Handango vs. Everyone Else, Round 10
Posted on 29 March 2008, at 3:17 pm, by Judie Lipsett
I just caught an item in my Mobility Site feed that reminded me of something I had meant to post when I read Rocco’s original item on Smartphone Thoughts. I got sidetracked by something else at the time, so I want to thank Chris for bringing it up again. 
Rocco had led by saying:
I just received some breaking news from a very trusted and reliable source. It turns out that Handango’s recent atrocities against software developers will not be tolerated! For those of you that are unaware, a few months back Handango decided that it was only fair to rape the wallets of the software developers that actually keep their foolish company afloat, raising their revenue shares to a drastic 50% of all software sales! It was bad enough that our beloved Windows Mobile developers were already paying companies such as Handango a fairly adequate size of their software sales revenue but this is downright ridiculous!
Rocco followed up with a letter written to him by a developer friend who works for SOTI:
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.
So that’s how Handango screws their developers, and whilst this latest atrocity is all very interesting and definitely bad news for those involved, it certainly isn’t the first time Handango has been way less than honorable with the people it deals with on every level.
Let’s talk a bit more about this…
How Handango screws their customers: In February 2007 our own Chris Spera had written an article entitled Handango Download Protection…Legalized Extortion?, and even though the title basically says it all, I’ll add a few of Chris’ choice statements:
For years, Handango has been offering “Download Protection.” For about $5 bucks per product, you can come back at any time and redownload your purchases. Until recently, they haven’t been enforcing that. However, I recently had to rebuild my computer and lost ALL of the software purchases that I had been maintaining since 2002 (I’m a bit of a pack rat. I save all of my downloads, so I never saw fit to purchase their Download Protection.) However, I recently lost everything and had to hard reset my iPAQ 6945 due to some configuration and sync issues. I found myself without my new copy of Microsoft Voice Command 1.6, so back to Handango I went to redownload my software.
If, like me, you don’t purchase Download Protection at time of purchase, and you want to redownload a file you’ve purchased after your 30 day grace period has expired, Handango will no longer allow you to do it…unless you purchase Download Protection for $6.99 (or $2.00 more that what they would have charged you at purchase).
I know they are NOT sharing the extra $5 to $7 with their Development Partners. Those are margin dollars that fall directly to THEIR bottom line…not mine as one of their partners; and I think that’s wrong. I purchased the product. I can prove that I purchased the product. I should be able to reacquire it as often as I need FREE of charge.
How Handango alienates their retail partners: Today Chris Leckness linked to Rocco’s article on Mobility Site and added this tantalizing bit…
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.
So of course I had to go to his original article and it was regarding the whole Omnisoft brouhaha that had got so many web site owners in a snit against Handango back in October 2006.
Summary: Handango, probably the largest online mobile software store, has abruptly closed my account and removed all of my products from their store for no stated reason, thus making it impossible to honor a raffle prize that I won from them last year.
I was awarded the $5000+ ad allowance fair and square before anything else occurred. But, by deleting my account, they made it impossible for me to use that allowance. Thus, Handango effectively reneged on their own raffle prize!
This was one of many reasons why we went with Mobihand when we set up the Gear Diary Software Store, and probably one of the reasons many other site owners did as well. When Chris Leckness wrote his post about leaving Handango, he said:
I am removing links to these stores, but I am sure that the won’t disappear soon and I am sure that whatever money my sites have coming to them will be forfeited due to some crappy term in our expired agreement.
Can’t you just feel his disgust and frustration?
Well, here’s something that no one is talking about: How many of you were aware that Handango just got an additional “$9.5 Million in Venture Funding to Expand Its Growth Initiatives in the Global Smartphone Content Market”?
HURST, Texas, March 3 /PRNewswire/ — Handango, the world’s leading provider of smartphone content, today announced that it has raised an additional $9.5 million in its Series C round of financing, which will be used to support the company’s new and innovative distribution deals, improve the scalability of its infrastructure, and expand globally. Additionally, Handango plans to enhance the consumer experience to make smartphone content easier to browse, find and purchase online and directly from a mobile device.
“Handango has proven itself as the undisputed leader in the global smartphone content marketplace,” states Sandy Miller, General Partner from IVP. “This new round of funding will further enhance Handango’s plans for growth and expansion at a time when the market is ripe for infiltration.”
“With the demand for smartphones growing at a faster pace than ever, Handango is in an incredible position to continue to lead the market both within the U.S. and abroad,” states former president and chief executive officer of AT&T Wireless and current Handango director, Mohan Gyani. “With the strength of Handango’s consumer-facing brand, its extensive customer base, its vast network of content partners, and its growing and evolving distribution channels, it is no surprise that this list of top-tier investors are back for another round.”
Offering smartphone content from 16,000 developers, the largest collection of partners in the mobile content industry, Handango delivers the most diverse collection of smartphone applications directly to consumers both through its online storefront at http://www.handango.com and on mobile devices using the Handango’s on-device client. Handango partners with many of the world’s leaders in the telecommunications industry, including RIM, HP, Microsoft, Verizon Wireless, T-Mobile and AOL, all of whom rely on Handango as an essential part of their smartphone content businesses.
So hold up! The same company that is taking 50% revenues from their developers, screwing their customers, and alienating their retail partners (and possible retail partners) through their poor business practices has just received an infusion of $9.5 million? What the heck are they doing with this money? Their infrastructure and site are already in place and have been for years. We’re talking about an intangible product here – they don’t need warehouses to store a developer’s software, and they don’t need factories to produce the titles. In my opinion, this $9.5 million is not going to improve anything other than someone’s paycheck. Or does someone know something that will explain all this away and make it “all better”?
I won’t hold my breath.
Outside Sources: Smartphone Thoughts, Mobility Site, and PRNewsWire via Wayne
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Fair game? | Planetoid Android Says:
October 2nd, 2008 at 6:35 am[...] I’m personally not a huge fan of the ‘grim’ Handango’s way of dealing with developers or customers. So I hope Google treats people with more [...]
March 29th, 2008 at 3:41 pm
Thanks for this info. I used to use Handango, almost exclusively, for all of my PPC purchases up until a few years ago. At that time, I switched to Mobihand because many of my favorite sites are linked to them.
I thought it was bad that the iTunes app store was requesting 30% of all of the developers software sold through them. 50% is just completely unreasonable considering the type of overhead involved in this kind of venture.
March 29th, 2008 at 3:49 pm
My only guess is they have to pay phone carriers to get their Handango Download App onto the phones.
I *think* there was also an article somewhere (can’t remember now) about Handango pushing into POS.
Alas, I suspect the end of the line may be near for them. If the whole open phone policy takes off like it should — that means that other companies might have access to the phones and offer a competing service.
Of course maybe that’s why Handango needed another $9million too — because they forsee having to pay more people in order to stay on the phone handsets once they get “deregulated”…
March 29th, 2008 at 4:41 pm
Like many people I know, I haven’t used Handango in years. The download protection nonsense was enough to steer me away on its won, but the stories of blatant mistreatment of developers just reinforce the decision.
March 29th, 2008 at 8:17 pm
The problem is with the venture capitalists. Since they’ve moved in everything has changed. It’s like all they care about is increasing profits to help pay their exorbitant salaries and improve the return on investment.
March 30th, 2008 at 7:48 am
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!
March 30th, 2008 at 12:42 pm
I don’t purchase software for my Palm all that often, and I’ve used Handango in the past. After reading all of this, I’m definitly going to look elsewhere for my software. This posting was just in the nix of time because I’m on the look for some organizational software.
March 19th, 2009 at 2:28 am
auto123456, Your totally right with the situation on how developers are locked into Handango.
Nothing is going to change though until the developers band together and jump ship.
I think a site like syncpedia (http://www.syncpedia.com) has good potential as they have a much simpler and affordable system for developers.
But still way too small to be the main listing spot at this point.
But what I find interesting about their model is that developers can list there, sell at the same price, and then if enough developers move over than eventually people can say good riddance to handango.
Check them out.