What It Was Like to Sell Apps Online in 2003
Apple likes to claim that the App Store replaced the system of selling software in physical boxes in stores and over the mail.
But it’s not true.
My experience selling apps before the App Store was not unique or new — it’s only interesting now because people may have forgotten this history, and younger people may never have heard it.
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We used a service called Kagi for the storefront and credit card processing. Kagi had been around since the ’90s, and it was well-known and trusted by the Mac community.
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And it was pretty easy. Easier than dealing with the App Store!
I can’t find the link, but one of Apple’s lawyers recently argued that the reason Apple chose 30% for the App Store fee was that it wanted to do better than the prevailing alternatives at the time. And they again tried to make it sound like they invented selling software online. I’ve used at least five different e-commerce providers since 2002, and none of them charged more than 15% (most much less). All were easier to deal with than the App Store.
Totally the same for me - except I was Kagi’s first customer and started with them in 1995, and continue doing the same to this day (other than switching to FastSpring in 2010). It wasn’t new over a decade before the App Store was released).
I had a very similar experience. I started selling my own apps in 2002, completely online, through a web site and in-app purchase. No boxes, no stores, no mail. Downloads, emailed serial numbers, and a third-party payment service. No Apple online store.
Exactly the same here, with KAGI, the license strings etc. Except that PdfCompress,BookLightning, TextLightning and PostView remained in the four figures/month. Still comfortable.
If Apple claims they somehow invented online software sales, they are lying. Egregiously.
I had the same experience in the mid-90s with downloadable Mac shareware, wrote a game in middle school and sold (a dozen copies or so IIRC) via Kagi; even back then, a teenager could sell software entirely online with no retail markup or gatekeeper.
On mobile, my Palm app initially launched in 2001 through proto-app-store PalmGearHQ with a 20% commission, but in 2002 when it started to make serious money I went direct with my own merchant account + abandoned PalmGear entirely by 2005.
But neither for software in general nor for mobile specifically did Apple bring anything new to the table with the App Store; they simply imposed taxes and regulation on an existing market that was getting along perfectly fine without them.
The first App Store I’m aware of appeared on NeXTStep in the early 90s
We first sold software for the Mac solely online also via Kagi in 1995
At a conference around that time an Apple exec said when I told him ‘no one will ever buy software on the internet’ :-)
Kagi was responsible for the beginning of the Iconfactory’s software business. It’s been going strong for almost 25 years now.
When I started @dejal in 1991, people mailed me cash and checks — to New Zealand! — and I had to take them to the foreign exchange at my bank. Later I processed credit cards via paper forms. When I started with Kagi, it was like magic; so much easier.
Apple itself sold software online back before the App Store — because of course they did. Everybody did.
Previously:
- Epic v. Apple, Day 5
- House Report on Competition in Digital Markets
- Tim Cook’s App Store Testimony
- Another Apple-Funded App Store Study
- The Talk Show Remote From WWDC 2020
- Software Before the App Store
- Kagi, RIP
- 1983 Steve Jobs IDCA Speech
Update (2023-02-13): Brent Simmons:
Framed thing on the wall of my office — a thing I’m super proud of. 🐣 🐥
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Pardon my ignorance on what the actual testimony is saying, but are they arguing that the App Store replaced offline or online software sales, or are they arguing that the system they put in place replaced the vastly inferior patchwork cell phone software sales model?
The reason I ask is their reference to the 30% being better than the prevailing alternatives sounds like they are talking about the latter. I don't remember where I saw it but my understanding is the commissions in those cases to the cell carriers could be far more than 30%.
Sorry for the extra comment, but I did remember one place I saw citing commission structure for pre-iPhone mobile phone software. Handango is credited as the "pioneer" of the 70/30 revenue split (with Handango receiving 30%), which they increased to 60/40 in 2005. So in 2008 when the iPhone debuted, 30% was better than the current cut that Handango was taking, at least.
There's also an interesting list of mobile app distribution platforms that lists revenue percentages for some of them. I'm not sure exactly how they're getting their numbers, though. iOS App Store is listed as 60%-70%, originally 56%-70%. Maybe the lower bound is pre-iPhone, when it was just iPod games? And for Handango, they list 42%, which does not mesh with either 70/30 or 60/40 noted above. Perhaps the commission structure changed again after 2005 and is not reflected in the Handango article.
Ah, yes... Kagi. A more elegant weapon for a more civilized age.
2.5% + $1 or $2.
About $3 out of $40 ~- 7.5 actual cost. 30% of $40 is 12. Apple charges 60% more.
And... the average selling price for a Mac utility was $40, $55 in today's dollars. Most people on the Mac App Store aren't getting that. Does volume make up for this?
There is something very China about the current Apple. They like to rewrite the history as they please. Luckily we still have witness to tell the truth in front of court. Although I am not sure if main stream media are willing to report it.
"replaced the vastly inferior patchwork cell phone software sales model?"
Before the iOS App Store, I bought apps for my Palm and Symbian phones the same way I bought them for my Mac: online, using my credit card.
Before the App Store, most people bought software in boxes, usually at retail but sometimes online. Some bought fully online from a variety of other sources.
After the success of the App Store, most people bought software on the App Store. Or some other vendor's equivalent. Fully online sales still exist, but what (mostly) doesn't is boxed software.
Online stores existed before and continue to exist now. What changed is where most people bought their software.
