William Gill

Here’s an interesting statistic.

The top 20 grossing apps in the iOS App Store are all free apps, according to online app analytics platform Distimo.

In fact, from the top 100 grossing apps, only 9 of them are paid apps, with prices ranging from $0.99 to $8.99, but most hovering around the $2.99 mark.

Source: Distimo.

The Google Play store is similar. There, only three apps in the top 100 grossing apps are paid, with the first paid app coming in at position 33.

Source: Distimo.

The revenue for these free apps seems to be coming predominantly from in app purchases.

It certainly seems to validate the idea of the freemium model, and proves that customers are willing to pay for in-app purchases to upgrade their experiences.

The Guardian published a very eye-opening piece yesterday on the usage of the Google Maps app on iOS devices. The summary is: despite the massive consumer backlash when Apple ousted Google and launched Apple Maps in iOS6, and the huge number of downloads the Google Maps iOS app attracted, usage of Google’s app has been falling steadily. It is now estimated that only 6M users used the Google Maps app in September – a loss of 23M users. Meanwhile 35M people used the built-in Apple Maps app.

The lesson here is that consumers are not always willing to sacrifice convenience for a better experience.

If your app or service wants to compete against functionality that’s built into the system, then the experience must not just be better, but must be an order of magnitude better to encourage people to switch. Or, ideally, it needs to be something completely different.

You won’t change default user behaviour and you can’t compete against baked-in functionality. Sure, a portion of power users might go to the effort of using an extra app for certain key tasks – but that won’t be the majority of users.

Think about it: why use a special app for managing your calendar when your phone’s app is good enough?

What else does this tell us?

It tells us that the OS platforms have a clear advantage on engagement for built-in experiences – and that the engagement platforms that can attract usage independently from the OS platforms are those which need to be platform agnostic to work – the best example being messaging apps. Whatsapp would have a fraction of the value if it only ran on iOS. It needs to be on all platforms fulfil the promise to the user.

This is maybe Google’s advantage over Apple. Google is about reach, and is happy to provide services that work on all mobile OS platforms. Apple, on the other hand, is set up to keep their proprietary experiences within the walled garden… which is why there is no (official) iCloud app for Android, but there is are Gmail, Google Drive, Google+ and other Google apps for iOS.

In the mobile value chain, the long(er)-term strategic differentiators will be those built on engagement platforms that cross across the mobile OS platforms. Or, said another way: the apps that will drive large numbers of users will be engagement platforms built around utility that is not, or cannot, be provided by the OS.

Google is trying this with Google+.

So why doesn’t Apple build a messaging service, for example?

Well, they have one – iMessage – but it only works between other iOS devices, and as such will never be a threat to Whatsapp, or indeed Google. A more interesting question is: how long before Apple makes iMessage available as an Android app? Would Apple take on the expense in order to drive further platform engagement and possibly convert a few more Android users?

So far they don’t need to – but as social messaging platforms become distribution channels, they may start to feel the threat.

I’m not a designer by trade (which means I have never been to design school or worked as a designer professionally), but I spend a lot of time designing things – websites, apps, experiences, presentations, flyers, posters and so on. The tools and resources needed to design beautiful things are more accessible than they have ever been before.

But what does this mean for designers? I mean, for people who call themselves designers; who are designers by profession?

I don’t think the design discipline is at risk of disappearing; of being absorbed by the greater masses. It is, however, becoming increasingly democratised and accessible. The lines between amateur and professional are blurred. That doesn’t force the designer into another profession – but it does force the designer to articulate his value in ways that differentiate him from the crowd.

Try this for a parallel: take a look at journalism. Journalism was also once a ‘closed system’, now it is hugely open and accessible. Journalism once required a degree in arts, journalism or literature, and your career started in the pit of some local rag newspaper writing articles by the thousands on local fairs, traffic jams and pub brawls. Now anyone has the ability to write something that reaches a million people instantly – and you don’t even need to be able to write a grammatically correct sentence to do it.

Modern forms of democratised media are changing traditional print journalism in big and irreversible ways – a situation nobody denies but nobody has a solution for. Partly because, I think, there is no ‘solution’. This isn’t a problem to be solved – it’s evolution.

What enabled this disruption? The internet, of course. But abstract it a different way and you see it was enabled by ubiquitous access to tools; tools that facilitate both creation and distribution.

Do should journalists start worrying about their jobs? Will they be replaced by citizen journalists and bloggers and twitterers? Maybe… it’s clearly happening faster than they think. Sure, a random blogger sitting in their bedroom cannot replace the TIME journalist who goes behind the lines in Afghanistan, Syria or wherever. But when a witness to a disaster or tragedy can upload a video to YouTube in seconds (think the recent chemical weapons attack in Syria), the role of that TIME journalist changes.

There’s another example that you might not have thought of: software engineering. Back in “my day”, you needed a computer engineering degree to write software (I know, I have one). Code was complicated and inaccessible. Now, anyone can write an app or build a website in minutes. There are frameworks and programs that let you build an app with a WYSIWYG interface and publish it directly to the store. There are code camps for designers and even code camps for CEOs.

So as a software engineer, does this make your profession less valuable? Maybe, maybe not. Right now there’s enough complexity in the growing infrastructure to keep plenty of software engineers busy (someone needs to build the frameworks and WYSIWYG editors, right?). But what it certainly means is that the lines between amateur and professional are becoming blurred. And why? Tools: tools that facilitate creation and distribution.

We can debate for hours whether using a WYSIWYG application framework to publish an app makes you a ‘software engineer’ or not. But in the end, does it matter? If the goal was to publish a well-crafted, functioning app, who cares if you’re a ‘software engineer’ or not?

So too with design. Like with software and journalism, the tools for the production of design, the availability of resources and materials and means for distribution have made design an accessible discipline. The lines between amateur and professional have blurred.

If I was an automobile designer, I wouldn’t be too worried that the average joe would put my job at risk. Yet. But what about the future? Imagine a time when you can design and build your own car with special software and a 3D printer? What role does the automobile designer have then? Would there still be automobile designers?

Professions evolve. You had to be a computer scientist to operate the first computers, now there’s one in your pocket. I also hear there used to be a profession called “Typesetter”. Where are they now?

My point is not that design is at risk of becoming extinct… on the contrary. Design is growing, evolving – it’s reaching the masses.

So where does that leave designers? I’d say: learn the lesson the journalists struggled to learn: lamenting the state of things and reminiscing on the days when only a ‘designer’ could design won’t stop help you any more than it helped the Typesetters. Embrace the evolution – see it as an opportunity to influence how millions (billions?) of people design, create and enjoy the world around them.

At this weekend’s Product Camp in Berlin I held an interesting session on Monetising Consumer Experiences. The discussion was good and we had great input and perspectives from everyone in the room.

Here are my notes from the session:

Why do we care?

Every product manager needs to understand their business model. Remember, an idea is not a product – and it’s certainly not a business. Irrespective of who ‘owns’ business strategy in your organisation – whether it’s you, your CEO or a distant corporate strategy department – it’s critical that you understand the complete business model your product is a part of. A customer’s journey through your product doesn’t just start at the welcome screen of your app, website or whatever.

Monetisation models

• User pays
• Pay once per app/device/download
  The user pays one fee for each device they install the app on. Example: Angry Birds. The three main mobile ecosystems all have payment platforms built in, but beware: they’ll all take their 30% pound of flesh on every transaction.
• Pay once for all devices
  The user pays once, and can use the app on any device they choose. Example: Diablo 3, or generally media content like eBooks or music.
• Subscription
  The user pays a recurring fee which generally allows the user to access the app or service on any device. This model is most often seen with services, such as Evernote – but also traditional apps like Feedly have adopted the model.
• In-app advertising
  The mainstay of traditional app monetisation. All three major mobile ecosystems offer an ad platform as part of the SDK, allowing app developers really easy access to ad content and revenue.
• Demo/Trial
  Make your app available to users for free with a limited feature set, for a limited time, or a combination of both. The idea is to make the value of your app available in advance to make it easier for users to know what they’re in for and to help with the purchase decision. This method is great for apps or services where the value is hard to imagine/quantify without actually experiencing it.
• Freemium
  In contrast to the demo/trial model, the freemium model aims to give all users a fully-functional, completely free app or service. The monetisation lies in the percentage of users who are willing to pay for a premium level of service. Here Evernote is another great example. Everyone has access to the basic app and service model, all for free. Those interested in the range of ‘power features’ pay a yearly subscription fee. Another example is Spotify.
• Commission/Referrals
• Lead generation
  If your product can identify sales leads for another organisation, you might be able to sell those qualified sales leads to other interested parties.
• Affiliate model
  Take a commission/fee for forwarding a consumer who makes a purchase. There are many examples of this in the travel industry, where websites or products referring consumers who purchase a flight or a hotel take a percentage share of the revenue. Another example is Amazon, where as an ‘Amazon affiliate’ you can earn a small commission when you refer an Amazon product to a customer who buys it. This is also a model being used by Pinterest to monetise, where by the Pinterest experience is used not just as a product discovery portal, but also connects consumers with retailers (online and offline) who sell the product.
• Content/Data monetisation
  If you can generate market insights through the usage of your data, you might be able to sell that to other companies or advertisers.
• Bundling
  Group additional similar services together to increase the overall value, such that you can reach a point where a consumer is more likely/able to pay. A great recent example: Amazon’s planned Matchbook service, which bundles traditional print copies of books with their eBook equivalent for free or for a nominal fee.
• Donations
  Popular among indie developers, you can try appealing to your users’ sense of charity.
• Licencing
  If your product can fill a need within another company’s product portfolio, perhaps you can provide your app or experience as a white-label offer for a licence fee.

Whatever strategy you use, each requires you to understand where the value is, and what value a user is likely to be willing to pay for.

Also remember to ‘zoom’ out and look at the broader ecosystem. Who else is benefiting from your product? Who else should, or could, pay?

Challenges

• Everybody wants free.
• You need traffic before you can monetise it.
• Changing or updating existing business models can cannibalise existing business.
• Advertising
• Old methods of presenting online or in-app advertising are becoming less effective.
• UX designers and even product managers generally don’t like advertising in their products (ok, this is a gross generalisation), and there is often a perception that in-experience advertising degrades the quality of the experience for the user.
• Hyper-targeted advertising appears to be the silver bullet for marketers, but is it all it’s cracked up to be?
• Effective targeting is hard. Real hard. Even if you’re facebook – and most of us aren’t – the best targeting is nothing more than an estimated guess. The mobile marketer’s wet dream is the case: It’s 8:30am and sunny. You’re on the way to work. We know you like coffee in the morning, and there is a cafe just one block away that your friend really likes, and they have a deal right now. Ping! Your mobile sends you a notification that solves your need not only for coffee, but a new cafe, before you even knew you were thirsty. The problem? We don’t know that you want a coffee – we can only guess. If you don’t want a coffee right then in that moment, then that notification is just more noise that you’re likely to quickly disable.
• Do people really want to be hyper-targeted? Lots of evidence and many studies point to increasing consumer distrust of services who try to know people better than they know themselves, especially when that knowledge is used to push products and services.

UPDATE: Added Amazon Matchbook service as example of Bundling.

You’re lucky to have them.

Without your customers you have no sales, no revenue and no business.

When the line at the post office stretches out of the door and into the street, I think: “How can I avoid doing my business here next time?”

When my cable goes down and it takes 30 minutes to contact tech support, I think: “What other cable providers are there?”

When an app I paid for (with my money, or with my time, and it’s irrelevant which) is slow or hard to use, when it crashes, when it doesn’t work, I think: “Is there another app that will do what I need to do?”

Your customers always have another option. Particularly for products that create needs or activate latent needs (as do many of the apps and services that exist in the modern consumer space), not fulfilling the need is a perfectly reasonable option for most people.

Beware the hubris of thinking that your customers are lucky to have you.

Just last week I posted about how the TV and film industries can battle piracy by embracing the internet as an on-demand content delivery mechanism. I compared it to the Spotify model and suggested that if you just make television available to people anytime and anywhere they want it, on any device at a fair price, then people will pay for it. Make it easier to consume it legally than illegally, and people will “do the right thing”.

Kevin Spacey, star and co-producer of the Netflix hit House of Cards delivered the keynote address to the Edinburgh International Television Festival recently and warned that a failure to do just that will sooner or later be the downfall of the television industry as we know it.

With House of Cards and Netflix, he argues:

We have demonstrated that we have learned the lesson the music industry hasn’t learned.
Give people what they want, when they want it, in the form they want it in, at a reasonable price – and they’ll more likely pay for it rather than steal it.
Well… some will still steal it, but I think we can take a bite out of piracy.

See the highlights of his address here:

The solution to online media piracy doesn’t really have to be so complicated. It’s actually quite simple: make it easier for a consumer to watch, hear or read legal material than it is to find high-quality pirated copies.

Simple.

Some say that the music industry is failing to keep pace with emerging technology and consumer trends. While it’s certainly true that music was late to the digital party, so to speak, the industry has made huge progress in the past years.

The music industry, along with the book publishing industry, has solved the critical requirement to meaningfully combat piracy: it is easier to download or stream music legally than it is to pirate it. Starting with iTunes, and continuing with Amazon, Spotify, Last.fm, Pandora, Nokia Music and countless others – there are so many options to legally hear music – many totally for free, or nearly – that there’s just no point downloading anything illegally.

The Newspaper industry (with a small handful of notable exceptions) is still leagues behind in this regard, as is the film industry. Outside the US the options for streaming films online are pitiful, and even in the US the latest cinema blockbusters are not available to stream until the theatre run is over. Why wouldn’t you download it from BitTorrent? Yes, changing this requires upheaving nearly a hundred years of Hollywood legacy – but what good is legacy when your consumers have already gone elsewhere? (Just ask Blackberry…)

For television, it’s even harder to legally watch the shows you want. Again, even in the US the industry is fragmented over a multitude of different streaming providers, cable providers and tv stations. Outside of the US you can mostly forget it completely.

People are creatures of habit and, most of all, creatures of comfort. If there’s an easier way to do something, it’s immediately attractive. The statistics on online media piracy prove that by playing the moral card alone (you wouldn’t steal a car, you wouldn’t steal a movie…) the media companies can only prevent a tiny percentage of the piracy. People clearly don’t relate to the story of the poor, undervalued Hollywood celebrities being robbed of their daily bread by heartless and immoral video pirates.

If the media industry wants to solve the issue of piracy and meet consumers’ evolving expectations, we still need to see big changes in the way content is produced, but certainly how it is distributed.

My tip: make it so easy to pay, that piracy just isn’t worth your time.

In idea is not a business; and it’s not a product. An idea is just an idea.

What makes an idea ready to become a product?

Facts.

An idea made up of only opinions is just that – opinions.

Don’t get me wrong: opinions are often sensational places to start a product from. Some of the most ground-breaking and innovative products started with an epiphany, a flash of inspiration or a daydream. The trick to being successful as a creator of products is to figure out which ideas are productisable – and which aren’t – before you build and launch a product and watch it fail.

Identify the intrinsic assumptions that exist within your idea, and then test them.

Avoid making product decisions on ideas or opinions alone. Testing the assumptions behind the great ideas is the only way to know you’re investing your time and money into the right product.

Too many of us spend far too much time in the building.

We sit at our computers and read blogs and write emails; we discuss in conference rooms and over coffee, sometimes even at the cafe down the street. But how much time do we actually spend outside the building?

Your customers are not in the building. You won’t find them lurking by the water cooler and you probably won’t see them at Starbucks.

I don’t know exactly how much of their time a product manager should spend outside the building – but my gut tells me it’s something like 20 or 30%. How else can you get close to the needs and wants of your customers, first-hand and in-the-flesh?

If you’re looking for insights into your market, you’re really not likely to find them by reading blogs or watching Twitter. Sure, some gems come along over the social channels, but the real insights are waiting for you out there – with people.

Do yourself (and your product) a favour and get out of the building this week. Go and talk to a customer or meet an industry partner. Run a panel, inviting some of your most vocal advocates (or detractors!). Attend a think tank or a networking event relevant to your industry.

Because the answer to your problem is probably not inside the building.

The web is awash with photo sharing services designed to broadcast your photos to as many people as possible. Even before the ubiquitous Instagram services like Flickr and Facebook were flooding you with photos from your friends of their holidays, their achievements, their pets, or whatever… photos that were liked, re-shared, posted, re-posted, pinned, re-pinned, tumbled, re-tumbled, tweeted, re-tweeted…

Among all the noise, the beautiful simplicity of sharing a moment with another human being – the supposed core mission of Instagram – was lost underneath the “social” deluge.

Enter Rando: a very different way to share a moment with someone.

Rando works like this: You take a photo and send it to the service. That photo will be sent (sort-of) immediately to another random Rando user, somewhere in the world. In return, you receive a so-called ‘Rando’ back from another user somewhere in the world. You have to send one to get one. Randos are always sent to exactly one person only, and they are always anonymous. You will never know who sent you the Rando, or who received yours. All you know is from what city it came.

You cannot select a photo from your gallery to send – you must take a photo with the camera right then and there. Most interestingly, all you can do with the randos you receive is look at them. You can’t share them, like them, reply to them or ‘re-rando’ them. They’re yours to keep – but only to look at.

When I heard about it, I thought two things:

1. This app will take about 20 minutes to become all about porn
2. It’s a bit pointless, isn’t it?

After sending a few Randos however I found I was becoming strangely addicted. I realised it’s really beautiful in a way.

When you receive a rando, you know that it was a photo that was taken moments ago (because you cannot choose from your gallery). This gives the moment that is captured a sense of immediacy – what you’re looking at just happened. And because you’re sharing with exactly one person, and that person is waiting for your rando, it makes the exchange more like a gift, thoughtfully prepared and delivered with a touch of altruistic love.

Compare this interaction with sharing your moment on Instagram or Facebook (ie blasting your whole network of friends and colleagues or indeed the whole internet with your ‘special moment’/interruption). Instead you’re sharing it with one special person who is literally waiting for your photo – your moment – to come in.

I found myself wanting to share special things with random people on Rando. This morning I happened by a strange Superman statue with its head blasted off. Cool, I thought. But instead of spamming my network with it, I felt immediately compelled to share this special find with someone on Rando. And the best part is that when I do, I get a rando back.

I’ve received randos from Russia, South Korea, Brazil, Venezuela, England, Scotland, Finland, Holland and even a random tiny island somewhere in the pacific. Looking at my growing rando collection I see incredible diversity of culture, architecture and people. It makes you realise that things and sights that for you are totally mundane and ordinary are for people in other parts of the world new and fascinating.

Rando is a beautiful idea that finally makes sharing pictures ‘social’ in the sense that you actually create a meaningful connection with another human being. It fights against the trend of making every object likable, sharable and distributable to as many people as possible, and instead lets you gift a moment to another human in a way that adds human meaning.

It’s available for iOS, Android and Windows Phone, and comes from the UK based design studio ustwo.