The App Store’s Subscription Model

Apple’s App Store has had their sales slow down in the recent years as the market has matured. It has become increasingly harder for developers to create the “jackpot” app that will reward them thousands of users as well as a stipend to improve their apps. Apple currently has over 2,000,000 apps on its App Store (second to Google Play), but the current App Store market is not centered around the amount of apps anymore. The statistic is irrelevant for the success of the platform.

This summer at Apple’s WWDC (World Wide Developer’s Conference), Apple announced that it was going to expand the auto-renewal subscription service to apps of all categories. This change benefits developers, allowing them to have an income from their apps in weekly, monthly, or yearly terms. This source of income will inspire the maintenance and addition of extra features for apps, eventually evolving the App Store into a ecosystem that revolves around “quality” over “quantity”. Developers will also have more control over the marketing of their app. For example, early adopters of the app could have their subscription price maintained while new users would need to pay a bit of a higher subscription price, rewarding those who were early users.

The subscription model benefits developers, but the question remains: Will users buy subscriptions for their favorite apps or subscribe for an app they have never tried?  People generally will easily spend $5.00 on a cup of coffee or $12.00 on a beer at a music festival, but as soon as an app is presented for $0.99, hours of contemplation will be spent deciding whether or not the app will be worth their time. The reason for this is that buying an app is a risk. When someone buys a coffee, the purchase results in a physical product that they know they will enjoy. The purchase of an app however is not guaranteed to be what that person was looking for.

The common solution to this problem is to allow the users to try an app for free, so that they may decide whether or not they would want to purchase. This seems like an ideal solution but since the App Store is so congested with free apps, the general assumption is that the app will not meet the quality of a paid app and for this reason many users will not download it.

It will be interesting to see if Apple’s new subscription modal for all app categories will add to this paradox of logic from the average user or if the culture of the App Store will change in favor of developers in the future.

References:

https://developer.apple.com/app-store/subscriptions/whats-new/

http://www.theverge.com/2016/6/8/11880730/apple-app-store-subscription-update-phil-schiller-interview

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