On Ethics, Economics and the Point of Selling Out
Last Friday Sparrow announced that their team was acquired by Google. This move raised many questions among the users and the industry, wether the decision of Sparrow’s developers was loyal towards their user base, and most important - what does it take to make sustainable software business. Independent app development is turning to a point close to the dot-net bubble several years ago. This time things are happening differently and more swiftly.
For about 4 years from its introduction Apple’s App Store has made many lucky souls millionaires, but this tendency starts to prove illusive as developers are struggling to keep maintaining and improving their projects. Today people are taught that full featured software should cost as little, as few dollars and the period of interest an app generates also starts to decrease. Sure developers can boost this by introducing new features and versions, but let’s be honest - the mechanics of the App Store are crowd-driven: when an app leaves Top 100 or 250, it’s unlikely that it will attract many new users. Also the demand for improvements and innovation from the current user base can be overwhelming in both developer’s and financial terms.
The case with Sparrow brings even more doubts to the table. This time we all (the developers and the users) did everything right, and yet it wasn’t enough to keep Sparrow’s team independent. They introduced an elegant piece of software to the desktop at affordable price, then receiving praises from the community re-implemented all the successful ideas once again, but on a mobile device. This wasn’t enough. Some argue that the pay-once business model is not working anymore:
From our experience, a $2.99 app in the App Store needs to hover around #250 in the top paid list to sustain two people working full-time on the app. Launch Center Pro has already dropped below that threshold, and may keep dropping. The app may spike into the top 100 again as we release updates and build excitement about new features, but it’s hard to guarantee that will happen. In the past month as Launch Center Pro has been making enough to support us full-time, we’ve been working on it full-time. But as it dips, we’ve decided to scale our time proportionally. If it spikes again, that will give us the opportunity to either take a profit, or just scale our time back up and keep the app at or near break-even.
Others like Faruk Ates are disappointed and think that Sparrow sold out:
Typekit and Instagram sold. Sparrow, like so many before them, sold out. The discontinuation of further development on the product may not be as disrespectful to its customers as the full killing of it, but it’s close enough for widespread discontent among those (paying) customers to be fully justified.
In a follow-up post Faruk Ates shares his thoughts about Google’s dirty strategy of fighting competition:
All the more shameful is Google’s pattern of buying companies that compete with them or in any way threaten their business model (ads), only to kill or handicap the product.
To me team Sparrow saw great opportunity to move their ideas to a bigger platform and to keep themselves away from exhausting business activities. I think they wanted to focus on what they do best - design and development of beautiful user interfaces that solve concrete tasks.
Google purchased talent, but the fact that Sparrow’s developers were not interested enough to keep their awesome work on the app shows a sad trend in today’s independent software business. You need not only a great idea and distinctive creativity to express it - you need innovation in the business aspect of the things as well. Even though Sparrow generated success and positive reviews, the team struggled with the bills and finally got an external funding from the French venture capital firm Kima Ventures.
Today one the few sustainable ways of keeping the bills of an independent developers is by introducing paid plans. Marco Arment proves this with his awesome Instapaper. The application is so influential that Apple, for example borrowed the idea of read-it-later lists of websites and implemented it in their flagship products Safari iOS and iCloud.
Instapaper has had multiple similar inquiries from large companies over the last few years. We’ve never gotten very far in talks because I don’t want Instapaper to shut down, I don’t want to move my family across the country, and they didn’t want to pay enough — for them, they’ll pay a premium to hire me, but they won’t pay much for a service they’ll shut down immediately and an app they’ll throw away.
I was only able to reject those offers because Instapaper is a healthy business, and the life that Instapaper provides for me and my family is better than what the big companies offered.
Sparrow are not the first and won’t be the last company to be acquired by big corporations like Google. Last month we spent quite some time ranting about Instagram joining Facebook. Several months before that, we did the same for Gowalla. Good software builds a bond between users and developers. Good software builds trust and mutual respect. In a world of expandable hardware, good software can easily be one of the few constants in someone’s digital life. Using one particular program for day to day tasks (like web browsing, messaging or an email) can easily make us vulnerable. People grow accustomed to products, and no one wants to refactor their own processes by switching apps too frequently.
That is why everyone feels upset about the end of Sparrow. I am sure they’ll do quite well at Google - the search giant needs more than ever tons of innovation to keep up the battle with Apple and team Sparrow has proven to be great at building simple and powerful user experiences. But as it turns out, we paid for a great app which became futureless, and more importantly this shattered our trust in independent developers.