The Real Zack Morris

An Open Letter to Apple on App Financing

Dear Apple,

With Amazon’s recent decision to begin lending capital to sellers, I thought it was time to suggest the possibility that you could do the same for your App Store developers.

It’s tremendously difficult for independent developers to raise funds for their projects.  Many of us have gone for extended periods with little or no income, putting our savings towards finishing projects that often take months or years to complete.  It’s notoriously difficult to raise funds for shareware games and other small projects.  Banks scoff at our business proposals.  Most of us don’t know any angel investors outside of immediate family.  There is always Kickstarter, but successfully funding a campaign can be elusive.  That leaves credit cards, a financial trap for developers unlucky enough to find themselves in the long tail of a product’s sales, where money trickles in too slowly to keep up with interest.

Meanwhile Apple has over $117 billion in cash reserves.  With an average project cost of say $25,000, Apple could fund over 4 million developers right now.  If you want to think different and grow the app market, that would surely do it.  You could use your iTunes Connect financial reports as a kind of credit check to determine if a developer’s track record makes him or her eligible for funding.  You could even have refinancing options if a second investment round is needed, where developers could trade some of their payout percentage for additional funds, or sell ownership of their app to Apple to close out a loan that’s looking at a long term repayment.

With the economy moving more towards services, we need to think about shifting investment from inventories to human capital.  I was close to finishing a major game project for the iOS App Store but ran out of money and recently decided to take a contract at a company instead.  If sales would have been anything close to our run in the Mac App Store, Apple’s 30% cut could have potentially been in the tens of thousands of dollars.  Multiply this across the many thousands of struggling developers, and you are losing out on millions of dollars.  It’s too late for me, but others could benefit from your investment, and you could increase your profits in the process.  I hope you’ll consider it.

Sincerely,

Zack Morris

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