Distributions, sales, ads, contracts, and international tax laws: Why anyone would dream of being an app entrepreneur is completely beyond me.
Last month, I wrote about my new app: Proxy Troubleshooter available for Android on Google Play Store. Here is a little follow-up article with my app distribution and monetization experiences after one month as an app publisher. I did write “app publisher” rather than “app developer” because the publishing job was almost as much work as developing the app!
I originally intended to charge for the app upfront rather than fund it with in-app advertisements. As a very niche app, I clearly didn’t intend to get rich from it. The app grew out of my own need to troubleshoot proxy servers and as I’d already made the app, I thought I might as well publish it to the world. However, I did want to experiment with app monetization for the heck of it. It could be a relevant expertise one day, and who doesn’t want to jump on a chance to grow their relevant expertise?
Being a very niche app, it would never make up for being free and ad-funded in volume. The distribution would also be further limited by the harsh Android 5 and newer technical requirements set by my app (less than 6% of the Google Play Store customer base). So I decided early on that selling it directly would likely be the best approach for my particular app. However, it became too overwhelming with the enormous overhead and complexity of international sales through the Google Play Store and having to work with local tax regulations in every country all over the world. Despite popular belief, Google doesn’t handle sales tax collection on behalf of app publishers — well, except for the European Economic Area where digital marketplaces are required to do so – and leave it up to each publisher to set tax rates, collect, and pay, and comply with local tax laws. For an individual or small publisher, that’s about a bazillion times too much overhead to sell a 99¢ app.
The next time you hear an Android user complain about a new and popular app being made available on iOS before Android, make sure to tell them the following: “That is because Apple handles sales and other taxes all over the world on behalf of the app publisher. Publishers can sell their app almost everywhere with very little effort on iOS, and that service is part of why Apple takes a 30% cut of sales. Google takes the same 30% cut but leaves all the tedious tax work for every country in the world up to the publishers."
For the record, the Windows Store follows Google’s lead rather than the more publisher-friendly approach pioneered by Apple. I suspect this is part of the reason why the Windows Store is such a ghost town. Considering what a great service Apple does to publishers, both Google and Microsoft should be ashamed for taking the same big 30% cut as Apple.
As a popular alternative to selling directly to customers, many publishers turn to ads. Ads are the one true international currency in the world of media and digital publication. As a website or app publisher, you only need to register with and hand over your users to an international advertising network and they’ll do all the hard work and give you a minuscule check at the end of every month. Provided that you can provide enough eyeballs, of course. As a niche app, I didn’t expect all that many users to download the app ever, but I thought I’d give ads a try anyway — for the experience with integrating ads and exploring the whole micro-economy more than any potential profits.
In the end, the ads ended up being kind of a feature in itself. If the ad successfully loads, it means that you’ve some kind of working networking even if you are experiencing trouble with an intermediary proxy server. Think of it as a status indicator and a feature rather than an advertisement.
At the time of writing, the app has only been downloaded a little more than a hundred times from Google Play Store and made a little over 21 EUR in ad profit. —yet three people have already contacted me to request that I add the app to their competing app store of choice. Two of them stated an unwillingness to share data with Google by using Google Play Services, and the last user didn’t have access to Google Play Store on his device.
I’m very unlikely to want to sign up with more app stores considering that I’ve had to sign a dozen different contracts totaling at 16 500 words to distribute an app on Google Play Store, and a few more totaling 9600 words to distribute it with ads. I’ve read the first 2000 words of the introductory Amazon App Store contracts before I decided to stop; fearing for death by legalese overload and total fun-deprivation.
Although I’m flattered that people care enough about what I’ve made to request that I make it available in more app stores, it just doesn’t make any sense to invest more time to make this app available there. The largest customer base and — I assume — the most technical will be on Google Play Store, so the extra overhead doesn’t seem to be balanced against a comparable number of new users. For a more profitable app, that might be different, and it would be good to diversify the distribution and ad network income. If I ever make a broad-appealing mass-market app, I’ll go the extra mile to put it in front of as many possible users as possible. For now, however, it will remain a Google Play Store exclusive. I’ve got to stick to the devil I know — and have already agreed to sign contracts with.