Handango Tries to Screw Developers - Will Developers Respond?
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A couple of weeks ago I posted on BGR about Handango’s revised CDA. Long story short, Handango sent a warm cheery email to all developer partners about what a great year 2007 was for the mobile software industry and for Handango. At the end of the email was a link to the revised Handango Content Distribution Agreement (CDA) that takes affect on March 15 of this year.
The most notable change to the agreement was the revised royalty schedule. As of March 15 developers will only receive 50% of gross revenue up to $250,000. This is down from 60% as defined in the current CDA. I doubt that there are more than three or four developers who do more than $250K in sales through Handango alone, but those who do will enjoy 60% of gross sales between $250K - $1M, and 70% over $1M. Ridiculous.
Handango also doesn’t do enough for their customers. As with most industry leading companies, Handango takes their customers for granted. Some examples? How about charging an extra $5 per title for “download protection”? If you want to be able to re-download an application that you purchased for up to one year it will cost you. As if it costs money for Handango to store a 1MB file on their servers. And have you tried to order apps for your device according to “popularity”? Let’s have a look at today’s top 5 for the N95:
- Quickoffice Premier 5.0 ($69.95) ——– 1,483 downloads
- Handy Tools Pack for S60 ($99.95) ——– 18,515 downloads
- WorldMate Professional for Series 60 ($69.95) ——– 64,872 downloads
- ProfiMail (Symbian) ($27.99) ——– 76,446 downloads
- Handy Safe for S60 ($39.95) ——– 25,676 downloads
Interesting. The first thing to note is that all of these titles are very expensive as far as mobile software goes. Casting that tidbit aside, let’s look at the download numbers. Title one, Quickoffice Premier 5.0, has been downloaded a total of 1,483 times. Because there is no trial available, is stands to reason that that number is relatively close to total sales (not taking re-downloads into account). Now the fourth title on the list, ProfiMail, has been downloaded 76,446 times. There is a trial, but if LCG converted just 2% of those trials into sales then they will have outsold Quickoffice Premier 5.0. Believe me, LCG has converted WELL OVER 2% of their Handango trials. So is popularity calculated monthly? Even if it is, I can guarantee that Quickoffice Premier 5.0 is not the best-selling software title for the N95 this month. Yet it is still at or near the top of the list each and every month. Hmmm…
I haven’t discussed this in any SiMo posts, but I do in fact sell via Handango. Why haven’t I mentioned that here? Using this blog as a sales tool for themes is simply not something that interests me - I wouldn’t want to sully my reputation. Anyway, I have created a handful of commercial themes that have been selling on Handango for about a year. Really they were only intended to cover some costs associated with SiMo; a handset here and there, apps that I wanted to review that weren’t generously gifted to me by the developer, etc.
Over the past year, I’ve actually sold several thousands of dollars worth of themes. As of March 15 however, I’m done. Every last one of my themes will be pulled from Handango and I will deactivate my developer account shortly after. Would the extra 10% Handango is taking really have killed me? Absolutely not. It’s simply the straw that broke the camel’s back. I might not sell anywhere near as much as a top seller on Handango, but if others will follow my lead we might just get our point across…
Developers: I understand that Handango is your number 1 source for sales. That WILL change over the next one to two years, I guarantee it. There are so many better options out there already in terms of getting your titles to the public and more are coming. My recommendation is that even if you don’t pull your apps from Handango completely, put some real time and effort into researching alternatives and get your apps up on other sites. There are shops out there with fantastic reach and numbers, and you keep up to 80% of sales from $1 up! Think about it - you can sell over a third less and still make the same money!
Bloggers: Do you have a shop tied to your site? If you do and it’s powered by Handango, I STRONGLY URGE you to find an alternative. There are plenty of other options that have just as many *useful* titles available for sale. I said useful - when Handango issues catalog figures, they include the thousands of terrible themes / video ringtones / flash screensavers / etc that sell three times and then disappear into the chaos. Handango also has a VERY LOW referral payout. Do some research.
Consumers: Plain and simple - DON’T BUY FROM HANDANGO. If you’re interested in an app that for some reason you found on Handango, get it directly from the developer. Maybe the developer’s site doesn’t have a shop, but you can always email them and they’ll likely sell to you direct. Impatient? Google the app name. I’m sure you’ll find it for sale in at least five other shops.
This might seem like a drastic post and maybe it is. The fact of the matter however, is that the mobile market is booming and it will continue to boom. Handango is doing nothing but slowing market growth. They promote the top developers (who can afford to pay ridiculous fees for their marketing) and the rest are left to fend for themselves amongst the madness. Blogs like SiMo, the few in our blogroll and thousands of other mobile tech blogs are great sources in terms of learning about apps. 99 out of 100 times, a blog will link to the developer’s site so you can purchase the app directly if you like it after the trial period.
If you’re a blogger I strongly urge you to do some research and post about this. Link me or don’t link me - I could really care less. Just get the word out. Developers enhance the mobile experience immeasurably and by stunting their growth (as Handango does) the mobile industry as a whole is being stunted…
UPDATE: I thought I’d link some more articles on the matter…
- A post from msmobiles.com
- A post from Electronista
- A post from BerryReview.com
- A post from BlackBerry Developer SideShow
- A post from tilt site
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However, I've done a bit of research and the only other option that I've found, for bloggers, is MobiHand, which powers several of my blogger friends' 'stores'. However, they're not looking to add any at the moment.
I've not found any that offer the ease and library of Handango. I'm not trying to be an ass, just calling you out on your statements. :)
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Regarding "the ease and library of Handango", I agree that their referral program is easy. It's basically the AdSense of software shops. Anyone can set it up fast and easy and it might even make the top 5% - 10% of sites some decent money. For the rest though, it's just another way that Handango spreads themselves as wide as possible and diminishes the value of a product. A few sales here and there will make you pennies; multiply that amongst all of the smaller sites that Handango has referral deals with and they're making dollars...
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www.handywi.com
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1. Double check what Handandgo paid to you. I did. In all mine 7 checks money are missing. In each one, no exceptions! Range is from 15 to 78 USD. That is why they are not sending with check the calculation list which will show how that total amount was calculated. They also do not have that information on their website. They have all purchases listed, but there is no information
which one included in what check. NONE! That is the biggest secret ever. That is where Handango is simply stealing developers money!
Try to ask them what payments are included in that check and you will not get the answer. They will refer you to website, they will refer to agreement,
they will tell you anything except the answer.
2. I know at least a few dirty tricks that Handandgo plays.
Here is the most popular one - the so called discount codes on Handandgo. I have investigated and I got confirmation from a few customers that they have paid the full amount, but Handandhgo is showing to developer that software was sold with discount price! Guess who got that money difference in their pocket? Letter to Handango.. no answer.
Check you payments at Handanago, find the discount ones, write letter to customer and ask how much did they pay in reality, compare that with Handango message to you.
You have a good chance to have some discoveries!
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The below clause in the handango-developer agreement prevents a developer from offering their product at a lower price in another software shop:
"At no time shall the Software's SRP provided to Publisher be higher than the Software's SRP provided to other distributors."
Thus, even if another software store charged developers only a 20% commission (as oppose to Handango's 50%), the developer can't pass that 30% savings onto consumers because this clause forbids that!
For example, if another software shop only charged a 20% fee, you would think it could work like this:
XYZ app sells for $19.95 on Handango, Handango gets 50% = $9.95 profit to developer
XYZ app sells for $12.50 on ABCshop, ABCShop gets 20% = $9.95 profit to developer
In the above example, the developer would still make the same $9.95 profit, but the consumer would save $7.50 by buying it though ABCShop!
The only way a developer could sell a product for less would be to NOT sell it through Handango (thus, they are not bound by the clause). But this would be like shooting yourself in the foot because Handango is the biggest shop and provides the highest sales count to developers. So, the developer has to bite the bullet and charge the same price in all software shops :(
How can another software shop ever be competitive to Handango when the best way to do so (by offering lower prices) is specifically prohibited in Handango's agreement?
Handango has the right to charge a premium commission if their market position offers developers higher number of sales. But, I feel that this clause is anti-competitive and Handango is using their market dominance to force developers into agreeing to it.
I feel Handango is in effect dictating the prices that consumers pay for mobile software - thats probably why every shop sells the same app for the same price that Handango sells it for.
I feel the FTC and other applicable government agencies should investigate this clause to see if it is violating any anti-trust/anti-competitive laws designed specifically to prohibit monopolies from preventing competition.
Also, because Handango has so many partnerships with cellphone carriers, when a newbie buys a smartphone and selects "purchase software" link, the chances are they are directed to Handango - thus handango gets first sales opportunity for all newbies. Then, after a newbie gets confortable, they will probably try to find a software store that sells apps at a discount, but because of the above clause, there isn't any. And because all shops charge the same price for the same app, there really isn't any significant incentive for a user to switch from handango.
However, if someone opened up a new software shop that offered 20% off ALL software, EVERYDAY, then the discounted price offered to consumers for an app would NOT be the developers fault, so Handango couldn't scold them under this clause.
Such a shop would have a significant chance to compete against Handango because there would finally be a real reason for users to NOT buy from Handango!
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I am a developer and I think that such situation can be. Thank you for your post, the best way surely is to make the shop of your own, when you have much content (as we have) - maybe about 500-600 themes and so on.
Konstantine
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http://creditcardsclub.com
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