Another iTunes App Store Puzzle

The iTunes App Store has in less than a year become one of the most significant digital marketplaces ever. There is over a billion downloads and 35,000 apps to choose from. It is one of the most liquid markets ever seen on both the demand and supply side and it is only embryonic.

So another puzzle emerged today. With so many apps, you would think there would be big opportunities for Apple to profit from priority. Apps are featured on the front page of the App Store and it is well-known that this spikes downloads. But they are also featured on iPhone commercials and in-store promotions. There have been calls for some better system of giving priority and I speculated whether a position auction might be worthwhile.

According to this report in the New York Times, that publicity does come for free.

“Apple doesn’t want the money. It’s a level playing field,” said Matt Murphy, a venture capitalist at Kleiner Perkins Caufield & Byers. If Apple likes the app, he added, “it doesn’t matter if you’re a one-person or a 10,000-person company; they’ll put it in ‘New’ or ‘What’s Hot.’ ”

… “For 99 bucks a year, Apple gives you the ability to sell software to millions,” Mr. Scott said. “They solved the distribution problem, but they did not solve the marketing problem for developers.”

Other sites fill the gap. is one I follow. But it is curious that Apple have not developed a Google-like mechanism of giving high position both to Apps that deserve it on a non-monetary metric and others who are willing to bid for the slot.

2 thoughts on “Another iTunes App Store Puzzle”

  1. Surely this is obvious Josh? For Google, the advertising is its primary reveue stream and it seeks to maximise it, including by forcing advertisers to bid for spots.

    For Apple, on the other hand, the third party applications are just complements that enhance the value of the company’s products. Apple’s interest lies in maximising the value of those applications to users rather than maximising the revenue it derives from them.


  2. Did you read ‘Murdoch outlines vision for digital newspaper delivery’ in The Australian’?
    He said “You’ll be able to get … everything on your Blackberry, or Palm, or whatever …”
    Do you think his omission of iPhone was just a lapse, or has he dismissed thought of a business model for News that includes Apple?


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