Under the Bridge

appbackr Challenge

So you might recall several months ago we mentioned this appbackr place that was generating some buzz as a way to crowdsource your iDevice app development funding. Well, it opened to the public this week, and they have an appbackr Challenge for us all:

  1. Submit an app on appbackr
  2. Promote your app through appbackr
  3. Reach $1,000 dollars in sales before November 22nd
  4. Win $500 extra backing (everyone) and an iPad (top 5 sellers)!

Hah! What, we ask you, could possibly be more appropriate than rolling over that October Challenge app we’ve been mentioning recently into the appbackr Challenge to see about financing some marketing and more development? Why, nothing at all could be more appropriate, indeed. So let us see if the terms make any kind of sense:

… You’ll receive money twice. Once when the wholesale purchase goes through (for standard $0.99 apps you’ll receive $.25 for each concept Queue Number; $.35 for each finished Queue Number) and again when the Queue Number sells through the iTunes store ($0.10 for concept Queue Numbers; $0.10 for finished Queue Numbers). For finished application, the higher the price of the app, the more money you make. See the Distribution Model. But to be clear, the Backr, appbackr and Apple also share in the revenues (e.g., for concepts priced at $.99, you receive $0.10; the Backr receives $0.54; appbackr $0.03 and Apple $0.30)…

So if you’re a wholesale app buyer, you make just over 25% on your investment when a finished product sells, almost 55% when a concept sells. Alright, assuming you’re clever/lucky enough to pick apps that do actually sell in shortish order, well that’s a pretty compelling opportunity we would say; not too many other low-capital passive investments available with that level of probable return. Can’t think of any, actually.

On the other hand, if you’re a seller with a released product, for each App Store sales dollar instead of getting 70¢ when it sells on the store, you get 35¢ from the appbackr wholesale sale and 10¢ when it sells on the store. That sound like a good idea to you? Well, for financing further BallZOut development/marketing that there’s a rather low chance we’ll spare significant investment/time for on our own in the near future, sounds like a quite acceptable idea to us, and no doubt many of you have a project or dozen in similar straits we’re sure. And probably a wide selection of half-baked ideas that the 25¢ up front for a concept still sounds worth going for to boot.

However, the devil as always is in the details. Exactly how does the revenue get sliced and diced like that? Let us examine the Developer Agreement:

2.2 Obligations. To use the Site as a Developer, you must: (i) have and maintain a PayPal account that you use in association with the Site and provide us with the name on such account; (ii) register and remain registered with the iTunes Connect developer platform and grant us the necessary permissions, through iTunes Connect, to access and view the “Sales and Trends” and “Financial Reports” areas of your iTunes Connect account; (iii) direct iTunes to deposit all revenue earned through the iTunes Store (less the commission taken by Apple) associated with Queue Numbers (the “iTunes Proceeds”) into an appbackr bank subaccount that we operate on your behalf to distribute the iTunes Proceeds to you, appbackr, and the Buyer according to the Distribution Model; (iv) comply with the bank set-up requirements set forth in Section 5.1; and (v) upon our request, cooperate in any investigation or provide confirmation to us of your identity and any Application Information you have provided to us.

Anything there jump out at you? Like this bit, specifically?

… (iii) direct iTunes to deposit all revenue earned through the iTunes Store (less the commission taken by Apple) associated with Queue Numbers (the “iTunes Proceeds”) into an appbackr bank subaccount that we operate on your behalf…

Now, unless there’s some Magic Hidden Option not available to Canadians in iTunes Connect, we only see one place to put one bank account for all the revenue of your entire oeuvre — app sales and iAd payments both — to be deposited collectively, we do not see any way to direct the proceeds from only appbackr-financed projects to be deposited to their account as described. That’s fine if you are setting up an appbackr’d only development account no doubt, but what if you’ve got a selection of other paid and iAd’d apps in there as well? Strike you as an issue needing some clarification? Yep, struck us as an issue needing some clarification back on morning of opening day which was Monday:

Date: October 18, 2010 11:14:13 AM PDT

Subject: Re: Appbackr Invite Request

> Call or e-mail me with any questions you have.

Yeah, section 2.2 ‘Obligations’ in the agreement seems problematic if you have any non-appbackr financed apps…

and as we write this late-ish Friday evening, the response so far is:

*crickets*

Seems like an obvious enough issue that there should be a pretty obvious answer, but if it’s staring us in the face we’ve missed it so far. So whenever they calm down from their no doubt busy launch week enough to get around to deigning to reply to the above inquiry, we’ll be sure to pass along to you what the deal is there. And assuming there is indeed a sensible obvious resolution, thereafter on our appbackr Challenge progress! Oh, challenges are so much fun!

UPDATE:

Well, we’ll certainly give the appbackr guys this, once they notice you whining about your email slipping through the launch week cracks, they sure don’t spare any effort to sort you out. On Sunday morning, no less!

So the deal as it currently stands is

a) You sign all your iTunes Connect income over to their bank account — nope, there’s no way to split it up — and everything non-appbackr related will get forwarded straight to you through Paypal. And they say that not only will you not have to pay Paypal fees on that transfer, they’ll even cover the wire fees that you’re paying now (C$ 25, for us). So as long as everything goes right, sounds like you come out ahead that way.

However, for those of us who are complete paranoiacs about sticking any extra steps in between Apple’s account and ours no matter what a good idea they sound like in theory, there’s also

b) Have your Paypal verified business account invoiced at the end of the month, and pay within 5 business days.

which sounds just fine to us. Aside from the slight hiccup that we don’t actually have one right now, so far Trollwerks Inc.’s few transactions have been handled with our personal account. Which yes is a horrible idea especially if Revenue decides it’s audit time, mixing corporate and personal transactions pretty much a red flag and bull kind of deal there, we just hadn’t got around to sorting it. But this is an excellent motivation to pull the thumb out and fix that, and shortly thereafter no doubt we’ll have updates for you on how appbackr is working out for us.

And for completeness, they’re also planning a third option,

c) ACH debit. “Hopefully will be set up within a month or so.”

So there you go!

5
  • http://www.appbackr.com Trevor Cornwell

    First, sorry that you did not get an answer right away from us. The problem for developers who have multiple apps has come up before and we have been working to come up with a solution. One possibility is ACH, what we use for paying gym memberships, for instance. The problem is that the amount that we have to deduct varies every month and that means you would have to agree to allow appbackr to deduct a different amount every month and that may not be agreeable to you (it wouldn’t be to me). We have been working with PayPal and if you have a verified business account, we can invoice you. You have to agree that if your balance goes above x amount (we are looking at $2500 or $5000 USD) that you will make a payment. This would eliminate the need to use a bank account that we have set up for you.

    We will have an announcement about that shortly. I do understand why you don’t want all the money coming through an appbackr account (which is set up exclusively for your iTunes Connect account) even though we pass through 100% of the proceeds for other apps and pay all your incoming wire fees. By way of explanation, the reason that we set up an account for the incoming funds is to create transparency between buyer and seller. It is a limitation in iTunes Connect that you cannot use different accounts to receive money and we are doing our best to find a better solution.

    Thanks for researching this and I hope that this helps. We are just working on finalizing the terms in the contract and then we can announce this new feature.

    Trevor Cornwell
    Founder & CEO
    appbackr inc.

  • http://www.appbackr.com Trevor Cornwell

    Alex, Could you let me know which email you sent your request for information to? It didn’t come into our support email and so I want to track where it went. Apologies again for not seeing this. Also please feel free to email me directly if you want to discuss any questions about this or anything else.

    Trevor

  • http://www.alexcurylo.com/ Alex

    Thanks for dropping by! Yep, the idea of adding another step to the payment process between Apple and our bank account for our other apps just isn’t really appealing, even if in theory it would be a totally transparent step.

    The other wrinkle for us foreigner types is how you plan to handle exchange rate issues. As it is right now for us in Canada, each month iTunes Connect adds up all the regions, converts them into CAD, and then one payment arrives in the designated Canadian bank account for CAD $25 less than the total amount displayed in iTunes. So whether we hand that whole payment over to you or you invoice us or what, there’s a question as to exactly where currency exchange would be involved in the process, since it’s probably a fair assumption that the backing payments, your deposit accounts, and eventual payouts are all in USD yes? (For that matter, is it even possible to tell iTunes Connect to deposit in a different currency than your developer account’s home region?)

  • http://www.alexcurylo.com/ Alex

    “Alex, Could you let me know which email you sent your request for information to?”

    Directly to Matthew, who’s been doing a stellar job of keeping me apprised of developments and replying in good order to all my emails right up to this last one. Since I did send it Monday morning, I figured chances were he was probably just extra-busy what with it being going public week and all. But I didn’t have anything better to post about Friday night :)

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