Ryan Leslie gave a great talk at IdeaLab last year explaining his approach to avoiding the iTunes Store for his music and his clients’ music. He gave some fantastic insights, but one struck me particularly hard.
Distributing Mac apps through iTunes is a really bad deal, financially speaking, and it’s not because Apple takes 30% of the sale. It’s not even because Apple might limit your album’s price through iTunes or restrict your products in other ways. It’s because Apple prevents you from owning the relationship with your customer.
Owning the Relationship
When a customer buys your album from Apple, Apple has that customer’s contact info and there’s no way you can reach that customer. You spent all that time and money driving customers to buy your album, but they bought it through iTunes, so when your next album comes out, you have to spend time and money to re-acquire those customers!
Ryan gives an example of an artist that Jay-Z produced whose first album sold 630,000 albums. They were only able to directly reach about 30,000 people, so for the next album they’ll have to spend millions acquiring customers again. He then gave an example of another new artist who said he’d have to sell 1 to 1.5 million records with his current record deal to make $1 million. With Ryan’s system that artist could make $1 million with only 10,000 customers — only 1% as many customers.
Distribution isn’t hard. If you’re selling apps instead of albums, then you’ve probably already got the skills to set up your own store front. I built mine using the awesome Potion Store as my starting point. It’s pretty close to maintenance-free. I use Braintree for payment processing, which has been rock-solid.
I’ve been selling Arq, my Mac backup app, for over 4 years using this method. I recommend it!