How important is the iPhone to books and reading?

There’s an excellent post by Derek Sivers on assuming you’ll get 1% to 10% of a huge market.

Here’s the ending -

He forgot there was a number lower than one percent.”

I think of this every time I hear business plans that say, “With over 30 million iPhones sold, our app is sure to…”

Guess what this reminds me of – People who think the iPhone will be more important than dedicated reading devices like the Kindle and Nook.

The fact that Apple sold 3 million iPhone 4s in 3 weeks makes a lot of people giddy because they use the 10% argument -

Surely, if just 10% of those people are reading books we have 300K iPhone owners to add-on to the 10 million iPod Touch/older iPhone owners (10% of 100 million). That means there are 10.3 million serious dedicated readers reading tons of books on iPhones. The iPhone is thus a far more important platform than the Kindle.

Truth is it’s just an estimate – It’s also a very optimistic one based on wishful thinking. Unfortunately, it’s not the only one used to pretend non-reading devices are more important than reading devices.

There’s another wildly optimistic estimate that we see very often – That every iPhone owner reads X books a year. That means across the iPod Touch and iPhone we have 100 million people buying one or more books a year. That’s just as nonsensical as the previous estimate.

Plus there’s an easy way for Publishers to prove their claims and fact-check their wishes – Look at actual numbers. If there are 100 million ebooks being sold a year through iPhones and iPods then those 100 million owners are worthwhile.

Of course, if Kindle and Nook and Sony Reader are selling 200 million ebooks a year then we have to factor in that it makes the iPhone far less important.

If, on the other hand, with 100 million iPhone owners we have just 10 million ebooks sold a year and Kindles and Nooks are selling 100 million+ ebooks a year then it says something about the relative importance of iPhones.

We can’t assume every iPhone owner reads – We can’t even assume 10% of iPhone owners read

Publishers and Newspaper companies and Magazines are easily seduced by the 10% argument and the 1% argument – There are 100 million iPhone and iPod owners and all you have to do is sell to 10% of them or get 1% of them to subscribe and you’re set.

Well, why not extend that logic -

  1. All you have to do is get 1% of the billion plus non-smart phone owners.
  2. All you have to do is get 1% of the people who own PCs.
  3. All you have to do is get 1% of the people who watch TV to read books on it instead.

As we start extending the argument the inherent fallacy becomes apparent. However, with the iPhone we are apt to believe this fantasy for a few reasons -

  • People equate availability with sales. Just because there are 40,000 book apps doesn’t mean there are 40,000 (or even 4,000) book apps that sell well.
  • It’s easy to fantasize that there’s an easy solution right in front of us – iPhones will magically save Publishers and newspapers.
  • People are quick to forget that nothing was happening with ebooks until dedicated eReaders came out.

Which brings us to a related point.

Dedicated readers tend to get dedicated eReaders

There are exceptions – However, for the most part people who read a lot get physical books or buy a dedicated eReader.

There are lots of reasons to read on the iPhone and most of them stem from – a physical book or a dedicated eReader isn’t available or isn’t around. Given how portable books and Kindles and Nooks are the whole ‘best book is the one you have with you’ argument doesn’t really hold.  

There are a select breed of LCD compatibles who feel it’s their holy duty to point out that they read 50 books a month on their iPhone. Well, if they are so important then why don’t Publishers just release numbers for ebooks sold through mobile phones – That will settle things.

Yet, Publishers don’t – In fact, Publishers with their pricing patterns and the Agency Model are clearly showing that they are much more concerned with stopping the growth of dedicated eReaders. If the iPhone were really the main reading device then why would Publishers try to stall the growth of dedicated eReaders? Why are there only 30,000 new books on iBooks? Why are there numerous countries that have an even smaller selection of books?

The ‘Reading is great on iPhones’ reality distortion works very well for Publishers and for Apple

This is what happens when a dedicated reader gets convinced to buy an iPhone or another multi-purpose device for reading -

  1. They put money in Apple’s pocket. 
  2. Amazon or B&N miss out on a sale.  
  3. They tend to read less because there are 200,000 apps competing for their attention.
  4. They tend to read less because the device isn’t focused on reading.
  5. A lot of them quickly find the small screen and the LCD makes it hard to read for long.
  6. They go back to books – physical books seem a ton better.
  7. Publishers get to exchange ebook sales for physical book sales.

It’s a really good arrangement – except for dedicated readers and dedicated eReader companies. 

How much do we value reading and books?

It comes down to how much you value reading and how much you care about reading – Is reading worth a $189 device dedicated to reading? Do you want to read more or less? Is your device being able to read books just as valuable as your device specializing in reading books?

It also leads to a few more questions – What device are people going to read more on? What’s better for the future of books – dedicated readers getting dedicated eReaders or them getting a multi-purpose device? Would you rather get your kid a device where all he can do is read or a device with a million distractions?

In the end the 1% argument and the 10% argument will prove to be wrong. We’ve spent the best part of 2008 and 2009 hearing arguments that the iPhone will kill dedicated eReaders and it hasn’t happened. Now, we’re going to hear more arguments – Why don’t all these people just produce numbers? Surely, the tens of millions of iPhone owners that are reading dozens of ebooks every month must be producing some ebook sales statistics we could look at.

Reviewing the new developments in Kindle vs iBooks

Steve Jobs announced some important additions to iBooks at today’s Reality Distortion Conference -

  1. Ability to add notes to an iBook.
  2. Ability to just tap and add a bookmark. 
  3. iBooks gets PDF support. Click a PDF you get in your email and it opens up in iBooks. A separate bookshelf for PDFs.
  4. iBooks comes to the iPhone. It’s in iOS4 which is the default for iPhone 4 and also available free to previous generation iPhones.  
  5. Apparently iPhone 4’s new Retina Display makes books very pretty. It might even make them more readable.
  6. A book bought via iBooks will be downloadable to all your iDevices.
  7. iBooks will synchronize your place, notes, and bookmarks across iPad, iPhone, and iPod Touch.  

Most of these features are already present on Kindle for iPhone/iPad. The PDF support is one feature that the Kindle for iPhone/Kindle for iPad app doesn’t yet support.  Overall, these features are a big deal as they make iBooks a stronger competitor to Kindle for iPhone.

Reviewing impact on Kindle for iPhone vs iBooks

If you own an iWhatever you will probably consider these points -

  1. iBooks is the more publicized app and it matches the Apple aesthetic better. 
  2. iBooks has PDF support.  
  3. Kindle for iPhone has far more new books and better prices for non Agency Model books. 
  4. Kindle for iPhone syncs with PC, Mac, Blackberry, and the Kindle.
  5. Kindle for iPhone is a better reading experience than iBooks – better themes, better brightness control, better font.
  6. iBooks has fancy animated page turns and wooden bookshelves.
  7. iBooks has an in-app store – No having to go to the browser to buy books.

Kindle for iPhone is clearly better if your focus is on range and price of books and the reading experience. iBooks is better if you care a lot about animated page turns or need PDF support. 

Apple’s trump card is the power of the default and owning the App Store. Apple will just publicize iBooks a lot and win out.

Reviewing impact on iPhone vs Kindle

 Kindle is clearly a better reading device. There are only two substantial pieces of news as far as Kindle vs iPhone is concerned -

  1. Addition of PDF support. This makes the iPhone a tiny better than it was. 
  2. Apparently books in iBooks look much better with the iPhone 4’s new Retina Display. If this translates into better readability i.e. less eye strain and better screen contrast then it would make a better contrast Kindle 3 an absolute necessity.

Today’s news makes existing iPhones slightly better reading devices. It also suggests that the iPhone 4 might be a slightly dangerous competitor with its improved screen contrast – Trust Apple to give it a fancy name (Retina Display) – almost expected it to be called MagicalVision.  

Reviewing impact on iPad vs Kindle

The iPad doesn’t really get much – just PDF support. It probably makes PDF readers history. However, the Kindle already has PDF support. The syncing between iPad, iPhone, and iPod Touch isn’t a competitive advantage either – Kindle syncs across a lot more devices including all three of these.

If the next version of the iPad were to get the Retina Display it would be interesting to see how it looks and whether the difference in readability between eInk and LCD is reduced. At the moment the Kindle continues to be a significantly better reading device – unless you want a device that does multiple things.

Big Surprise – iBooks doing well with Agency Model Publishers

Jobs was fashionably vague about how iBooks is doing -

  1. In the first 65 days – 5 million books downloaded. About 2.5 per iPad. 
  2. No update from 2 million iPads sold. Guess he’s waiting to reach 3 million. 
  3. 5 of the 6 biggest publishers in the US tell Apple that the share of iBooks is up to about 22% – in 8 weeks. Assuming he means 22% of the ebook market for those 5 publishers. 

Compared to how close to their chests Amazon and B&N keep their sales figures this amount of disclosure seems positively scandalous.

What does it mean?

Perhaps as the Agency Model 5 raised their ebook prices their sales on other devices dipped. Lots of iBooks users were probably unaware of the whole $9.99 vs $14.99 controversy or didn’t care and their purchases meant that 22% of all sales of ebooks (for these 5 publishers) were from iBooks. It’s also worth noting that Random House is not on iBooks – meaning most users had no choice except for the Agency Model 5.

  1. Does this mean another 22% of sales for these Publishers were through Kindle for iPad? Amazon aren’t exactly going to help us out with that question. 
  2. B&N eReader for iPad was released just a few days ago so its figures wouldn’t really help.
  3. Is the figure high because Kindle owners have stopped buying books from these Publishers? Is it because iBooks users are buying lots of books?

2.5 books per iPad doesn’t seem very high – especially if it includes free books.

It’s hard to say exactly what’s going on – 22% is a healthy number. However, it’s disingenuous of the Agency Model 5 to not reveal what happened to ebook sales in other channels – Did they dip? Did they go up? What about sales through Kindle Store – what happened there?

iBooks on the iPhone and iPod Touch means a huge potential customer base

The two key words are huge and potential -

  1. There are 100 million iDevices and most of these are iPhones and iPod Touches (98 million or so). 
  2. The iBooks store will have access to the 150 million credit cards that iTunes has access to. 
  3. These users might be interested in reading books.
  4. Some portion might be coerced into reading 1 or 2 books a year.
  5. A smaller portion might end up reading a book a month on their iPhones.

The hugeness of the number (98 million) and the fact that there are 150 million credit cards in iTunes are very significant. It remains to be seen whether that translates into a lot of ebook sales.

Dedicated eReaders Vs All in One Devices – Kindle vs iPhone

James Fallows at the Atlantic posts follow-ups from his readers on the ‘all in one device’ debate.

A lot of the arguments against ‘one device to rule them all’ apply to Kindle Vs iPhone -

  1. There are physical and hardware limitations to just how multi-purpose an all in one device can be.  
  2. Dedicated Devices will keep improving as all-in-one devices improve.
  3. The ‘convenience’ factor is over-rated.
  4. Current investments in devices that are better at individual functions means they aren’t going away anywhere.

There are also counter arguments like this one which, rather conveniently, mentions Kindle Vs iPhone -

“Personally, my new iPhone 3GS has crossed the threshold of being a “good enough” e-reader that I will probably never go for something big and clunky like a Kindle”.

And its camera, at 3MP, is almost the equal of the first digital camera I bought (3.3MP), from which I have many photos that are certainly “good enough.”

That is the whole problem – ‘good enough’ is not enough.

The iPhone is Master of a few Trades, not all

Lets consider the iPhone and some common uses -

  1. Browsing – There’s no way that the iPhone can supplant a PC or laptop and the dedicated keyboard and huge screen.
  2. Games – Again, a console and TV (especially a good one) are a much better choice for games than a tiny screen. 
  3. Reading – We’ll jump into this more. The short version is that a small, LCD screen cannot replace a 6″ eInk screen. 
  4. Camera – Take the same picture with an iPhone and with a 12 MP camera and ask yourself what you’d prefer if you had to take a photograph you want as a keepsake.
  5. Video – Everyone who thinks Flips and other sub $200 HD recording camcorders are going to die because the iPhone has VGA recording are mistaken. All the videos on this site are HD videos from a tiny Kodak Zi6. The iPhone can’t give you anything close to that level of quality.
  6. You can have journal apps and take notes – However, a real life journal is much better. Even something on your PC like The Journal or OneNote is much better.

Because you carry it everywhere the iPhone is often the most convenient device to use. However, that doesn’t make it the best device to use.  

Take the iPhone camera –   

  1. 3 MP, Autofocus, Tap to Focus, Video Recording, VGA up to 30 fps with audio.

Do people seriously think that will make digital cameras extinct?

 Take a Canon SD780IS (my current camera) -

  1. 12.1 MP,  3x zoom lens, Optical Image Stabilizer, HD video recording (720p at 30 fps). It’s also the size of a pack of cards.

If you had to take pictures of your kids or on your vacation what would you rather choose?   

People who say the iPhone 3GS camera is good enough don’t consider that when you want a lifetime memory the difference between ‘good enough’ and great is HUGE.  

iPhone might be evolving, so are Dedicated Devices.

The key thing here is something a James Fallows commenter pointed out – iPhone and other all in one devices are improving. However, so are dedicated devices.    

  • iPhone gets a 3 MP camera and 12 MP cameras get HD video recording and become smaller than a pack of cards.  
  • iPhone gets VGA recording and the Flip gets HD video recording.
  • iPhone gets eReader Apps and Kindle gets a 9.7″ screen DX, Read To Me, and WhisperSync.

Consider the Flip and how much more convenient it is than previous generation camcorders – dedicated devices are going to keep evolving.

The Loser’s Choice Argument

The one most common argument used in favor of all-in-one devices is -

  1. Why would you buy a $250 camera instead of a $500 phone does 10 things?

Well, the short answer is – You don’t have to choose one. That’s a loser’s choice.

  1. The iPhone is great when you’re unprepared and want to quickly capture the moment.  
  2. The ‘unneccessary, going to die’ $250 camera is great if you love photography enough to take it with you, or when you know you’ll be needing it.

The two questions to ask are -

  1. Do I have to pick just one?
  2. Which one is better at Function X? How important is function X to me?

That brings us to eReaders and eReading Apps.

Kindle Vs iPhone

Let’s take a look –

With medium font sizes this is what we get -

  1. iPhone (on 3rd of 5 sizes) has 80 words per screen.
  2. Kindle (on 3rd of 6 sizes) has 210 words per screen. 

Note that the video has iPhone with a smaller font size (2nd of 5 sizes) which is almost too small to read.

Here are the benefits of the iPhone -

  1. You get Kindle for iPhone for free.
  2. You carry it with you everywhere.
  3. There’s color.
  4. There’s a back-light.
  5. There are a variety of eReader Apps in case you don’t like Kindle for iPhone.
  6. There are thousands of eBooks as Apps.

Here are the benefits of the Kindle -

  1. Much larger screen.
  2. Screen (eInk) optimized for reading.  
  3. Very long battery life.
  4. Does not hurt your eyes.
  5. Read To Me Feature (when not disabled by a Book’s Publisher).
  6. In-built dictionary and Wikipedia Access.
  7. The device is designed for reading.
  8. No distractions.

In many ways the state of eInk puts the Kindle at a huge disadvantage. It still is better for reading.

Going back to the points we made earlier -

  1. People who want a great reading experience will choose the Kindle.
  2. Casual Readers will love the free reading apps on the iPhone.
  3. You can have both.
  4. As Reading on the iPhone keeps getting better (including Apple iReader/Apple Slate) Kindle and other eReaders will keep evolving too. 

If people do not want to spend $259 on a Kindle because reading is not that important for them or they can’t afford it – that’s fine. However, let’s not pretend that it’s because the iPhone is better for reading.

As eReader companies tap into developers and let people innovate eReader features dedicated eReaders will become much better.

It’s impossible to do everything well – the All-In-One Magic Device is a myth

With the App Store and its excellent design the iPhone does a few things exceptionally well and is decent or good at a lot of other things.

However, there are always compromises -

  1. Games etc. need a color screen which makes an LCD necessary and instantly makes long-term reading difficult.
  2. It being a phone makes the small size necessary instantly making a keyboard impossible.
  3. The Camera having to fit and having to be within a certain price range means no zoom and a limited resolution.

And so forth.

As the iPhone becomes good at a million little things it’s also becoming stuck in the ‘good enough’ zone for each of those million little things.

The Apple Slate will fix the size problem. However, the compromises made in trying to be good for everything makes the iPhone incapable of being excellent at most of them.

When an iPhone owner claims an iPhone makes digital cameras (or for that matter, the Kindle) unnecessary, they are letting their love for the iPhone blind them to the fact that it is neither the best camera nor the best eReader. 

People in love with reading and photography are not going to give up Kindles and Cameras.

Actual Numbers – Kindle for iPhone, eBook App Stats

While there is a lot of buzz around eBook Apps on the iPhone and even claims that the iPhone is more significant for reading than eReaders there are few attempts to actually enumerate exactly what the number of active users is, what types of Apps are popular, and how many daily downloads there are.

Well, here are a set of reasonable estimates and hard numbers on reading on the iPhone.  

3 Million Active Users of eBooks Apps

The big data points here are from Flurry, a mobile application analytics company, that estimates 3 million iPhone owners are actively using Book Apps. 

Number of Active eBook Users

Number of Active eBook Users

 They also point out -

  1. eBook apps are the second largest category of Apps in the App Store (they quote Apptism) -

    However, most surprisingly, we have observed that just behind the largest category, games, eBooks has emerged as a strong second (with 14% share).

  2.  300% growth in active users of eBook apps from April to July. 

Note that Kindle for iPhone was released on March 4th, 2009 and there were just .5 million active readers then.

Update: Please do not interpret this post as meaning iPhone is more significant for reading than eReaders. Firstly, at this point we have no idea of how many books these iPhone ‘active’ users are actually buying. Secondly, the Kindle itself is ‘probably’ over a million unit sold and Sony was definitely at 400K units sold in January 2009.

10,000 eBook Apps for iPhone – 12% of Total Apps

The actual number of book apps is -

For the Last Year 

  1. Mobclix –  10,067 eBook Apps. 12% of All Apps. 691 of which are paid and 9,376 are free (93.1%). In comparison Games Apps are 19.7% and Entertainment applications are 15%.
  2. Apptism – 10,124 eBook apps. eBooks as the second biggest category with 14% of total apps.

For the  Last Month

  1. Mobclix- 158 eBook apps added. 11% of apps. 7 paid, 151 free (95.6%). 

Most Popular eBook Apps 

Via Apptism we have these top eBook apps -

Top Free: 

  1. Kindle for iPhone (4th overall in App Store App rankings). As a measure of how significant that is, Amazon Mobile is 97th.
  2. Stanza (24th overall).
  3. B&N eReader (27th).
  4. B&N Bookstore (46th).
  5. eReader (69th). This is around where the top paid eBooks app i.e. Classics would fall.
  6. AudioBooks (75th).
  7. Shakespeare (95th).
  8. Tips and Tricks (Lite version) – The paid version is a bestseller too.
  9. The Curious Case of Benjamin Button.
  10. Wattpad.
  11. Love Poems.
  12. Grimms Fairy Tales.
  13. Bible Stories.
  14. The Scriptures.
  15. KJV Bible Audiobook.
  16. Alice in Wonderland.
  17. Archie: Freshman Year #1.
  18. Book Bazaar (a book search and price comparison engine).
  19. Shortcovers by Indigo Books and Music.
  20. Coleman Campfire Tales.
  21. Alice in Wonderland.
  22. Fairy Tales by Hans Christian Andersen.
  23. The Iliad and The Odyssey by Homer.

Top Paid eBook Apps

  1. Classics – $0.99 (4th overall in iPhone Paid App Rankings).
  2. Tips and Tricks – iPhone Secrets. $0.99 (34th).
  3. Holy Bible KJV – $0.99 (68th).
  4. The Little Red Hen – animated storybook. $0.99 (74th).
  5. Audiobook player – 2,300 Free Books. $0.99 (75th).
  6. 150 Plus Great Books – $1.99 (95th).
  7. Hells Kitchen – $4.99 (149th).
  8. NIV Bible – $7.99.
  9. A Twilight Trivia Book – $0.99.
  10. 23,469 Classics – $1.99.
  11. The Love Dare – $0.99.
  12. Picture of Dorian Gray – $0.99.
  13. Twilight – $9.99
  14. Self Help Classics – $1.99.
  15. GI Joe: Prequel – $0.99.
  16. DreamBook – $0.99.
  17. Easy Recipes – Food and Drink. $0.99.
  18. LDS Scriptures App – $14.99.
  19. New Moon (Twilight) – $9.99.

There seem to be four main types of eBook Apps -

  1. eBook Readers from the big shots i.e. Kindle, B&N, etc.
  2. Paid One off Book Apps.  
  3. One off public domain books.
  4. Paid and Free public domain book readers.

Sales Rank to actual Sales Numbers – Kindle for iPhone has over a million monthly users

Flurry again have the best data (May 2009) -

  1. Average downloads per day for Top Free Apps – 181K a day for #1, 98K a day for #2, 63K a day for #3, 60K a day for #4, 53K a day for #5, 52K a day for #6, and 24K a day for #10.
  2. This would indicate Kindle for iPhone is getting around 60K downloads a day these days (perhaps more).

In terms of active users the most useful data point is from Admob who list statistics for their tracked apps (mostly free apps) -

  1. The top 5% of apps see over 100K active users per month. Given that Kindle is #4 out of 70,000 apps i.e. top .005% it would not be a stretch to say that over a million users a month use Kindle for iPhone. 
  2. The next 14% of apps see 10K to 100K active users per month.  
  3. The middle 27% of apps see 1K to 10K active users per month.

Also interesting is that Joel Comm reveals that when he hit #1 overall in December 2008, his app sold 13,274 units. It had sold 9,760 units on the day it was #2.

That would mean that in about 5.5 months, the daily sales of the #1 iPhone App increased from around 13,000 a day to around 180,000 a day – about 14 times.

Kindle for iPhone Numbers, Conclusions

Just putting these together again -

  1. Kindle for iPhone probably has over a million active users.
  2. It probably gets 60 thousand downloads a day. 
  3. Its rank of #4 absolutely dwarfs the sales rank of Amazon Mobile at #97.
  4. Combine Kindle and Stanza and it would not be a surprise if Amazon has as many active users as all other eBook apps combined.
  5. In short, Kindle and Stanza together give Amazon an almost unassailable lead.
  6. Except for Kindle for iPhone, Stanza, and B&N eReader amongst Free Apps, and Classics amongst Paid Apps, no other eBook Apps make the overall Top 25.
  7. Only 6 of the top 100 paid apps, and 7 of the top 100 free apps are eBook Apps.

Looking at these figures, its no wonder Amazon bought Stanza. iPhone might be more of a reading platform than we realize.

The big missing piece is how many book sales there actually are.

Wonder what Steve Jobs thinks about the fact that 12% of iPhone apps are reading apps and that the #1 and #2 spots are owned by Kindle and Stanza.

Lessons for Ebooks, Kindle – courtesy iPhone App Store

The iPhone App Store holds some valuable lessons for publishers, authors, and even Amazon and the Kindle Store.

There’s a very high chance that as the Kindle Store and ebooks evolve we face the very same issues that iPhone App developers face today.

Lesson #1: There’s a relentless race to the bottom

Take a look at what iPhone App developers have to say -

AppCubby: With the average price in the App Store now at $1.39 for games and $2.58 for all apps, the App Store is killing the value perception of mobile software shoppers.

He also adds: I’m finally willing to concede that for most apps, the price ceiling is now $5.

Craig Hockenberry – developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes. This proliferation of 99¢ “ringtone apps” is affecting our product development.

When there are extremely low barriers to entry and loads of people are competing, they end up competing on price. 

This is why we’re seeing some Independent authors selling their books for $1 just to be able to create a brand. This directly results in -

  1. Unrealistic expectations developing about ebook prices.
  2. Pressure on every independent author to sell at $1.

This will, sooner or later, translate into pressure on small and big authors and publishers.

Note: The iPhone App Store has the added downward pressure inducer of Free Apps. Thankfully, the Kindle Store has a $1 price limit. This ensures ‘Free’ marketing doesn’t completely destroy the value of writing.

Lesson #2: Bestseller Lists and ‘Getting Featured’ become ridiculously important

There are currently over 65,000 iPhone Apps. There are over 100,000 registered iPhone App Developers.

There are only 3 ways for them to get attention -

  1. Sell a lot and hit the Bestseller lists. Difficult, given there are 64,999 other apps. 
  2. Get featured by Apple in the ‘What’s New’ or ‘Staff Picks’ sections.  
  3. Get featured by blogs, newspapers, TV channels, etc.

This complaint from the creator of PCalc iPhone App should sound familiar to Kindle owners -

As it stands, the App Store is too crowded to find anything if you don’t know exactly what you are looking for by name.

iPhone App Developers are finding that their options are limited -

AppCubby:  the only methods of marketing I’ve found to be measurably cost effective are working with the press and getting featured by Apple, both of which are essentially free, but incredibly hard to guarantee.

The closest thing I’ve seen to a “business model” for marketing iPhone apps is to advertise like crazy until you get into the top 50 and once you’re there, the top 50 list will start generating it’s own buzz. Then, just throttle the advertising to keep it in the top 50.

The Kindle Store faces the same search and discovery problem. Amazon does a better job of diving into niches – however, it’s still rudimentary.

Also, putting free books into the main bestseller list is an issue.

Lesson #3: It’s not easy making a living off of Apps for Individual Developers

This, although a result of the first, is important enough to consider separately.

Safe from the Losing Fight pointed out in end 2008 -

I’m unconvinced that having one or two iPhone applications as a sole source of revenue is sustainable. Earning $4,000/year seems like the most likely scenario (at least after the first year).

We now have a lot more apps in the App Store and huge companies like Skype, ESPN, and Google entering (actually Google Voice was barred from the App Store).

People look at an app like SGN’s F.A.S.T. that made $1 million in 6 weeks and assume their app will make a million too. However, they miss out things like -

  1. Social Gaming Network is a full-fledged company with $15 million in funding (that it got in May 2008).  
  2. It has a million plus people that use its Facebook apps – people that it can advertise their iPhone apps to for free.
  3. It has 24 employees.  
  4. There’s a lot of history – SGN’s founder Shervin Peshavar had built up to 24 million unique visitors a month BEFORE he ever started on Apps.

A lot of the successes in the iPhone App Store are really big companies like ESPN and companies founded by industry veterans like SGN.

There are very few individual app developers making a living, and even fewer getting rich.

Thoughts – Lessons ebooks and Kindle Store could learn

Unless the Kindle Store and eBook Stores are careful we’ll result in the same situation i.e. instead of a democratization we get randomization.

There are a few things obviously needed –  

  1. Tighter price controls i.e. not let authors price themselves into oblivion.
  2. Better Search and Discovery that lets readers find what is of interest to them -

    Perhaps create a Kindle Store per user i.e. something that focuses on the 3% of books that the individual user is actually interested in, and the additional 2% they might be interested in.

  3. Create a mechanism that gives independent authors a fair chance and perhaps even lets them stay independent.  

Evolving the Kindle Store intelligently is an almost intractable problem, and it might not even be in Amazon’s favor to do it (because they could, like Apple, just profit from people working for their platform).

However, here’s to hoping Amazon and the Kindle Store find a solution that benefits readers and authors.


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