The Mac Marketplace - MacHeist Afterthoughts

by Oliver Breidenbach

Congratulations to Phillip Ryu and John Casasanta for the runaway success of MacHeist. In just seven days, they sold more than 16,000 of their shareware app bundles with a gross revenue of almost $750,000 (estimate based on published $185,000 donated to charity representing 25% of the revenue). It surely exceeded everyone's expectations and probably Phillip's and John's wildest dreams.

It is frankly astonishing to learn that Mac users are prepared to spend this kind of money on shareware apps if they are presented in an interesting way. It also shows that Mac shareware app developers could make a lot more money if they would band together. After all, this is about $75,000 per app in a single week and I am sure that not very many (if any at all) of the participating developers ever sold as much in a single week. In addition to that it seems that the regular revenue at least for us was not less than usual. So this really is on top. Those $75,000 would be a nice boost to our yearly revenue.

So what do we learn from it?


  • Bundles of say 5 to 10 apps priced at slightly more than the most expensive app (a slight adjustment I would make to the current setup) are really appealing to customers and make it much more likely that they actually buy the product, even if they only imagine a marginal usefullness of the other apps in the bundle.

  • Getting exposure is much easier for the bundle than for the individual app. If we can avoid building factions and get more developers to support this, the exposure could even be bigger.

  • Advertising for such bundles would also be much more cost effective.



There are also a couple of points to give thought about:


  • Although I got emails from many people claiming that they never bought "shareware" apps before and a very small number of the 18,000 people had previously been in our database, I think that MacHeist still did mostly reach the same kind of customers that we had before. Apple sells about 1.8 million Macs a quarter, so the 16,000 represent a bit less than 1% of the Mac sales of the Quarter. Or 0.2% of the year.

  • 16,000 customers in just 7 days require a lot of handling and not everything on our side went smoothly, mostly because we expected much less. In addition, the increasing spamfileritis creates many problems in actually delivering the licenses to the customers.



So, how to move on?

I think a Mac Shareware Store is called for. A place where customers find interesting bundles, that has an affiliate system to reward developers who drive traffic to the platform, a system where people earn mileage points towards future purchases, accepts all kinds of payments and puts gift-card-like displays into the Apple Retail Stores. Add to that a MacUpdate/Versiontracker/Mac Products Guide like functionality and the talent of a Phillip Ryu and John Casasanta for marketing. Something like the Windows Marketplace.*

The economics of a place like that would have to be a bit different than that of the MacHeist, but instead of a one off pot luck shot it would probably be a solid business with a good revenue stream. To make it fair, the company could sell stock to the developers who list their products. 40%-50% of revenue could go to the developers, 20%-30% into marketing and advertising, 20% into operations and 10% into profit for the owners.

In fact it should be much like iTunes. An app pre-installed on all 1.8 million Macs sold in a quarter, with an editorial content, built-in download system and copy protection. You know, I always wondered what the "Mac OS X Software..." menu entry in the Apple menu is about.

* Before you fire up your flamethrowers: Yes, it does not have Phillip or John working for it; Yes, Vista is a Mac OS X rippoff; I just mention it because it is a basically good idea and has many of the attributes I would like to see in a Mac Market Place. Apple,... do ...something!

9 Comments

umijin
2006-12-18 03:41:17
I don't think everyone was or is impressed by MacHeist.


As a consumer, I found it a waste of time, and would rather purchase said apps at a discount, as MacZot offers. I feel MacZot does a better job of improving visibility of small developer apps, as does MacAppADay, albeit in a different way.


Having said that I did purchase the MacHeist bundle at the full cost afterwards. I did so because a couple of the apps were of use to me, and the charity hook. It was cool to choose my charity. And 25% of 49.95 is more than what the iPod Red (Product) donates per iPod, IIRC.

Gazzer
2006-12-18 08:43:09
Obviously a great success for someone. As the MacHeist was billed as 'for the benefit of the Mac developer', and therefore many of the people buying like myself felt that the developers were benefitting too for each sale, I trust that was in fact the case and contributing developers reaped a fair share of the profits.
Mario
2006-12-18 09:54:54
I can be counted as the one that almost never buys shareware but bought the MacHeist bundle. I really wanted 2 of the apps and the rest was just a nice addition. I also bought a few heavily discounted apps from MacZot - so this type of promotion really appeals to me.
dburney
2006-12-18 10:14:29
John Grubber breaks this down on daringfireball.net - well worth the read if you assume the developers are reaping the benefit.
Jamie
2006-12-18 12:31:00
Im not one to hate on a marketer making money like this, but they have made half a MILLION yet the developers got 5,000 each.


Surely, there has to be an issue of ethics here. Thats just obscene.

John Allsopp
2006-12-19 02:26:57
There is no such thing as "shareware" anymore. Everything is shareware. Every application comes as some kind of demo download - though ironically the developers of some very expensive apps don't have the intestinal fortitiude to give you full features for a reasonable period of time.


So if you don't buy shareware, you are mistaken. You buy shareware, you just don't think of it like that. And if you don't buy software that doesn't come shrinkwrapped in stores on principle, you are simply an idiot. Why wouldn't you buy software you can try fully for an extended period of time, typically at a fraction of the price of the "big guys" software on principle?


Shareware won. It's how software gets sold these days. Here's to the ....

Peter Jaros
2006-12-19 08:29:57
Oliver, you make an excellent point. Regardless of how you feel about the financial breakdown of the profits, the user community spent a lot of money on this. That alone is good news for the community.


Now, in the future, I'd like to see better ways to take advantage of marketing this good without giving the marketers almost the whole pie. I guess that's the next experiment.

Hamish
2006-12-19 17:18:21
All my shareware has been bought and paid for. Quite often I would be interested in buying / upgrading but for the $.
So MacHeist was "nice at the price" - a chance to get a few good apps at the price I was willing to pay.


Plus, if the upgrade price to the next version is right, then the developers will get my $ for this.


Just my $0.02 (probably about how much each developer got per serial number)

Jan Peters
2006-12-20 15:53:13
I think the macheist the smartest thing from a developers side: I will only ever use three of the programs (DevonTHINK, fotomagico & delicious library) and would not even have tried out or known about 9 of them without the Heist (and I read MacCentral+MacRumors+TUAW daily). The biggest success is getting programs known to people. While I do not pay for comercial software, I like paying for good shareware - and have bought a fair amount before. In the end, such packages really get me to explore more shareware...