“Flectere si nequeo superos, Acheronta movebo” — Virgil on tech monopolies and decentralization.
I have recently been playing around with a few ideas and one of them caught my eye as being particularly interesting. Simply put the idea is to offer a single decentralized payment system built specifically for software distribution. This system would lower the bar for a curator to build an app store, and so would allow developers to choose from a wider range of distribution platforms, countering the negative impact software distribution monopolies (like the App Store or Play Store) have had over developer and user experience.
I ended up spending enough time thinking about this that I decided to make a quick pitch deck and one-pager for this system. For the sake of this post, let’s call it Acheron — for the Greek river that eventually takes us all to the underworld, much as software unlocks new realms for us (though often more cheerily). To be clear, Acheron is not a live product, startup-in-the-making or anything like that; simply a vision for what an open payments layer for software distribution would enable and what it may look like.
My hope is to convince you that an “open-store” future —one in which truly anyone can curate lists of software they love and use with their audience and share in the value they’ve given developers — is essential to the future of software development. If any of this Styx (bear with me) with you and you have power over a software distribution platform, or you happen to know a Tim (Sweeney or Cook would be great), or other developers eager to see a more equitable web underpinned by an open economic system, this post is for you ;). That’s the goal here: to get more people thinking about how we might shape the world of software distribution. Please share.
Beyond that, please find my quick pitch below, and links to a deck and more startupy one-pager/high-level spec I made for the fictional system, Acheron, if you are interested in digging a little deeper into this decentralized app-store (and not decentralized-app store).
The state of the world
When we talk about app stores, we mean both modern software distribution platforms (i.e. over the Internet) and OS-dependent ecosystems (i.e. your phone app store). While greatly responsible for the amazing growth of the software landscape, centralized models of curation for software distribution is showing its seams. The issues are many, but amongst them:
- curators charge software creators usurious rates,
- curators enforce rules arbitrarily,
- curators are subject to censorship and anti-competitive pressures.
To be clear, the severity of these issues is marketplace-specific. Epic Games for instance charges 12% to developers selling on its App Store, vs Apple’s 30%. And while curation undoubtedly has great value — it allows consumers to find and trust software and creators to be found — , the marketplace lock-in that exists today easily gives rise to the above abuses to the detriment of creator and consumer experiences.
At its core an app store is a payments system (for app + in app) developers agree to use in exchange for access to a captive audience. It’s worth wondering whether the payments system is really the common piece here, when looking at something like the Chrome or Firefox extension store, but I think these are business-model related exceptions (i.e. companies not monetizing what is otherwise an app store). In such an app-store, the audience is typically captive because of some advantageous positioning its curator has over the platform the audience lives on. This can be:
- Hardware Control — e.g. Apple, AWS, Sony, Xbox
- OS Control — e.g. Google
- Ecosystem/Software-suite control — e.g. Salesforce AppExchange, Atlassian marketplace, WeChat Mini
- Exclusive Content — e.g. Epic Games Store, Battle.net
We can imagine three paths ahead for regulatory outcomes:
- App Stores as we know them but not managed by ecosystem builders — the “separation of powers” outcome: split organizations away from the marketplaces for software running atop the platforms they have built. This is like the three-tier system for alcohol distribution. On its face, this seems to achieve little: replacing Apple with another arbitrary decision maker does little to repair the faults of single-party rule, and Apple arguably has a better understanding of iOS’s capabilities than any other curator.
- Curation-less software discovery as the norm — the “wild west” outcome: consumers can freely sideload or install binaries on their devices from anywhere. Not only is this not enforceable beyond mobile (if at all), but there is undoubtedly something delightful about browsing-based software discovery vs search-based (which there is more of on personal computers). Regardless of platforms, curation is key to good user experiences.
- Competing app stores as the norm — the “multi store” outcome: consumers can choose from based on inventory and curation standards — In this instance, while you may not simply install binaries, competing app stores must be allowed on any platform. This is largely what the personal computing ecosystem looks like.
Let’s imagine a fourth, better path.
The basic pitch for Acheron — the “open store” outcome
An ability for consumers to choose from competing app stores seems to me like the best option: it gets us the advantages of curation with real competition for curation pushing curators to innovate since they can only charge as much as they are providing unique value to the consumer and developer. Now going back to our definition of an app store as a payments system developers agree to use in exchange for access to a captive audience, the idea is to develop an independent payments system any curator can use to distribute software lists: Acheron.
A large part of the complexity in distributing software comes from managing software identity, inventory and updates, and processing payments across regions. Acheron (or such a system) would take care of this so as to enable more parties to innovate on distribution, curation, feedback and and ratings systems.
Specifically, Acheron would act as a platform for creators to list and verify binaries and their updates, as well as for processing payments for software purchases, licenses and in-app content. Acheron would allow for:
- Lower barriers to entry for curators: more options for consumers.
- Transparent curator lists and associated economics: simple recourse in the case of arbitrary curator behavior or usurious rates.
Here’s a quick slide to illustrate how Acheron could be used.
I forgot to mention a final “detail:” Acheron should be developed as a decentralized system. Specifically, an Acheron-like system would be made up of two main elements. First, a public ledger that tracks and associates binaries, creators and curators. Second, a set of two cryptoeconomic tokens: a stablecoin used for all internal accounting across currencies, and an associated governance token (obtained by redeeming the stablecoin) distributing dividends proportional to the GMV (Gross Market Value) of a given software list (or of Acheron as a whole), in order to enable token holders to share in a fraction of the economic outcomes of the system.
Why it deserves to be decentralized
Now I agree: for the most part blockchains are inefficient databases. But for this use-case, decentralization carries many key advantages over a centralized alternative. These advantages are all derived from the key feature of a blockchain: it is public, thereby offering verifiability and transparency to onlookers. By creating a decentralized app store (or a federated app store to be precise) we prevent any centralized entity from running the store and payments layer. They cannot, therefore, extract monopolistic rent and cannot hide antitrust behavior behind arbitrary rules. More specifically, this means:
- No trust for a centralized party: This is what got us here in the first place. Having a public blockchain at the core of software distribution ensures one need not go on faith to trusting the system but can verify what curators are doing.
- Open Ecosystem Development: Likewise, operating Acheron as a decentralized protocol lowers barriers-to-entry for developers to build new features atop the platform. This gives rise to a vibrant ecosystem of software distribution protocols, rating and feedback systems, curation tools, and more that cannot be developed today due to the captive nature of existing app stores.
- Legal Oversight at the curator level: By the same token, laws of competing jurisdictions is handled at the curator level rather than Acheron-wide. No banning a set of apps altogether because of a given country’s request, legal oversight applies at the curator level and does not impact the viability of the payments system itself.
- Tokenomics: By tying market development to a stablecoin, Acheron can more easily grow across geographies fiat-by-fiat. Further, the system enables creators and curators to effectively invest a portion of their proceeds back into the marketplace itself. The only way to invest in the iOS App Store today is to buy AAPL stock. Acheron lets its participants share in the ecosystem growth through direct investment into the global app store, or any of its federated lists.
Why the “open store” outcome would not come to pass
I believe the most likely long-term outcome to the current battle around ecosystem lock-in is a world of competing app stores, the “multi-store outcome” above.
Apple has spent the better part of a decade building out a services-based business model to go alongside its main one selling hardware. Yet, as an outcome of its battles with Epic or Spotify, it risks losing developer mind-share in existing and emerging software ecosystems if it is seen as a bully in how it controls the App Store.
Accordingly, Apple has a couple options if they cannot quell discontent developer-by-developer. Apple can cut its take-rate in the hopes of retaining its monopoly or it can relax its monopoly over curation on its devices and allow others to run competing app stores (mind you many consumers would still use Apple’s, especially if it is a default).
Apple would rather maintain its monopoly I assume, but could be forced to allow app store competition by regulators. I believe this is the most likely long-term outcome and one that would satisfy all large players in the ecosystem.
Legislators will not be the path through which an Acheron-like will be adopted. It is too specific a solution (a new payments standard being made available across ecosystems) to a larger problem (software distribution monopolies), and removes government control over software distribution.
Accordingly, Acheron would only gain adoption if it
- finds success in a software niche of early adopters who will grow it into a standard (I can’t think of one),
- if it can become a neutral standard Epic, Spotify, and similar companies rally around (this is why I write this post).
The second path is more likely but means Acheron (or such a system) would only work if these powerful companies forego their long-term economic interest (of owning their own app stores and replicating Apple’s success) in the name of what they are clamoring for right now: more competition, even for the “little guys” (and here we mean those smaller than Epic’s $17b valuation).
And all of this would need to happen before government bodies legislate and make the “multi-store” outcome a possibility for these companies. I think the confluence of power players adopting this against their economic interest in the right time window is unlikely.
This is a very exciting time to be developing software. But we are clearly at a crossroads as pertains to software distribution across the world. The status quo is broken. Opening up the very core of these systems, i.e. payments infrastructure gives us a rare opportunity to set new ground rules for software discovery and distribution. I hope you’re inspired by one vision for a way this might be done! My goal here is to argue the case for why an open software distribution future would be best for users and developers across the world. If you have power over a software distribution platform, I hope you’ll consider this.