iPhone Apps - Freemium?

Time has an article entitled iPhone Apps: To Pay or Not to Pay, part obligatory iPhone App article to appear to be down with the tehcno hipsters and part questionning of the consumer’s willingness to pay for an application when all around us is free, free, free…

‘So why can’t all iPhone apps be free? Well, quite simply, because people are still willing to pay for them. Apple currently generates most of its revenue from up-front sales — whether it’s for MacBooks, iTunes or iPhones. And the pay approach for mobile games, ringtones and videos has long been used by other tech purveyors like Verizon and Research In Motion, and even third-party app stores like Handango. “It is a historical business model,” notes Kevin Burden of ABI Research. Buyers are willing to pony up, though, because of the cachet of the Apple brand.’

Google Android will no doubt be free, ad supported, whilst Apple would have to totally rethink their business in order to make Apps ad supported, because if they were, surely Apple would seek to control that business as Goolge does rather than let 3rd party ad sellers wade in and reap the rewards.

In all this talk of freemium and ‘falling to zero’ and no doubt Chris Anderson’s forthcoming opus Free, there doesn’t seem to be any mention of people actually wanting to pay for something and not be served ads.

I pay for anything by 37Signals; basecamp, backpack etc… I also espouse their Getting Real philosophy so I’m a total convert.

The thought of ad supported iPhone Apps is plain wrong. Small screen, intense interactivity, invasive ad which no matter how targted etc etc will still stink. The user will be left feeling lightly manipulated.

The key is ease of transaction and appropriate costing. Well with iTunes, it’s one click payment, simple and a system we are already used to. The value of apps remains to be seen, market forces will dictate that, as competing apps seek to undercut each other. I imagine this will be particularly fierce on the gaming front.

But as a pure play content delivery business model it’s perfect. Current target market of 6million users, Apple addicts, predominantly young men with cash. If you create a ‘must have’ app and charge $1, you’re making $0.70 on every sale and let’s say 1 million people buy it. Let’s call it the ‘Guaranteed to make you a better lover’ App, sort of like a Wii game on a mobile, I’ll let your imagination do the rest and bypass the Apple T&C’s.

6 months later you bring out a new and improved version, market it through your existing App, your 1 million users upgrade.

I’ve paid $2 in 12 months for something I find invaluable in my other life as a male gigolo. I could have been bombarded with ads for lotions, rubs, rubbers and toys… but thankfully and thanks to Apple I haven’t.

When did we come to expect everything for free? Music, sure, the industry messed that up, opportunity gone. But applications, mobile applications, if we really think about it are we ready for ad supported mobile apps? Who wants them, hands up please? When you’re business plan is predicated on your consumers being misers, its time to tear it up and start again.

Posted in 2 Minute Critique, Mobile, iPhone | No Comments »