To Heist, or not to Heist?

A lot of indie software exists today because developers are able to make a living by selling directly over the internet to customers, bypassing margin-hungry middle-men. While developers no longer require a distributor (except for selling retail boxed copies), marketing is just as important as ever. The controversy surrounding MacHeist begs the question – is there room for a marketing middle-man, and if so, at what cost?

I believe the answer is ‘Yes’, there is room for a sales channel, like a bargain bin, where consumers can pick up discounted and older software. It would appeal to the bargain hunter, the budget conscious and let the curious pick up software they normally wouldn’t purchase. How much would this marketing service cost a developer? My gut feeling is somewhere between 10-20%, which is in line with what is offered by many affiliate marketing schemes.

So why the controversy? It might be the altruistic marketing of the event. Everybody loves a bargain but some consumers really do care about where their money ends up. So when an event is named “The week of the independent developer” and there is a big shiny counter on the web-site to track proceeds going to charity, one would expect profits to be distributed equitably, with perhaps the lion’s share going to developers and charity. However, it seems this is not the case, as the folks behind MacHeist will rake in around 70% of the profits, and this estimated figure has yet to refuted, causing many to ponder if this is fair or not.

MacHeist and MacZot remind me of the margin-hungry middle-men of yore. In the pre-Internet days, you had no choice but to approach a distributor and hope they would firstly, take your product, and secondly, not gouge you too much. The distributor’s negotiating power was mainly derived from being the gatekeeper to the desired market. Ironically, internet promoters don’t have such a stranglehold, so there’s no reason why developers should need to accept draconian terms, even on special one-off events.

It’s important to note that the MacHeist participants are happy with the event and their respective deals. You can read some of their thoughts here:
Taking the Heist
Will Shipley
Professional Courtesy, Whither went ye?
Have a spoonful of hate, there’s plenty to go round

However, given that MacHeist could hit $500,000 in sales, I’m sure they’ll be wondering (even if only slightly) whether they were treated fairly amongst their peers. The promoters didn’t think it was worth negotiating with Gus (who wanted a percentage rather than a flat fee, and thus declined participation) but it was worth sitting down at the table with Allan regarding TextMate. That’s the unfortunate reality of wheeling’n’dealing.

Update 3: It seems that the locking of TextMate was pure marketing, and did not mean Allan received preferential treatment. According to John Gruber, developers got roughly the same deal, with a flat fee of $5,000 to $6,000. Final sales of MacHeist actually hit over $750,000.

Having taken part in a MysteryZot with RadioLover a while ago, I understand a little about how these events are organised and the kind of returns for the developer, both tangible and intangible. Would I take part in such a bundled event again? Probably not, as I do not believe there are long-term benefits in doing so, although I still retain an interest in MacZot. I think Brian Ball who runs it, could develop it into the de facto sales channel for discounted Mac software, and I wish him luck – as long as the relationship with developers is symbiotic.

If on the other hand, promotions continue to grow in popularity and developers are addicted to the extra gravy (cents on the dollar, mind), there could be a day when developers wake up to discover that they have cannibalised their own ability to sell to customers directly, because customers are hooked on the special offers, discounts, and bargain bundles. At that stage, powerful marketing organisations could have an adverse influence on software development, much like the record labels have had on the music industry. Invariably, such a situation would harm the diversity and innovation of indie software, which is what makes it attractive in the first place.

Update 1: To put MacHeist’s estimated 70% into perspective, it’s worth reading about how much work a Japanese distributor does, and from my knowledge, they would probably expect around 30% of the sales they make.

Update 2: Not everybody is optimistic about MacZot. A few weeks ago, John Gruber felt that MacZot has pretty much dried up while Steve Harris feels the long-term marketing benefit of taking part in bundled promotions is negligible as the promotions target a small and insular market of hardcore Mac enthusiasts, rather than the millions of regular Mac users.

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