In a panel at the mediabistro Publishing App Expo today, app publishers discussed how to create business models out of apps.
On the panel, developers discussed Apple’s controversial in-app selling rules, when Apple began demanding a 30% royalty on any content sold within apps. For Jenny Lam, co-founder of Jackson Fish Market, a startup that designs children’s eBooks, said that this was bad news when Apple first changed their rules. But she said that she now sees this as a marketing cost. “We thought that that cut would drain us of all of our profit, but actually the App Store as a marketplace is almost our number 1 source of visitors, so now we realize it is just a marketing cost,” said Tam.
David Steinberger, Co-founder/CEO of comiXology, said that he finds Apple’s in-app royalty to be a marketing cost. “I see it as a customer acquisition cost,” he said. He also encouraged publishers to build up their own customer database within the app, so that customers will have accounts with your business. This way, they can access their account with your company on any device.
Lam also shared the advice that app publishers should give away some content for free. After trying to give away promo codes for apps to bloggers and the press and having little downloads Lam, whose company has almost 60 eBook apps available, discovered that giving away some content was a better model.
On the panel, Steinberger talked about the importance of good customer service. His company uses Twitter, Facebook and Amazon forums to trouble shoot issues and respond in realtime. Steinberger, whose company now powers apps for Marvel and DC Comics, also recommends that app developers choose strategic partners can help you build your name. “If you are scrappy, you have to understand what the publisher’s fears are,” he said.