In running a large iPhone gaming site, I have a somewhat unique perspective into the market, and there’s been a notable shift in the market in the past month or so.

To give some background, the iPhone app market is competitive. There’s been a lot written about what it takes to get to the top of the App Store. In the end, it’s all about exposure. Whether that exposure is through the App Store itself or through review sites, it’s a pretty key component in a developer’s success. While several small “indie” developers have been able to successfully make it big in the App Store, there are, of course, hundreds of developers who have been unable to. Some of those developers have been more vocal than others over the course of the year about issues of fairness about coverage on reviews sites, and whether indies really do have a shot.

In the past, I’ve generally dismissed these complaints, as I didn’t necessarily think they held that much merit. While there were a lot of games being released into the App Store, I felt the majority of them weren’t worthy of coverage and very few really truly deserved to be a success. In the end, I felt that most developers needed to realize that their games were not as good as they thought they were, and their lack of App Store success wasn’t necessarily reflective of a flaw in the system but perhaps of the appeal of their game. I guess I believed the cream would rise to the top.

The reason I believed this was that despite the massive number of games coming out, I felt we could actually keep track of all the games coming into the App Store. Through our forums, and by playing the games ourselves, I felt like we could pick up on the games worthy of coverage. It was a somewhat tedious process, and I think we might have played 20+ games for every game we thought was worth covering. We also would try to play every game that would be sent in to us.

So what’s changed?

Well, clearly the volume of games appearing in the App Store has increased. But that’s not necessarily an insurmountable issue. While I don’t feel I can personally play every game that comes out, this is the sort of thing that more manpower can be thrown at, and we’re making adjustments to try to address that.

The biggest change, however, is the influx of mid-sized to large developers who are invading the App Store space. Companies like EA and Gameloft are really ramping up production of their App Store games. In March, EA announced 14 games coming in 2009. That’s a new EA game every 2 and a half weeks being released. Gameloft has ramped up their production as well and seems to be releasing games at least as aggressively. And these are high quality titles.

Ignoring those big players, a number of other serious small to mid-sized development firms have turned their attention to the iPhone. Glu is a mobile gaming company that has started releasing original titles for the iPhone as well. They’ve announced 5 at GDC and are planning more. The list goes on. Ngmoco, Freeverse, Digital Chocolate, Artificial Life, IUGO etc… all have multiple titles coming to the iPhone this year.

So What’s The Problem?

Well, for the serious gamer, there might not be a problem. The number of high quality games coming to the iPhone is increasing by leaps and bounds. For the smaller developer, however, it introduces a number of issues.

First of all, the quality level for gaming has been continuing to increase while the prices of games continues to drop. Major developers have been adjusting their prices downward in order to find the right pricing. At this point, I see $4.99 as a bit of a ceiling for quality no-name brands. If you price yourself above that you’re competing directly against Gameloft and EA titles. And the problem is that margin is getting narrower.

I think the bigger issue, though, is one of exposure. There’s only so much attention that gamers are going to have, and they are going to be naturally drawn to the big name titles.

From a news and review site perspective, you’re competing for attention against some major titles. This past week alone we saw the releases or news of Boulder Dash, Need for Speed, Sims 3, Top Gun, Star Defense, Mass Effect, Tiger Woods PGA Tour, Myst, Siberian Strike and more. Those are titles that occupy the time and space of gaming sites. While story posting volume can increase to some degree, I don’t believe it can (or should) go up too high, as otherwise you’re losing the attention of the people you want to be exposed to.

That’s not to say all hope is lost. Fortunately, the iPhone gaming audience continues to grow, which means the absolute amount of exposure for a smaller game may actually be higher today than it was 6 months ago. However, since the numbers are up across the board, that may not help as improve App Store rankings as much as it has in the past.

I guess the first thing to note is that describing what I do as “blogging” isn’t entirely accurate — in that it’s not all I do. It’s the accepted term, of course, and one that I adopted because it best describes my business.

The “blog” term has become so broad that it now encompasses a small site like this, but also applies to MacRumors.com. The act of blogging is simply writing a story and posting it to your site. Just by filling in a few blanks and clicking on a few links, you can easily set up your own blog on WordPress.com.

The trick to being profitable in blogging, of course, is a combination of finding a large enough audience and being able to make money off that audience. Trying to extend your blog into a business will require you to become familiar with ad sales and ad networks. As traffic in your site grows beyond the confines of your current web hosting account, you may have to become familiar with the intricacies of web hosting and dedicated servers.

These problems, though, are good ones to have, because it means you’ve grown large enough that they matter. Most hobby blogs won’t ever have to worry about these issues.

For those of you who are already blogging or have established sites, this advice is not for you. Once you are familiar with the markets, you can make strategic decisions to start a site on whatever topic you want.

For those of you who were inspired by the story about someone who was able to turn their hobby into their career but don’t know where to start, here’s my advice on starting a blog:

I think I’ll stop there for now. I’m sorry if it seems like such a basic and obvious list, but I think those are the essentials.

I also don’t think people should be discouraged by my 8 year figure. I’d said before I think many people could and would have made the switch after 3-4 years. Recently some blogs have been able to rise to prominence over the course of only 1 or 2 years. Of course, competition can be tougher these days with the many corporate-backed blogs.

Job and career satisfaction are always hot issues and I suspect there are a lot of people have that secret career in the back-of-their-mind that they wished they had pursued.

Understandably, there was a lot of coverage in the blogs and especially from those with similar aspirations. Several people had emailed me about thoughts and advice on building a site. I don’t know if there’s a magic formula, but I’ll share some thoughts in a later post.

Finally, there were a few people who found offense to my career switch. I understand some of the issues surrounding it, but I think the best thing I can say is it was a very difficult decision for me at the time, and also a very personal one. Some people are focusing on the money, but in reality, it was a lifestyle and family choice. I suspect that given the same options, most people would have made the same decision.

The most likely reaction I expect from regular MacRumors readers is “You weren’t working on MacRumors full time already?”

As crazy as it seems, for these past 8 years, MacRumors has been a hobby or part-time job. I think most people would have made this move long before me, but the momentum of my “other” career made it difficult for me to break free.

I started MacRumors.com in February of 2000. I was in my 4th and last year of medical school. I had been dabbling in the web for fun and decided to focus a natural interest of mine (Apple) into a website. My work on the site has since had its ups and downs. Over the next 8 years, I completed medical school, an Internal Medicine residency, a fellowship in Nephrology and even worked two years in private practice as a physician (Nephrologist).

During that time, I’ve been fortunate enough that my hobby has become successful enough that I am able to transition it into my career. While the trend may have been clear for past couple of years, I was slow to recognize it.

One of the most frustrating things over the years, however, has been my inability to dedicate the proper time to improve MacRumors as I might have wanted. In addition, as a web-tech-guy I constantly have ideas and plans for other web projects that I’ve never had the time to pursue. By settling on this as my career, I will be able to execute some long standing plans.

Wish me luck!

Follow Me

Twitter: http://twitter.com/arnoldkim
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My Active Sites

Normalkid – my personal blog
MacRumors.com – Mac news and rumors
TouchArcade.com – iPhone games

Contact Me

arn@normalkid.com

That’s it. If you have a site that attracts a lot of visitors, you will be able to make money. On the internet, traffic equals power, which subsequently equals money.

Depending on the topic of your site, however, it may be easier and harder to generate that money. But even a seemingly ridiculous site such as HotorNot.com has a revenue of $5-$10 million a year (with the bulk of it being profit). If you aren’t familiar with the site, the premise is simple: rate other users on how “hot” they are on a scale of 1 to 10. That’s it. You vote, and get sent to the next photo. When I first saw it, I thought it was amusing but saw no way they could make money from it. As it turns out, they managed to turn it into a casual dating site with a simple subscription service that allowed you to make connections. This simple $6/month revenue stream added up to a revenue stream of up to $10 million a year,

Now, generating revenue might not be enough if your expenses are high. One notable site that has never made a profit is YouTube. To be fair, I don’t think generating a steady profit was part of the original game plan. As a venture capital funded site, millions of dollars were invested in the infrastructure, employees and bandwidth to create what became a “killer app” for the Internet. In the end, the founders and investors did make an enormous profit on the site through its sale to Google for $1.6 billion dollars. Why did Google pay $1.6 billion to buy a site that has never made a profit? Because Google understands more than anyone the value of traffic, and truly believes that traffic = power = money.

As the founder of a well trafficked site, and with plans to establish other sites, the concept of building traffic is always on my mind. I have ideas of how other sites established their user base, but here are a few reasons MacRumors has grown to be as popular as it has:

- Good domain – I was fortunate to be able to pick up “MacRumors.com” as an expired domain in 2000. It’s a generic keyword-rich domain which perfectly encapsulates the topic of the site. It’s easy to remember, and well ranked in searches related to rumors.

- Addictive Content – it’s no coincidence that I started a web site surrounding rumors about Apple and the Mac. I was already an addict. I scoured messageboards and news sites around the web for hints about future Apple products. I don’t expect everyone to understand how this particular topic is as addictive as it is… but clearly it’s not just me.

- Little Competition – We weren’t the first rumor site on the scene. But what was interesting was that there used to be a clear divide between rumor sites and news sites in the Mac web. “News sites” would not report on rumors. They purposefully ignored the entire subcommunity. That seems ridiculous now, as the lines have since blurred, with even mainstream media covering Apple rumors. But I’d say that gave us a 4 year head start over other Mac sites. They weren’t willing to cater to the rumor-audience, so MacRumors was one of only a few rumor destinations for those intervening years.

The New York Times just did a profile on Mr. Munroe and revealed some interesting stats with regard to making a living as a web comic-strip writer.

XKCD.com attracts 500,000 unique visitors a day and delivers over 80 million page views in a month. There are no ads, however. Instead, Munroe appears to make a living off T-shirt sales. They reportedly sell “thousands” of T-shirts a month, which supports him and his partner “reasonably well.” It’s apparently not that easy to find this success since Munroe estimates he’s one of only two dozen web comic authors who actually make a living off of their comics.

If we wildly guess at $10 profit per T-shirt, that gives us a range of $20,000-$99,000 (2000-9999 T-shirts) revenue a month which projects out to $240,000 to $1,188,000 a year in revenue. So, the duo probably pull in the mid-hundreds-of-thousands a year. Not bad at all, and a surprising revenue stream. In some ways it makes sense, in that advertising revenue for comics can’t be very lucrative. Regardless, it’s refreshing to see someone have a non-advertising revenue stream.

Another interesting tidbit from the article is that Munroe talks about the power of the Internet with respect to niche markets:

On the Internet, he said, “You can draw something that appeals to 1 percent of the audience — 1 percent of United States, that is three million people, that is more readers than small cartoons can have.”

He’s built a business succeeding in his niche market, despite the fact that “mass appeal” of a technical comic strip is relatively small.

It would seem a physically bound book would be an obvious step to take, and it appears its in the works in some form.

For those who aren’t familiar with ArsTechnica, it’s a technology news site that has distinguished itself over the years by offering intelligent and thoughtful articles. With the recent trend of rapid-fire blogs and “breaking” news blurbs, it’s to their credit they’ve been able to sustain their audience and reputation.

I don’t know the founders of Ars personally, but am certainly aware of their work. The story goes that it was started in 1998 by Ken Fisher (and Jon Stokes) out of “boredom” in graduate school and apparently stayed a hobby for the first 6 years. Ken Fisher touched a bit on the start of Ars in a recent video interview with Kara Swisher. I’m not sure the exact sequence of events, but today Ars is reported to have a staff of 8 people who will now be working for Conde Nast (publisher of Wired).

Their decision to sell is interesting. Online ad revenue has been on the rise over the past 5 years, and I’m certain they are benefiting from this phenomenon. With their technical audience, they should be able to attract very favorable ad rates and sponsors.

Assuming the founders were making a solid profit on a yearly basis in-line with a $25 million valuation (let’s assume they didn’t get a “can’t refuse” offer), what are the motivations for selling a self-sufficient business that from-all-that-I’ve-read has been their “baby”?

10 years is a long time, so I suppose they were ready to move on for various reasons. While the writers are moving to Conde Nast, I don’t see how the co-founders would stay there beyond a compulsory period of time with $25 million in their pockets. I’ll be very curious to see what they do next, and wish them luck.

Update: Fisher explains the motivation… they want to built the site up further which requires corporate backing. And it appears he will be staying to continue building the site.

On the surface, this surprised me, as I always felt Gizmodo and Engadget were of comparable size… but as with all 3rd party traffic data, you have to be suspicious about their methods of collection and how this might skew the result. Hitwise apparently draws from a pool of national Internet Service Providers (ISP) and generates traffic data based on this. On the surface, it seems like a reasonable method, but I still can’t wrap my head around the belief that Engadget draws 6x the visitors as Gizmodo.

Compete’s records show that they have roughly the same amount of traffic, but their methodology is also subject to error.

Fortunately, we do have direct traffic stats for Gizmodo that is directly measured which shows that Gizmodo draws 5,097,121 unique visitors from the U.S. in one month. If we assume this 6x the visitors stat holds true over a month, that means Engadget should be getting 30,000,000 uniques over a month.

To put that in perspective, that would make Engadget twice as large as Digg (whose stats we also have direct measurements) who “only” attracts ~15 million unique U.S. visitors a month. I don’t think that adds up, and while I have no solid proof, I don’t see how the 6x multiple could be accurate.

One of the arguments of pro-Twitter bloggers is that Twitter is quickly becoming one of their top traffic referrers based on their web logs. A particularly noteworthy graph is from Calacanis who describes that Twitter has sent ~45,000 people to his startup (Mahalo) in the past 6 months.

That’s an impressive number, of course, and helps drive interested entrepreneurs and bloggers to start their own twitter accounts to try to recreate this effect. And before I get to my point, Twitter is certainly a great self promotional tool, and I think it’s a great tool to interact with your peers and others interested in you and your business. However… that being said, there’s some fine print to these statistics.

The way Twitter works is that people “follow” you to see your updates. So you tell your friends, your fans, your customers to “follow” you on twitter. It’s kinda like a private RSS feed for them. They see updates from you and anyone else they follow. (me on twitter)

So, of course, if you link to your site, people who follow you might click through. That’s great… but it’s a closed pool of people. A closed pool of people who already know who you are and were interested enough to “Follow” you on Twitter.

So, how many of those ~45,000 visitors to Mahalo were actually unique individuals? No more than 21,000 (or whatever number of followers Calacanis had at the time). And these are people who already have an active interest in Calacanis. Realistically the 45,000 may represent only 4000 distinct people clicking on multiple links over those 6 months. In many ways, you are preaching to the choir. And while there is value in that, perhaps not as much as the raw numbers would lead you to believe.

As a comparison, I think there’s more (different?) value in 45,000 visitors from Google or scattered across multiple other sites, as those possibly represent “fresh” visitors.

That being said, I think Calacanis is doing it right, in that he’s driving traffic to his startup rather than his blog (where he recruited his Followers). I think if you are simply trying to drive Twitter traffic back to your blog (or where ever you recruited your Followers), then you are simply driving the same people back to the site who would have gone their anyway (via Web or RSS). There’s no harm in that, but then the warm-fuzzy feeling you get from your Twitter referrals may be even more misleading.

In some cases the offense is clear: exclusive content or screenshots that are simply “lifted”, republished and no attribution given to you. Of course, this is the most offensive of actions, and fortunately, it is a relatively rare occurrence. Ironically, this used to be a bigger problem with mainstream news sites. As blogs were just emerging as a news source, I’d frequently see “legitimate” news sites reference emerging news with a wave-of-the-hands “word on the internet is…” and refuse to link to the original sources. Fortunately, this trend has dwindled as the line between blogs and media have blurred.

An equally deceptive, yet growing trend I’ve noticed is one where sites will rewrite original content and even include a link back to the original source, but hide the link in a way that makes it entirely un-obvious that the original site even exists.

Instead of writing “BlogXYZ.com writes…”, they might just report the news “We’ve heard that ABC is going to be great…” and then maybe link one obscure word later in the text back to the original source. While they’ve technically linked back to the source, the end result is the same as the first scenario, taking credit for the information.

I can’t really offer a great solution on this issue. I do know what the end result: you are far less likely to link to them, which, in turn, over time, will result in them being far less likely to link to you. This circle tends to feed on itself.

So, in the end, play nice and attribute properly.