February 9, 2011 at 11:47 am

Mac App Store Produces Thousandaires by Selling Software Like Music

As surprising as it may be to longtime computing enthusiasts, the mobile phone has become the template for the desktop computer.

Witness the rise of the Mac App Store, where apps that run on Macs are sold the same way that Apple sells music for the iPod and apps for the iPhone: in one centralized store, with Apple claiming 30 percent of the resulting revenue. Apple reportedly likes the idea so much that it is considering ending its sale of boxed software in its stores and on its website, routing everything through the Mac App Store instead.

One might expect software developers to recoil from the notion of a single gatekeeper skimming 30 percent of their revenue, but the Mac App developers in the music category we canvassed for this story were unanimous in their praise for the Mac App Store. They credit the one-month-old Mac App Store with increasing their revenue by orders of magnitude in its first month of operation — even after Apple takes its healthy cut.

Real money is at stake here, because Mac Apps are, for the most part, not free. As of today, the Mac App Store lists 125 music apps, for instance; 11 are available gratis, while many of the rest generate healthy, if not quite hedge-fund-manager-level, paychecks for their creators.

Mac App Store's music app selectionThe top-ranked paid music app in the Mac App Store, Bubble Harp ($2), sells about 300 copies per weekday and 400 on weekend days, according to its developer, Scott Snibbe (more commentary from music Mac App developers). That makes it the fifth-highest-grossing app in the music section, and the number 16 paid app in the Mac App Store overall.

Second-place Ringer, ranging between number 20 and number 30 in the overall rankings, sells between 200 and 300 copies per day, also at $2 a pop. Number six Pyrcast ($5) was sold about a hundred times in its first three days in the Mac App Store, while number seven, the $50 Capo, sold 80 to 90 copies per day.

The $50 Capo, like many other popular Mac Apps, costs far more than a typical iOS app. It generates approximately $4,000 per day, making it the third-highest-grossing music app after algoriddim djay (which didn’t respond to our query) and Apple’s own GarageBand.

If Capo sales continue at that clip, it will generate about $1 million dollars this year after Apple’s cut, but it’s an outlier. Most Mac App developers we spoke with are on a clip to be gainfully employed thousandaires, rather than retiring millionaires, in part because the Mac App Store currently does much less business than the iTunes iOS app store.

Bubble Harp, the top-ranked paid music app in the Mac App Store, sold approximately as many copies as the 20th-ranked Music Theory Pro in the music category of the iTunes App Store. Still, Snibbe stands to make about $160K this year from Bubble Harp after Apple’s 30 percent cut.

These are still early days for the Mac App Store, but every Mac desktop and laptop running Snow Leopard (and presumably future versions of OS X) includes a prominent link to the Mac App Store within Apple’s operating system. The same approach worked quite well for Microsoft, which made Internet Explorer the most popular browser in the world by bundling it onto Windows machines.

Apple could similarly risk antitrust scrutiny by bundling its software store with its operating system, but for now, it’s smooth sailing. Developers are more than happy to part with Apple’s 30 percent tithe because the Mac App Store is increasing their sales volume so much.

“From Ringer’s sales perspective, the Mac App Store has become the way people buy the product,” said its developer, Jon Steinmetz. “People buy Ringer from the Mac App Store vs. our website at around a ratio of 50 to 1… This will become the primary way that consumers will buy software. It is just too easy compared with the alternatives.”

But Steinmetz, a former employee of the large software firm Adobe, said he does not expect high-priced software to be sold through the Mac App Store, even as every other type of software becomes distributed there, because for companies like that, Apple’s 30 percent is too onerous.

“I worked for Adobe for 13.5 years on such products as ImageReady and Lightroom before leaving to run my own company,” said Steinmetz. “I would be surprised if they put their more expensive products, like the suites, on the Mac App Store.” (To be clear, he noted that he has no inside knowledge of Adobe’s plans.)

The reason for the Mac App Store’s early success with other types of software is counter-intuitive: By appointing itself gatekeeper between developers and consumers, Apple actually brought them closer together because consumers no longer need to seek out software on the web. A developer need only have software and a Mac App Store seller’s account to reach millions of potential customers, now that the iTunes model, which began as a way to sell music, has been applied to mobile and now desktop software.

“Certainly, there is no better way to distribute desktop apps than with the Mac App Store,” said Snibbe (more developer commentary). “For an individual developer/artist like myself, the app store creates an opportunity that never existed before: an opportunity to directly distribute these experiences to the general public. I actually pitched these types of programs to a variety of executives and funders in the late nineties and got no takers. They all thought [my] ideas were ‘useless.’”

“Some ideas you need to bring to the public directly yourself to prove their viability,” he added. “I often tell people my apps are useless programs — as useless as a song, a short story, or a painting.”