When I first read Jared Sinclair’s post on Unread’s finances, I was admittedly puzzled. He’d made $32K in six months on a single app in a crowded market. Wasn’t that something to be proud of? Yet reading the details, I understood the depression, for want of a better expression, of having invested a lot of time directly, and money indirectly (the opportunity cost by not taking a job with another company), and not feeling like you’ve gotten a whole lot to show for it.
Now obviously, 32K isn’t enough to make a half decent living on, even in Indiana, and there’s been a general lament about making it as an indie developer, how Apple makes it hard, and so on.
Sinclair’s app is for its market quite successful. Consider:
- RSS readers are commodities and essentially fungible: that’s the nature of the beast. Switching costs are low by design.
- There’s no trial or free version of the app. So a consumer needs to make a decision to buy the app based on a decidedly crummy app store listing and website (sorry), and a wave of reviews.
- The app is skewed towards reading “your favorite writers”. Unintentionally or not, this limits the appeal of the app. CNN had 25+ million subscribers on Google Reader; what would the experience of reading CNN’s RSS feed be like? (A potential customer has no way to tell; while they might switch between the CNN app and one RSS reader, they’re not going to switch between two RSS readers regularly to accomplish their feed reading.)
Ben Thompson wrote an excellent post on the nature of making a business, and finding the right niche. What I haven’t seen is an analysis of how large the RSS reader market really is. I’m no expert, so I’m doing essentially back-of-the-napkin calculations, except in Soulver. But let’s see if we can determine what the total addressable market for RSS readers is.
This is of course laden with assumptions. Feel free to chime in with corrections and alternatives.
It’s not the total number of iOS devices out there, nor even the number of iTunes accounts with credit cards.
Alex Kessinger claimed in 2013 that Google Reader had about 50 million users, likely 80% market share, putting the total market at 65 million. On the other hand, Paolo Amoroso estimates the size of the market to be 20 million, based on web analytics from Parsely.com.
But even if true then, the size of the market is likely smaller than either of those numbers. As Ben Brooks points out, many people who used to discover news through RSS now use other mechanisms: Twitter, Facebook, apps.
Still, let’s stick with 20-65 million potential users. Unlikely though it is, let’s assume that all those users have mobile phones. Unread is iOS only, so how many of those users have iPhones? I admittedly didn’t look very hard, but Venture Beat claimed that by December 2013, there would be 1.4 billion smartphones out there, 294 million of which would be iPhones. Of course, iPod Touches should be included, and Apple sold about 100 million of those; but I don’t have any idea what the overlaps would be smartphones and iPod Touches. For the sake of the argument, let’s say 40 million. The iOS (non-iPad) market share of phones is thus about 23%. (This seems a little low; Tim Cook claimed that 800 million iOS devices have been sold, which would include roughly 200 million iPads — surely no one’s going to claim that 25% of iOS devices sold are no longer in use?)
Does that mean that iOS users constitute 23% of the RSS reader market? It could be much more or less. Do we have any reason to believe that iOS users are more likely to use RSS readers than any other users? It’s possible, but I can’t determine how much right now (no time). If we believe that iOS users are more technically savvy than those on other platforms, then sure. We do know that iOS users skew somewhat wealthier than other platforms. We also know that a large percentage of Android phones are used as feature phones. Let’s assume that the percentage of RSS reader users that use iOS is between 25 to 40%.
Unread is iOS 7 only, which has 85%ish adoption. Let’s assume that potential customers that would pay for an app are more likely to have upgraded their OS; say 90%.
That brings us to anywhere between 4.5 million and 23.4 million iOS users.
But how many of those users are likely to pay for an app? Note that Unread doesn’t include a back-end: it hooks up to Feedly and other providers. Kessinger guessed that an RSS service could see a 4% conversion rate. Stephen Johnson, in his discussion of pricing models, describes a 2% to 7.5% conversion rate for his freemium app. But note that at least with a freemium app, the customer can get a fairly clear sense of the value the app will provide. That’s not going to be true of pure-paid apps. I’m inclined to go with 2% to 4%.
In other words, there’s anywhere between 90 thousand and a million potential customers who will pay for an RSS reader, some (many?) of whom have already done so.
Based on Sinclair’s sales and app pricing during the period, we can estimate that Unread has about 9 100 users.
So, in the paid app market, Unread has between 1% and 10% market share.
After six months? Even if it’s 1% (and we have good reason to believe that the market is smaller than a million, but larger than one hundred thousand), given that there are over 500 competitors, free and paid, on the App Store, I think that’s pretty impressive. While the App Store is surely flawed, I’m not entirely convinced there’s much Apple could’ve done anything that would’ve changed the outcome in this case. (Except, perhaps, trials. Color me skeptical.)
I realize that is not much consolation to Sinclair: market place success didn’t translate to personal or professional success. But there’s value in knowing that you’ve developed a good product that people are willing to buy.
The hard part is finding the right market to serve.