Will mass game gifting disrupt the balance of the App Store?
On Monday 22nd March, we discovered Apple had finally decided to capitulate and allow customers to gift apps via iTunes in the same way as we've been able to do with music for some time.
For a good couple of hours, this news was greeted with warm approval as customers and developers alike saw new possibilities for sharing and distributing, albeit still not across international borders.
By lunchtime on the 23rd however, things had taken a slightly more sinister turn: some eagle-eyed developers had spotted an opportunity to use gifting to buy their way to chart visibility.
Give to gain
The procedure is simple and cheap. Announce a free app giveaway, sign up eager punters and their email addresses, gift them your application, then watch the sales and rankings magically rise, like a phoenix from the ashes of obscurity.
Compared to paying for advertising or hiring the services of a PR company, this would seem to be an incredibly cost-effective way of gaining exposure in that it guarantees a visible chart position (thus generating further sales), and provides an excuse for feverish media hype.
As a simplified example, catapulting a 99c game into a top ten spot in the US chart could be achieved by gifting 1,000 copies with a nominal value of roughly $1,000. Then, the developer will be reimbursed 70 percent of the sales revenue, or roughly $700 resulting in a net cost of around $300.
Apple also offers corporate volume pricing discounts for the bulk purchase of iTunes Cards that could bring down the initial outlay cost considerably. Oh, and unlike promo codes, gifts never actually need to be redeemed to register as sales.
The downsidePerfect! Or is it? Apple has not yet made it clear whether or not this practice is in breach of any of its terms or even how gifts will be calculated in terms of sales and rankings and it is possible - Apple being Apple - that it could introduce new rules at any moment. Consequently, developers seeking to exploit this apparent lacuna may be taking a considerable risk both financially and legally.
There have also been concerns raised suggesting that that this type of promotion strategy is fundamentally unfair and further hurts the chances for independent developers to draw attention to their products in a market that is already dominated by big business.
The issue is two-fold. Firstly, it's biased in favour of those with deep pockets and obviously, the deeper the pockets, the bigger the potential chart impact. Secondly, it reinforces customers' expectation that, if they are patient, they may eventually have their coveted apps without paying for them.Chart dumpingSo, does mass app gifting really constitute flagrant market abuse or are developers just employing standard business practices and common sense?
Don't developers have the right to give their products away if they choose to? We don't complain about buy-one-get-one free offers in the supermarket after all and no-one can argue that food companies don't have an ulterior, commercial motive in gifting us these extras.
Economists have long argued that the human tendency is towards rational self-interest at the expense of the common good. If we agree with that, we probably shouldn't expect to see individual developers resist the pull of individualism in favour of a collective approach.
The App Store is a notoriously difficult market in which to make a living and the temptation for companies to seek out opportunities for exposure by any means necessary, is strong and understandable.
Undeterred by the uncertainty or the potential pitfalls, intrepid developers such as Bryan Mitchell and Imangi Studios have been quick to get on board this pioneering bandwagon and I for one will be watching closely to see the results.
If their gifted games emerge higher in the charts and otherwise unscathed, I think we can safely declare open season for mass gifting.
Pam Douglas is a lawyer and also handles marketing and PR for Glenn Corpes Ltd, developer of Ground Effect for iPhone and iPod touch.