Mobihand Reducing Commission Payments and Unable to Compete with App World

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Mobihand
Mobihand traffic has taken a considerable hit this past year.

It looks like Mobihand is on the decline and having a hard time staying relevant in light of App World. Recently, Mobihand sent out a letter to their distribution partners saying that they are reducing commission rates in order to accommodate the fact that they are paying developers 10% more on their sales. Developers used to get 60% from Mobihand and they now get the industry standard 70%. According to Mobihand:

Due to this 10% increase given to the developers, we need to lower the shared sales rate you earn to a maximum of 13%, with lower rates applicable to lower amounts of sales, effective July 1, 2011. This is an unfortunate revenue reduction for us and our network partners, but we believe the new developer rate evens the playing field and will have developers promoting our network of stores as much as they have done in the past.

What Mobihand doesn’t seem to understand is that they’re shooting themselves in the foot. Developers don’t make much money on Mobihand. From all the developers we’ve spoken to, it seems the average developer sees about 20% of their total revenue come from Mobihand and the majority comes from App World. The reason Mobihand is great is primarily because of the distribution partners. Mobihand and its distribution partners make a great marketing team and spread the word about apps to the partners’ readership. An additional 10% to developers isn’t going to amount to much in the end. Lowering the commission rates could create a sour relationship with the distribution partners who are keeping the company alive. The distribution partners are also driving a lot of traffic to Mobihand and lowering commission rates could have a negative impact on traffic as partners move elsewhere. From the above graph, it’s clear that Mobihand’s traffic is on the decline and it’s only a matter of time until the company either sells, goes bankrupt or pivots to remain competitive. Click through for the letter from Mobihand to partners.

June 1, 2011

Dear MobiHand Distribution Partner,

As you may already know, on May 1st MobiHand increased the amounts we pay software developers to the 70% rate that has now become the industry standard. Our previous arrangements included payment of various rates that averaged around 60%.

The old rates made it increasingly difficult to attract leading developers who get 70% from virtually every other significant store (including Apple, RIM and Google). The old rates also encouraged developers to push customers to RIM’S BlackBerry AppWorld and Google’s Android Market instead of your MobiHand-powered store(s).

Due to this 10% increase given to the developers, we need to lower the shared sales rate you earn to a maximum of 13%, with lower rates applicable to lower amounts of sales, effective July 1, 2011. This is an unfortunate revenue reduction for us and our network partners, but we believe the new developer rate evens the playing field and will have developers promoting our network of stores as much as they have done in the past.

We are also changing our payments dates as a result of other changes in the overall structure of our distribution services. Many of our other sales channels cannot pay us in time to enable payments in 15 days. This has forced us to change the payment dates for our thousands of developer partners and consequently our monthly payment process will be changed to occur in 30 days.

We have been busy adding new features to both the desktop and mobile stores, to help increase traffic to your stores and encourage users to keep coming back. AppVerse has been a great success and now we have added “Lists” to AppVerse. We have also just finished a complete make-over of your mobile store, making it easier for users to search & buy apps on their mobile phones. In addition, the new rates paid to developers appears to be making it easier to sign developers with popular apps. So we expect to see increased traffic and sales moving forward.

To formally implement this change, the following amendment of our agreement with you will be effective on July 1, 2011:
_______________________________________________________
Amendment

This is an Amendment of the Co-Branded Store and E-Commerce Agreement (or such other named agreement that governs the establishment and operation by MobiHand of an electronic software store accessible by customers through the website(s) and/or on-device application(s) controlled by the recipient of this notice) (referred to herein as the “Agreement”)

Beginning July 1, 2011, the percentage rates of Net Software Revenues to be paid under the Agreement are as stated in the following table:

Prior Month Sales, Referral Fee Rate:
Less than $1,000, 7%
$1,000 – $4,999.99, 9%
$5,000 – $9,999.99, 10%
$10,000 – $14,999.99, 11%
$15,000 or more, 13%

Beginning July 1, 2011, payments by MobiHand will be made on the 30th day of the month and all references to the “15th” are hereby changed to the “30th”.

This Amendment shall be effective as of July 1, 2011 and shall remain effective until either revised pursuant to a subsequent amendment or the termination or expiration of the Agreement. This Amendment is being implemented in accordance with the change procedure stated in the Agreement.
_______________________________________________________

These changes will make it easier for us to acquire exciting content for our stores, making the stores more interesting to customers and resulting in increased revenue sharing paid to you.

Best regards,
The MobiHand Team

  • http://twitter.com/berrygoodthemes BerryGoodThemes

    ever since app world allowed free submissions our mobihand sales have declinded, to the point they are now 50% lower than pre free app world submission levels.

    our share is about 60/30 app world to mobihand but we are stuggling justifing even spending time to upload products to the stores as sales are so low .

    shame as this is where it all started but have to step up or lose out!

  • Guest

    We did not receive a developer payment from Mobihand this month and no response to emails.

    Looks like the beginning of the end…

  • Adfasd

    I have not got my money from MobiHand since July.