Are Software Developers Leaving Handango?!
Posted by Chris Leckness on 03/29/08 in Rants, Software
Well, I am no software developer, but I left Handango as the provider of software sales through our cobranded store based on some shenanigans they pulled back in 2006. It may have been a hasty move, but it was a move I felt comfortable with. I didn’t like the direction this company was going.
Well, I got a tip from a friend to a post on Smartphone Thoughts that clearly shows that Handango is still moving in the wrong direction. What do you think?
From: Bruce Wayne
Sent: March 27, 2008 11:00 AM
To: ‘Lucius Fox’
Subject: Handango Direction
Importance: High
Hi Lucius,
I am writing to let you know that I and many other developers are not very happy with the direction Handango is taking these days in terms of the increased revenue share (now at 50%). As a result of these changes SOTI is now at a crossroad and seriously considering switching off HCE and moving to another company to process sales. Developers are talking to each other, and there is now a growing consortium of developers looking to dump HCE, I do not think this is the direction that Handango wants to go in. I hope you guys see the light before it is too late.
We have been using Mobihand to power our store for the last year and I have been quite pleased with their performance. How do they treat their developers?
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Basically, my opinion of the situation is:
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!
I am a consumer and left Handango after their heavy handed approach to me as their client. I was also appaled at how they treated another developer (John Cody?) around that same time. I am much happier now purchasing directly from developers whenever I can and from other stores whenever possible.
Handango’s requirement for me to buy a download protection jacked the software price by 10-20% was the reason for my decision to quit being their customer.
I brought this to their attention and they were not receptive to my concerns.
Although I am not in to Apple products, I think I would enjoy the Apple online retail experience. My assessment is that they have a much better understanding of customer (and developer) service.
I sell a number of apps through Handango and I just became aware of this change in revenue share. I plan to take my products elsewhere (I will check out Mobihand)