An incident over an app developed by an Australian company on Amazon has highlighted how saturated the market has become and the increasing difficulty for start-ups to make money from selling mobile software, developers say.
Development firm Shifty Jelly has savaged the retail giant for giving over 100,000 copies of its app away for free. The company says if it knew this would have occurred it would have never agreed to sell its program through the service at all.
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“This was a part of the developer agreement that we had no idea about,” says Shifty Jelly co-founder Russell Ivanovic. “It was really strangely worded, but apparently the agreement says this decision wasn’t up to us.”
The issue began when Shifty Jelly noticed that its app, Pocket Caster, had been featured as the “Free App of the Day” on Amazon.
But while the company was under the impression developers would receive 20% for all sales, even when given away for free, it quickly found out that this wasn’t the case for this particular promotion.
“Amazon is being predatory here, and asking developers (who are often desperate for exposure) to give away their app, in order to promote Amazon,” the company explained on its blog this week.
It quickly discovered that over 100,000 copies of the app had been downloaded, with the company receiving no money at all. Ivanovic says not only will the company need to increase its infrastructure spend to accommodate for the new users, but that its subsequent sales have plummeted as a result of the deal.
He also criticises the fact that Amazon allegedly rewrites app descriptions, doesn’t provide error reports and is only working within the United States.
Amazon was contacted by StartupSmart but a reply was unavailable prior to publication.
Ivanovic, who has removed the app from the store, says this is yet another example of how it is becoming harder for small software businesses – of which they are several successful examples in Australia – to make a sustainable amount of money.
“It’s getting a lot harder. There are 300,000 apps in the App Store, there’s about 150,000 in the Android Market, and it’s just a lot harder to get noticed,” he says.
“We’ve tried a few different things, press releases, paid sponsorships, things we’ve never had to do before.”
This has become a common complaint among app developers over the past two years. As the number of apps grows and the competition from corporate app makers also increases, developers have had to work a lot harder in order to maintain a viable level of sales.
Many have been forced into adopting typical marketing techniques to advertise their app.
Marc Edwards, chief executive of Melbourne-based app studio Bjango, says the sheer amount of apps means every dollar counts, and says losing over 100,000 sales can be a blow even if more consumers know about your company.
“I think the gold rush where you put anything on the store is now kind of over. You need to have something decent, and really have a good product and then market it.”
“For Amazon, I don’t think developer unfriendly rules will help grow their store. The other argument of saying the developer will make it up with volume, it doesn’t work when you’re small. I know some that have gone free to try and bolster paid app sales, but it doesn’t work.”
Ivanovic agrees, saying, “I can see that perspective, but it’s not for us”.
“I think if your app had a wide reach like a game, that may work. But in our case it’s a niche application – not everybody listens to podcasts – and it really is just a narrower type of market.”
“This just means we’ll be scrutinising everything from now on. Had we read through the entire agreement we may never have signed up with them in the first place.”