[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
RE: The App Store Effect
The "app store effect" is much more complex than Pogue suggests.
Very surprising, as Pogue is usually a very well-informed
commentator.
The problem with applying a model of low prices to specialized
media such as research publications is that the content itself,
not only the price and the format, determines the size of the
market. How much larger would the readership of "The Journal of
Retinal Surgery" be if it were half the price or free? The
elasticity of the market is not very great. There would be some
increase in readership, but in many cases (probably most and
possibly all) the increase in readership would not offset the
decline in margin.
There are exceptions to this. In consumer media there is no
question that lower prices bring in more users or customers.
Even in research publications, there are untapped audiences for
certain categories. For example, I personally might want to read
an occasional article in "The Journal of the American Historical
Society," to which I do not subscribe, nor have I any training as
a historian. But there is nothing that could induce me to read a
journal of statistical economics at any price.
I want to be very clear that in taking exception to the extension
of Pogue's comments, I am not suggesting that the world of
research publications is rosy or that all publishers have equal
skill in establishing pricing models.
Joe Esposito
-----Original Message-----
From: owner-liblicense-l@lists.yale.edu
[mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of Mark Funk
Sent: Friday, June 12, 2009 7:06 PM
To: liblicense-l@lists.yale.edu
Subject: The App Store Effect
Yesterday, New York Times columnist David Pogue wrote about the
iPhone's "App Store Effect."
http://www.nytimes.com/2009/06/11/technology/personaltech/11pogue-email.html
Pogue was amazed that Apple will be selling its upcoming version
of OS X (called Snow Leopard) for only $29, instead of the usual
$130. After listing three reasons why this might be so, he
settles on a final possible reason: the App Store Effect.
> When programmers write iPhone programs, Apple encourages them
> to set a price that's really low--like free, or, if you insist,
> $1. As a result, the huge majority of programs in that store
> are impulse buys. Nobody blinks at $1; it's less than a soda,
> and it's something you'll have for a long time. Price is
> virtually no barrier at all.
>
> That's quite a bit different from any other software category.
> Even shareware usually starts at $20. There's a huge
> psychological difference between $1 and $20.
>
> The App Store Effect says this: if you cut a software program's
> price in half, you sell far more than twice as many copies. If
> you cut it to one-tenth, you sell far more than 10 times as
> many. And so on.
>
> It's a little counter-intuitive, but this principle has paid
> off beyond anyone's wildest dreams. The numbers are staggering:
> as you've probably heard, iPhone/iPod Touch fans downloaded 1
> billion apps within 9 months. Some iPhone programmers have
> become millionaires within months--yes, selling $1
> software--because of this crazy math. $20 may sound like more
> than $1, but not when 1,000 times more people buy at $1.
>
> I can't help wondering if Apple has the App Store effect in the
> back of its mind with Snow Leopard. If the previous Mac OS X
> version sold for $130, then Apple would need five times as many
> Snow Leopard sales to equal the revenue.
>
> The App Store Effect says: Oh, baby, that's a no-brainer.
Granted, STM journals are hardly impulse buys. But we're all too
familiar with the death spiral of increasing journal prices
leading to cancellations which leads to increasing journal
prices, leading to more cancellations. Couldn't there be an
opposite effect? In a normal economy (not now, unfortunately),
could there be an App Store Effect for publishers if journal
prices were slashed instead of increased? I'm not suggesting that
STM journals be priced at $1. But a significant reduction of the
current prices would practically eliminate cancellations and
absolutely cause more subscriptions. Librarians desperately want
to buy more resources, it's just that we can't afford them. When
they become affordable, we buy more.
Yes, I know: "That is so naive." "You don't understand how
publishing works." "That would never work in reality." What I do
know is that Apple's App Store is demonstrating an economic
theory that actually works in the real world, and in the process
not only are millions of copies of applications being sold, their
authors are making a ton of money--all because of low prices.
Mark Funk
Head, Resource Management - Collections
Weill Cornell Medical Library
1300 York Avenue
New York, NY 10065-4805
mefunk@med.cornell.edu