from your computer.
2) Download a zip file to your PC or Mac (Mac support was sporadic).
3) Unzip the files, move the .prc (or equivalent) into the Palm desktop (or equivalent) software.
4) Plug in your PDA to your computer.
5) Hot Sync the files to the PDA.
6) Try the software for 30 days (and then it would stop working).
7) Remember where you downloaded it.
8) Return and purchase a “Registration key.”
9) Wait for the email from the developer with the key.
10) Launch the software on your device.
11) Manually type in the (sometimes long) registration key code.
12) Now you were up and running.

These steps left many points at which customers would abandon the process. Some developers added self-installers to their zip files. Some developers included directions on how to purchase in their software. When wifi came out for mobiles, and smartphones appeared, there were tricks where you could download the software wirelessly to your device, but it was not standard and didn’t always work.

The ecosystem thrived, even if the market was heavily slanted towards early adopters of mobile devices, like Personal Digital Assistants (PDA’s), and those with enough technical knowledge to actually complete the 12 step process.

Then people got greedy. The ESD’s were worried because people would download from their site, but buy directly from the developer (termed “leakage”). They required developers to put “Buy it at Handango” or “Get it at Palm Gear” in their software. At first developers could list everyone, but then the rules changed and the trials you listed at each ESD site had to be different and ONLY include that ESD, adding complexity to your program. (Later, developers couldn’t even include in the software their website or email for customer support needs.) The ESD’s added language to their agreements that developers could not charge a different price at other sites or their own. The ESD could discount up to 25% off, at their whim, but still pay the developer a royalty based on the net sales price, not a “wholesale price.” Commission rates started to rise, increasing to 30-40%. The small developer had no choice to list on the ESD–it was the only place to get real exposure for a reasonable price (only paying a commission on what you sold).

As smartphones became popular, the the carriers decided to take their cut. Besides disabling beaming and/or bluetooth, they had their own stores (still on websites at first) and if a developer was “lucky” enough to be listed, the carrier took a 30-40% cut, then the ESD (if they were the middleman on the deal) took 30-40% of what remained. The developer’s cut was sometimes as low as 20-30% of the original non-discounted price. Plus, developers had to trust that the numbers were real–no sales reports were issued with the royalty checks. Developers also did not get customers’ contact info, as they had to modify the registration scheme to be listed on these stores.

The greed continued, especially as ESD’s consolidated. Motricity bought Palm Gear and Pocket Gear, for example. ESD’s raised commissions to 40%, then 50%. They added auto-fulfillment, which was a double-edged sword. Customers got their registration keys in real time (less customer service complaints), but since no email fulfillment was involved, the ESD could prevent the developer from seeing customer contact info. The cross-sell and up-sell options were severely limited, as well as upgrade notifications. Palm opened it’s own Software Connection Store and refused to give the developers emails. Their store was run by Palm Gear, and the cut was 50% PLUS transaction fees, and no customer connections. Developers were not even allowed to include their website within the software or in the listings for customer questions! Customer service was a nightmare, mostly due to the 12 steps, but also because developers couldn’t verify that a customer had actually purchased a product from them, plus many customers couldn’t even find developers. Soon, ESD’s started “hiding” additional commissions to carriers and other sources as “transaction fees”. Royalties were sometimes as low as 20% after commissions and fees were deducted. Developers even tried to start an unsuccessful ESD Union.

So, in summary, installation took 12 steps. ESD’s were greedy and no longer shared contact information. Palm and other mobile platforms did not promote that third-party apps were even possible to add to the smartphones as PDA’s. They (and the carriers) claimed their customer service costs were so high because buggy third-party software caused their devices to crash. Selling software was tough because the distribution method was really broken, plus prices were low, but it was still possible.

In comes the iPhone and the AppStore. Finally distribution was fixed! The 12 step process was eliminated. Users tap one button, enter a password, and voila, software is installed! Everything could be done wirelessly. The commission of 30% with no extra fees was reasonable. You could cross-sell and up-sell your titles from within your software. Customers were given support emails and websites, so customers could choose to contact the developer or get more information. Developers could even sell support software (desktop or web companions) outside the AppStore, and inform their customers from within the app. Apple actually heavily promoted third-party software–“There’s an App for That”–so that the millions of users would browse and buy in the store. Volumes are amazing.

The AppStore is not perfect (though many improvements have already been made). Developers still ‘game’ the system, and continue to find new ways, as loopholes are closed by Apple. Prices are horrible–$10 to $40 looks great now, in contrast to 99c to $5. The review process is long and unwieldy and some of the rules do not seem fair. Discovery on the store is horrible and out of the control of the developer. … But, hey, we can always go back to the old way of distributing software.