Edible Apple

Newsweek recently published an article premised on the argument that most developers in the iTunes app store, contrary to popular public opinion, aren’t in fact getting rich.  The problem with this argument is that it rests entirely on the ill-conceived notion that all developers should be getting rich, simply by virtue of releasing an iPhone app on iTunes.

The iTunes App Store has been extremely lucrative for some, and has even prompted many to abandon their day jobs in the hopes of churning out the next big iPhone hit.  But somehow along the way, perception of the iTunes App Store has morphed into a marketplace where people think that everybody is making it big, when in reality, the iTunes App Store simply gives anybody the opportunity to make it big.  And that’s a big difference.

Newsweek naturally begins with the story of Steve Demeter, a computer programmer who famously made over $250,000 in just 2 months with his popular iPhone app, Trism.  Demeter’s success was so inspiring that Apple chose to profile him on their website and also at the most recent WWDC.  But then the story notes that Demeter was really able to make it big by investing in Palm when its shares were really low.  That’s all well and good, but how exactly does that prove that the app store isn’t a potentially lucrative endeavor?  Because Demeter made more through investments than he did with Trism?  Call me crazy, but $250,000 in 2 months is the definition of hitting the jackpot.

So thus far it’s Reality:1 and Newsweek 0.

Next, Newsweek profiles Davd Barnard, a developer who quit his job and borrowed a ton of money to build Trip Cubby.  The app garnered critical acclaim, earned a spot on the highly desirable and visible “What’s Hot” list on iTunes, and raked in impressive $45,000 in less than 3 months.  But all told, the app was a losing venture for Barnard who spent over $74,000 during the apps development on things like programmers, marketing, and legal expenses.

But the story doesn’t end there.

Barnard, undeterred by debt, went on to develop Gas Cubby, an app which went on to earn him well over $200,000 in revenues, less expenses which he claims total more than $100,000.  Still, that’s quite a lot of moolah to take home.

Reality 2: Newsweek 0.

But Barnard’s story is illustrative of a common misconception about the iTunes App Store – namely that everyone is entitled to succeed simply because they have a useful app, business logic be damned.

If I know I can produce an app that will earn me a projected $500,000 in revenue, but actually developing that app would cost around $700,000, going forward with the project would be idiotic, no matter how useful or popular that app might be.

And you know what, the iTunes App Store is a business.  There’s no guarantee of success.  Devoting a lot of resources towards development is risky.  Quitting your day job to program full time for the platform is risky.  There’s no getting around it, which is why a Newsweek article on the topic seems a bit like stating the obvious.

Interestingly, Newsweek brings up the story of iShoot developer Ethan Nichols, who was one of the first iPhone success stories.

Today, the App Store icon from North Carolina is himself staring down the barrel of a gun, struggling to produce another hit game after iShoot was buried by competitors and copycats. “It’s terrifying,” says Nicholas, who says he is “not a millionaire” and describes iShoot’s success as “pure luck.” Despite spending eight months and more than six figures developing a second shooting game to be released this month, he says that he is still “very worried about being a one-hit wonder.”

A valid concern, to be sure, but that scenario is no different from the millions of entrepeneurs who enter a multitude of business ventures each and every year.  Hard work, in and of itself, does not ensure profitability.  You have to have a product that people are willing to pay for, and unfortunately, betting the farm on what the public may or may not be interested in is always a risky proposition.  The stakes are high, but so are the rewards.  Business 101.

In the end, its hard to take pieces like the one in Newsweek seriously because they’re premised on the faulty assumption that because some people succeed on the iTunes App Store, everyone should be profiting and watching the money roll in by the thousands.

The fact of the matter is that the iTunes App Store has put everybody on a level playing field.  You don’t need to work for Gameloft to help develop a popular iPhone title.  You can work on it by yourself on sleepless nights spent in a quiet apartment.  You might put thousands of man-hours into the project and actually end up with a final product that works – and in the end, you might only get $500 for your efforts, if that.  But the key thing about the app store is that it actually gives you ( a small guard) the opportunity to get in a game dominated by 7-footers.  It gives you the opportunity to to strike it rich.  Actually accomplishing that, however, is entirely different story.