MacHeist in Retrospect

MacHeist has been perhaps the most successful shareware promotion in history. Slashdot has an article suggesting that (like all success stories), MacHeist has created a schism between the “winners” (uh, the organizers of the bundle and perhaps the developers who participated) and the “losers” (seems to be developers who didn’t participate). I’ve been careful to reserve comment about the whole thing until it was over or nearly over, because trying to pass judgement on it before today would be nothing but pure speculation, and you know how I never engage in that.

So, I am of the opinion that MacHeist has been a good thing for everyone involved. Here’s the obvious reasons why:

• If nothing else, it’s been interesting.
• It’s helped associate the ideas of high quality and good value with Mac shareware in the minds of a wide audience.
• It’s been good for the platform. This is the second group marketing event which the organizers have put together which leaves the Windows community (if there is one) on the sidelines, asking “why didn’t we think of that?”
• Nearly $200k will be donated to charity.
• Customers got a bunch of great applications for $50.
• The organizers stand to make a cool couple hundred grand in a week.

So, what’s up with this winners and losers thing?

The organizers of MacHeist deserve the lion’s share of the profits. It’s simple: they took all the risk. They came up with an idea, somewhere around an estimated $50-$70k in start-up capital, and risked the money on the idea. The developers, on the other hand, took no risk. They were paid a flat fee up-front. What if only a few hundred people had bought into MacHeist? Let’s see how badly the MacHeist group could’ve gotten screwed:

There are flops in the shareware world, for sure. Most people who get into it don’t quit their day jobs for some years. It was entirely possible for the MacHeist organizers to lose a significant amount of money. The indie developers, though — they would’ve been paid regardless, and if no (or virtually no) bundles had sold, they wouldn’t even have incurred additional support costs. One way to look at this event is that a bunch of developers paid MacHeist to prove the concept of bundling unrelated applications from different vendors and selling at volume on a discount.

The other interesting question regarding MacHeist is whether or not this will be a one-time thing, or an annual event, or quarterly with a different set of applications each time, or what. I’ll tell you what’s for certain: the next MacHeist, or MacHeist-like bundle, will not be able to buy the indie developers’ products as cheaply. Given that this strategy has proven successful, you can bet any participants in future events will be able to command a higher flat fee, or a percentage, or what have you.

(Or maybe not: it occurs to me that there might be a higher demand for MacHeist-like events from indie developers, but the number of Heist organizers and events may remain constant. Either way, that would imply that there’s a non-monetary value to participation which developers will want to buy. Perhaps developers in the future will have to pay MacHeist to take part, which would imply that the developers who participated in this round got an amazing deal.)

Still, I think it’s very easy for me to make these observations in hindsight. When the program first started, I too wondered why Delicious Monster would agree to sell an unknown and unbounded number of licenses for a flat fee — it did seem on the surface that the developers were getting the royal screw. Others have pointed out that now each one of the ten participating developers now has a base into which they can sell upgrades that’s 15,000 users larger. And as your business school teacher might say: “nothing ventured, nothing gained” — the developers weren’t the primary risk-takers, and thus were not the immediate primary gainers.

I think it’s pretty cool and that it’s benefitted the Mac market as a whole. Please excuse me, I have $49 burning a hole in my pocket.