App Store Changes Could Level Playing Field

Macworld — The news that Apple may have altered its ranking algorithm is rather a big deal for developers large and small, which probably explains both the current wave of hand-wringing over the rumored change as well as Apple’s (AAPL) reticence to discuss the matter.

As with all changes, if Apple actually is up to something, there will be winners and losers.

For developers, App Store rankings are an important dual-purpose tool. As a data point, they are useful for understanding how well an app is doing in relation to its competition; more importantly, however, high placement in the rankings is the easiest way to get your product in front of potential buyers and can have a significant effect on sales.

Obviously, rankings are useful to the end user as well: the various charts, which currently provide a snapshot of popularity based on either number of copies downloaded or revenues, are a great way to discover the apps that are creating the most buzz among fellow App Store users.

The current ranking algorithm, as it is commonly understood, is based on the number of copies that an app sells. Although Apple has never released any specific sales figures associated with the position of an app in the App Store’s charts, it has been widely estimated that, as an app climbs higher in the Top-100 sales chart, its sales increase at an exponential rate.

Because the charts are based on sales, climbing them requires a big marketing effort on the part of a developer—something easier to accomplish for a large company than it is for a small, independent house.

But one could make the point that app sales are only one of the indicators of how popular an app really is—how many times, for example have you bought an app only to launch it once or twice before forgetting about it, or even deleting it? This is where the supposed new rules could come into play. By supposedly integrating metrics like the amount of time a user spends on an app, or the star ratings that the app receives from those who download it, Apple may be trying to give insight into the longer-term value of App Store offerings.

These adjustments, in turn, would make gaming the store’s charts much more difficult, potentially leveling the playing field for all developers. With the old system, a massive sale—like the one Electronic Arts (ERTS) did around the 2010 holiday season—has the potential to greatly skew the rankings—and, therefore, the sales figures—of every app. With the new system, this kind of marketing move would be much less effective at sending apps skyrocketing up the charts and thus reaping even more sales by virtue of their increased visibility.

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