Under the Radar

Under the Radar 31: Today’s App Store Announcements


  welcome to under the radar our show

  about independent iOS app development

  I'm Marco Arment and I'm David Smith

  under the radar is never longer than 30

  minutes so let's get started so today we

  wanted to talk about these interesting

  changes that were announced about the

  App Store today as of as a time of

  record they were announced about an hour


  Apple has officially recognized the

  speed of apps of a preview times being

  being improved some updates to the auto

  renewing subscription plans and some

  expansions of capabilities to

  subscriptions there and then number

  three is they've announced that search

  ads will be coming to the App Store what

  do you say we talk about the

  subscription changes sure so as best we

  can tell and there's a great page we'll

  have a link to it in the show notes of

  like the what's new in subscriptions

  that Apple's laid out see there's some

  good color you kind of get from Phil's

  interview but the real meat of it is on

  developer.apple.com and it seems like

  there's two or three big deals one is

  that you can now essentially offer Auto

  renewing subscriptions in any app type

  this used to be really some of somewhat

  of a vaguely defined rule but you had to

  be a magazine or a cloud services

  company or a dating site I think we're

  the three things that you could do yeah

  it was always this rule has always been

  very vague it used to only be like

  periodic content first they used to be

  able to be newsstand like in the very

  very first implementation of it back in

  2011 and then it kind of expanded to be

  like well you could be newsstand or it

  could be a handful of things that we

  that had like you know recurring costs

  like cloud services companies like I

  know Evernote started using it very

  early on for their premium service and

  it was the kind of thing where you could

  apply to do it and you could submit an

  app that did it and it seemed fairly

  inconsistent as to what got through app

  review for that and what didn't and what

  counted as like an ongoing service or

  ongoing content and what didn't count

  and so it was oh it was always very kind

  of risky to attempt to do that if you

  were just like an app that wanted

  subscription revenue for for some other

  reason outside of those narrowly defined

  boxes yeah and so now that seems like


  those kind of criterias are going away

  and any app category or type is

  available I think I mean that honestly

  that's that's still left a little bit

  vague and in the language on on the page

  it still left a little bit vague it's it

  still kind of sounds like okay now any

  app category can do this but you still

  should be offering some kind of like

  ongoing service backing it or some kind

  of ongoing content delivery so it's

  still a little like so if you just made

  like a really good calculator that

  didn't have a service behind it i it's

  not entirely clear that you would be

  allowed to subscription price it yeah

  and I think that is probably the most

  significant thing to note is that it

  does seem like the like on in on the

  developer page they're talking about the

  types of an order of renewable

  subscriptions are for content or for

  services and so it doesn't sound like in

  the sense of if you wanted to just say

  like here's my app and you will pay me

  whatever a few dollars a month a year to

  use this going forward that you would be

  able to you'd there'd have to be

  something that you were giving the user

  on an ongoing basis and I'm sure there's

  many ways around that like you can just

  kind of structure something in your app

  that will make that you know check that

  box but it doesn't sound like in in if

  you were just trying to do like a

  general purpose if you want to use my

  app you have to pay that doesn't sound

  like that's quite there um but it's

  expanding it certainly more and I

  imagine as we this gets rolled out and

  people start sort of pushing the edges

  of it will have a better understanding

  of exactly what that means but at the

  very least more people are going to be

  able to do subscriptions than could do

  subscriptions before yeah and it seems

  like the implementation of them is

  certainly improving but it seems like

  it's based on the auto renewing

  subscription type that we've had since

  2011 it you know it's it's still it

  isn't like some kind of separate app

  store payment structure like you know

  free versus paid upfront like it's not

  going to be like a automatic it seems

  like it's going to be a lot more like

  what we

  had before which is here's an in-app

  purchase type you have to as a developer

  you have to code the support for this a

  net purchase type in your app you

  probably have to write the backing

  service to validate them I'm not sure

  there's gonna be like I'm sure there's

  companies that will do that for you for

  a fee but you know you are still kind of

  manually implementing this in your app

  so it's not it's not as easy as you know

  if you have a paid app a paid upfront

  app you literally just like set a box

  and iTunes Connect saying this app costs

  X dollars and you don't have to deal

  with anything else ever again you know

  in relation to collecting money from

  people it's not going to be that easy

  it's it's still an in-app purchase that

  you have to code for you have to account

  for in your app ultimately though I

  think this is the better way to do it

  because this gives you flexibility in

  the app to do things like what if you

  know what if you want to have some

  amount of your apps functionality or

  content be available with it without

  subscribing and then have some other

  section of it be available with the

  subscription then you know this allows

  you to set that balance yourself so that

  I think is is the right way to do this

  ultimately though this is you know

  assuming that that they will allow all

  apps to use this which again it's the

  wording is kind of vague that I think it

  boils down to this one sentence on on

  the page on their site which says

  although all categories of apps will be

  eligible this Benzema this business

  model is not appropriate for every app

  so I guess it depends on their

  definition of eligible and appropriate

  it does that mean does appropriate mean

  they don't recommend we do it or does

  appropriate mean they won't let us do it

  so that's that's again still unknown but

  I think subscription pricing is a really

  really interesting compromise to what

  developers have been asking for in the

  App Store for a long time which is like

  you know upgrades trials some some kind

  of way to make money from people ongoing

  because software as we've just before

  you know software people expect ongoing

  functionality they expect updates they

  expect bug fixes they expect you to be

  putting in effort to improve and fix

  your software over time for them and so

  when they pay for it they expect not

  only am i paying for the software to use

  now I'm paying for upgrades forever like

  that's basically you know as much as

  developers like to like to fight against

  that with things like different versions

  and paid upgrades the way people

  perceive it

  is I pay for this thing and therefore I

  expect updates forever and so to try to

  try to track the balance between like

  what users want which is paying either a

  zero or one time and then getting this

  forever and versus what we need which is

  ongoing revenue to fund the development

  of these ongoing things and to fix

  things over time and to improve things

  over time subscriptions I think are a

  really good compromise there because

  look we're never gonna get paid upgrades

  in the App Store we're never gonna get

  like automated free trials this is the

  they're giving us the system now they

  gave us in-app purchase at first to to

  kind of first semi simulate free trials

  and types of upgrades sort of and now

  they're giving us subscriptions to to

  basically replace ongoing upgrade

  revenue and there's some ups there's

  some downs but I think it's pretty clear

  this is Apple's message this is this is

  them saying like we're not giving you

  those other things this is what we're

  giving you figure out a way to make this

  work for you or to make the other stuff

  that we already offer through in-app

  purchase work for you and there's the

  user side of this of course is is a big

  question mark but the the developer side

  as I think is very very clear now is if

  you want ongoing revenue you know for

  for people who just use your app if you

  want on long everything you need to

  either find a way to to convince them to

  pay for this for a subscription price

  like this or you have to do something

  like advertising where you just kind of

  automatically get paid with with usage

  of your app over time I don't know what

  do you think it's definitely a mixed

  feeling that I have when I spent I saw

  this news because on the one hand I'm

  very glad that something is happening

  like oK we've talked about for many

  episodes like there's a lot of things

  that feel not great in the App Store and

  for years it's felt like nothing was

  ever gonna change like what we had is

  just what it was and that's where it was

  going to be in eternity and I'm very

  excited that things are changing that

  whether this is a result of Phil

  Schiller taking over the App Store more

  fully or if it was just time for this to

  happen or whatever the reason something

  has caused this like changes to start

  happening the things are starting to

  sort of bubble up in the App Store and

  are changing which overall I'm pretty

  excited about because I think things

  weren't in a great place and I mean you

  never know it could be worse overall in

  the end but I'd rather have I'd rather

  to sort of find my way in a store that

  was evolving and changing because in a

  lot of ways like being a small developer

  there's a lot of benefits when things

  are more in flux because I can try

  things out with much less overhead and

  kind of dive in and there's less risk

  than if I was a bigger company I can be

  a bit more flexible and agile in that

  way so overall I like that I'm not sure

  if an annex and expansion of auto

  renewable subscriptions is like

  fundamentally going to improve the

  situation in terms of making a viable

  business in the app store it's I think

  the types of applications where it will

  make sense exist but they are more and

  more limited and the thing that I worry

  about as a user is if this is where

  software goes but like if all of my

  software requires an ongoing

  subscription to have there's a very I

  think you'll hit a fatigue point with

  that where customers won't want to

  download software or new software if in

  their mind it's going to come you know

  come with it a monthly charge of a

  dollar a month or whatever it is into

  their you know on their iTunes account

  every single month in order to use any

  of the apps and if they stop paying all

  of a sudden all their apps stop working

  and so I would imagine a lot of

  customers would you know fight against

  would push against that and in many ways

  that could push even stronger pressure

  towards the just sort of like software

  being free model where the expectation

  is that it'll be free and the reality is

  in the App Store right now I mean this

  is my own experience from trying every

  business model known to man is that the

  most success I've ever had is in the

  just sort of give it all away for free

  and put ads in it model which I don't


  I have a hard time believing that the

  percentage of my customers who would be

  willing to pay a non insignificant

  amount I mean one thing that I'm very

  curious about yes there's a bunch of

  stuff in here about different like 200

  different price points and you can

  specify different price points in

  different territories and there's a lot

  more flexibility there and I'm really

  intrigued to see if we're going to get

  something where the payments that you we

  are charging can be lower or like in a

  way that charging somebody a couple of

  dollars a year maybe much maybe a bit

  more palatable than charging them a

  minimum of 99 cents per month which I

  believe is the in the current form of

  Auto renewing in-app purchases that's

  the lowest tier you could do is a dollar

  a month and maybe it's maybe I'm being a

  little hard hard on my own software but

  I I don't think a lot of people would

  view a lot of what I make is worth more

  than that where they're paying twelve

  twelve dollars a year for it and but

  maybe they would be willing to pay a few

  dollars a year for it and so if there's

  those types of things that's interesting

  to me and I'm also quite interested in

  the way that like in-app purchase or

  auto renewing has a lot of flexibility

  in it like the actual fundamental API as

  it exists today and I imagine going

  forward or it has built-in support for

  things like free trials and bonus

  periods and things where you can have a

  bit more flexibility about the way the

  first you know someone is I'm being

  unboard into paying for your sock for

  your you know for your software for your

  service so that's certainly nice in

  terms of a lot of people have been

  asking for years for free trials on the

  App Store and with in-app purchase you

  can sort of get there you know they're

  exactly how that goes like is gonna be

  an interesting thing to navigate an app

  review of app review typically doesn't

  allow your app to be have a time limited

  free trial but you can sort of get

  around that if a your app is tied to an

  online service and so will we be able to

  work something out there but

  I said overall it's kind of this weird

  mixed feeling of I feel like I'm glad

  that this is changing I really hope this

  isn't the only change that we're gonna

  see in the near future but I think it's

  a good thing overall that it's happening

  and the reality is even if maybe only a

  few a very particular genre of

  application will now be made more viable

  maybe that's that's enough I don't know

  it doesn't have to benefit me or you

  necessarily but if all of a sudden

  there's you know a few hundred

  developers who can now make a viable run

  at the App Store like that sounds great

  overall yeah I mean and you know as you

  said like that I don't think this is

  going to address you know that there are

  basically two challenges that that are

  that developers face for monetization in

  the App Store two big ones

  one of which one of those challenges is

  when people do want to give you money

  our options for how to collect that

  money have been limited and this

  addresses that head-on this gives a lot

  more developers a way to collect money

  in a different way that might be a

  better way that might earn them more

  over time and the second challenge that

  developers face is from conversation is

  that there's just so many other apps out

  there that it's hard to give in people

  to pay anything for your app if there's

  a million other free ones that do

  something close enough and this don't

  this is not going to address that at all

  I do I do kind of argue though in

  general that that's not really Apple's

  problem that's that's our problem as

  developers like that's just the market

  that the market is full of competition

  and full of alternatives and if somebody

  else can do can offer the same thing for

  us that that we can for cheaper then you

  know good on that like that's that's

  their prerogative and so I don't I think

  this is Apple doing what they can to

  help apps that are worth paying for earn

  more money or collect money more easily

  and and to solve oh you know ongoing

  revenue in a new way which before we go

  we only had basically we had crappy ways

  to do it before and now we have a less

  crappy way to do it potentially I have

  in the past written about how much I

  didn't like the implementation of Auto

  renewing subscriptions I am reserving

  judgment of this new one until I see it

  and possibly

  even use it for my subscriptions we'll

  see but I I they say they're changing it

  this is like you know subscriptions 2.0

  they're saying so I'm willing to give it

  a shot

  it will see if it's improved in in in

  meaningful ways it sounds it sounds from

  the language and the pigs that that it

  has so I will wait and see on that the

  other before we quickly leave this topic

  the other thing to talk about on the

  subscription front is that they they're

  changing the revenue split that they are

  so normally the revenue split is 70/30

  Apple gets we get seventy applicants

  31st for Auto renewing subscriptions of

  this new type are all actually for auto

  doing subscriptions there's changing the

  split from 70/30 to 85 15 after the

  first year so any subscriber you've had

  for more than a year you will start to

  earn more from them you'll start to earn

  85% set of 70% so this is basically

  incentivizing you to create you know

  it's if you have a way to make money

  from people over time this is

  incentivizing you to both use this

  system for for doing that and to to make

  something that is worth people

  subscribing to for more than a year and

  that's kind of cool and it's it's kind

  of cool to see you know this is this is

  the the first exception to the 70/30

  rule at least that's been publicized in

  the history of the App Store there I was

  able to find an article on I think was

  recode that I'll link to in the show

  notes from back in April that said that

  some of the video services on the Apple

  TV we're getting this 85/15 deal right

  up front as part of the negotiation with

  Apple but other than that I have never

  heard of any exceptions to the to the

  70/30 split so I think that was

  interesting and it's originally

  considered to like where Apple might go

  with a 7 with the 85 15 option in the

  future they can use this as a way to

  incentivize development to in a certain

  way or on certain platforms that need

  help so for instance they could you know

  if if Apple TV isn't getting enough

  developer attention they could say all

  right now everything on Apple TV is

  85/15 if if they wanted to incentivize

  people to go to the Mac App Store they

  could say all right now all Mac App

  Store apps are 85/15 so something

  interesting interesting to consider is

  like using using this this new lower

  lower Commission basically

  so we make more money as a way to

  incentivize different development or

  apps on different platforms that that

  need incentives to spur development

  exactly and I think the the actual in be

  like impact of this in this narrow case

  is it's nice I mean I guess if I had a

  subscription that had more than a

  years-long like subscriber base I love

  it like one day my revenue just goes up

  a little but like by far the more

  fundamental thing that this is really in

  treating with is it's the first sort of

  chink in the in my in the like well it

  will always be 70/30 for everything

  forever and if that's no longer true and

  it's like demonstrably not true that in

  this particular case they're changing

  the split what else could they change

  the split on like you said and driving

  they can incentivize whatever they want

  and that's intriguing you know are what

  you could imagine things where it's a

  different revenue split for the first

  revenue you make in a year to try and

  help smaller developers you could

  imagine you know trying to encourage

  people to different platforms to try

  different incentivize different business

  models there's all kinds of things that

  not having it be strictly 70/30

  everywhere you know can certainly make

  the imagination run wild with and so you

  know it's certainly a good thing I don't

  think it's immediate I can if your

  business wasn't viable at 70/30 having

  to wait a year for it to switch to 85 15

  to become viable seems a little bit of a

  stretch but it's certainly you know I'll

  take it it's better than nothing for

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  once again all right so let's talk about

  app store search ads this was rumored a

  few a few weeks or months ago and it now

  it apparently is real they are really

  doing app store search ads and so what

  do you think I'm not delighted that's

  for sure

  the things that I think so probably good

  at paint paint a word picture as they

  say for what's happening is in the App

  Store when you go to the Search tab and

  you type in what you're looking at what

  you're looking for they will now be

  potentially a ad at the top of that

  screen you can get an example of this if

  you go to the search ads page in our

  show notes and the placement there is

  going to be based on an auction and a

  combination of who's willing to pay the

  most for that spot as well as some vague

  relevance metric but essentially people

  are going to be able to pay money to

  appear in the App Store Search tab at

  the top of the results which is pretty a

  pretty big deal like Apple even says on

  their page that about 65 percent of

  downloads come from searching in the App

  Store so you know a substantial majority

  is going to be coming from there and the

  things that come to mind first and I see

  this is this really is unfortunate for

  apps that are currently the second

  search result for a particular term

  things are gonna fall off the screen

  because previously like back in the old

  days when you would did a search you

  would be able to see maybe like five or

  six results at once then they switch to

  the cards view we have now where your

  first two screenshots are a screenshot

  and your app preview are shown on that

  first screen and so they take up a lot

  more vertical space and so you can see

  the top result and the teeny little bit

  of the second result and now if there's

  an ad you're only ever going to see that

  top result and the paid ad so that's a

  little unfortunate because I've

  definitely seen in my own apps where if

  you fall off that first page

  yes if the user has to scroll it's a

  substantial reduction in user interest

  views on your page etc so that's a

  pretty big deal if now only two apps are

  gonna be shown in that in the initial

  search screen one of them is paid to get

  there and the other one is just the top

  result so if you're the top results like

  hooray things are looking good for you

  if you're the second result or below

  it's getting worse and then there's just

  like the fundamental thing about it when

  I look at it that feels it feels weird

  to have to pay to show up in search

  rather than search just being really

  relevant and helpful and I can see the

  areas where this unlike this is helpful

  where if you're launching a new app and

  you you know you're never gonna be the

  first search result on your first day

  and so you want to try and find your way

  into that like you can do a big spend on

  that first day and hope you know I hope

  that really helps at your launch and

  that sort of makes sense

  and it makes a lot of sense I suppose

  for someone generic terms but what I

  worry about a lot is how is the HAR

  they're going to police and manage you

  know and someone searches for a specific

  app you know so someone goes into the

  App Store and searches for a pedometer

  plus plus and my competitor like right

  now if you go into the App Store and

  search pedometer plus plus I'm the

  number one result which intuitively

  makes sense but if I in the future you

  do that search the top result is going

  to be a competitor of mine who wants to

  be placed on the top of there that feels

  really weird

  and am I gonna have to pay for that like

  am I gonna have to start paying like

  protection money to keep people

  searching for my apps name relevant to

  me you know so that I would be the both

  I guess the paid results and the natural

  result like that starts to feel really

  weird and awkward and not great but I

  mean I don't know if this seems like

  this is the new reality then I'm just

  gonna deal with that and try as best I

  can to work it

  work up to my favor but I definitely

  have a lot more apprehension about this

  than I do about the subscriptions change

  honestly I am excited about search ads

  because like if you look through their

  page it seems like it's it's more

  complicated and both both more simple

  more complicated than than what I would

  have guessed it is auction-based which i

  think is good and if you look they have

  a little screenshot of the interface to

  buy one of these ads and they say also

  like it says ads will only be shown as

  relevant to the search query if an ad is

  not relevant to what the users looking

  for it will not be shown regardless of

  how much you're willing to pay so that

  means it it sounds like they're gonna

  try to make it impossible for you to

  like keyword spam in a way that would be

  kind of odd or uncomfortable or

  inappropriate I'm curious to see how

  that works out in practice that sounds

  really great if it works and also it

  looks like you can kind of let them kind

  of like place you automatically if you

  want to or you can add in certain

  keywords that you want to be that you

  want to like bid on also but it seems

  like it's a fairly high level buying

  process rather than like a low level all

  right whenever you search for this exact

  string I will pay up to up to five

  dollars two beads to be on that first

  spot like it isn't quite that rigid or

  that or that specific it looks like so

  I'm really curious to see how they do

  this as a developer like I right now

  it's like okay well right now over cash

  is growing at a rate that's okay but I'd

  like it to grow faster I'm willing to

  pay a little bit for that how do I do

  that I mean the App Store is the perfect

  like app store search is the perfect

  place for me to do that

  as far as I know from before I mean if

  you've ever done it it seems like it

  would be the perfect place to do that

  I'm willing to pay money if somebody

  searches for like podcasts to pet to be

  in that top slot I'm like I'm willing to

  try that and so to have this new option

  to grow my app if it's done tastefully

  which it looks like it might be this

  honestly looks very promising the way

  that on this page they've set up here I

  would love to have that option and it

  looks like it's probably not going to

  make it impossible for other apps to get

  discovered because it's so limited to

  like what people can buy and and you

  know what portion of the screen is

  devoted to this ad I think it looks like

  it's gonna be good but we'll see I mean

  thinking's gonna take a lot of

  experimentation I've actually you know

  trying the system out spending of you

  know maybe a few hundred dollars buying

  some ads first and see like we know what

  works what doesn't

  there's a lot of ways to advertise for

  apps and most of them don't work very

  well this one might work so I'm excited

  you know I think this will be I think

  this could be really good and there's

  definitely like we've said with all this

  like I love that they're trying

  something that they're not yeah like

  that part of it is good and sort of

  unequivocally I'm very I would rather

  things like this exist and make me a

  little nervous

  then things not exist at all and make me

  be even more nervous that this platform

  that I make my living on is just

  stagnant so I'm definitely excited that

  it exists and it's interesting to to

  think about how having to think about my

  like all my customers from the

  perspective of what are they worth to me

  is like the immediately thought maybe

  this is just like me and my numbers

  brain where I think about these things

  but essentially what it comes down to is

  I now have to in a very concrete way say

  what is a customer worth to me because I

  can now in many ways pay that amount of

  money to acquire that customer or at

  least have a promising venue with which

  to acquire them and so if I can say you

  know a new user is worth 50 cents to me

  and I can come into the search ads page

  and pay you know 49 cents for that user

  I'm coming out ahead I as soon as I can

  understand and wrap my arms around what

  like these are all like the terms like

  the average value per of each customer

  and those kinds of things once I can do

  that I can sit down and say okay I'm

  just going to pay as long as I break

  even or slightly come out ahead I can

  keep putting you into this weird cycle

  where I can just keep taking money out

  of the app and putting it in to a point

  mm-hmm and maybe the value of my

  customers will go down at a certain

  point as you do that like new there's a

  dilution effect but overall it certainly

  is a very intriguing way and maybe it's

  a good thing for you know for us as app

  developers to be forced to think of our

  apps in a more tangible business sense

  in that way that it isn't this kind of

  vague crafty thing that I'm sort of like

  I don't really know

  the value of it's kind of like I just

  make this stuff and I put it out in the

  world it's like no each I can sit down

  and say I get this much revenue from

  this many users that means each user is

  worth this much to me so I can pay up to

  this amount to acquire new ones and

  that's that's maybe a good thing for us

  to have to think about and I think it

  can help

  it can help newcomers like everyone's a

  little bit worried like what's this

  gonna do to the toy like the little guys

  I thinks will actually help newcomers

  give them an option that if they

  wouldn't otherwise be visible for a

  search query give them away to get in

  there you know like that I think this

  actually could be really good if done

  right and it looks pretty promising so

  far so we'll have to see all right and

  finally we want to very briefly talk

  about the the app review times being

  formally acknowledged you know we said

  that this would be great if this sticks

  around and one of the ways to make sure

  it'll stick around is if Apple formally

  acknowledges it in public and they did

  so fast a preview is probably sticking

  around and that's great thank you for

  listening everybody thanks to Braintree

  for sponsoring and we'll talk to you all

  next week bye