One third of top-grossing iPhone apps are free | Hacker News Reader

One third of top-grossing iPhone apps are free

nytimes.com

47 pointsaaw23 comments

The headline is misleading. The base apps are free, but you pay for the full app via In-App Purchases. This isn't a whole lot different than the standard lite and full versions model.

How about the less-sensational: "One Third of Top-Grossing iPhone Apps Profit With In-App Purchases"

I think this is quite a bit different than the standard lite and full version model. The reason why is because, through in-app purchases, a developer has the potential to realize a lot more revenue per user.

If all you're trying to do is to get someone to upgrade from lite to full, that can only happen once. In-app purchases can happen several times. In Restaurant Story (one of the games mentioned in the article), you buy gems to speed up the process with which you make food. I'd bet that most people who purchase those gems do it more than once, because they're directly tied in to your success at that game. In short, there's the potential here for recurring revenue.

Not only that, but the prices on in-app purchases can be startling! Going back to Restaurant Story, I think the smallest batch of gems you can buy is $5 and it goes all the way to $99. That's a lot more revenue per user, potentially, than on an upgrade from lite to full.

It's not misleading, it's just not overly literal.

I think it's pretty easy to make the connection that Free Apps who also have revenue are selling things within the app.

Also, the article makes clear, it's not just people paying for the "full versions," but for virtual currencies, select features, etc.

If you look at several of the games it mentions, they are not "light vs full" versions of the games. They are more like Farmville, where you can buy better stuff and/or progress faster. This is a far more lucrative model than the light/full model because it doesn't end after the first purchase.

My favourite example is Billings (http://itunes.apple.com/us/app/billings-touch/id343938310?mt...). It doesn't sell content like music or in-game credits, but features. The app is free, but if you want to send invoices via email or sync it with your Mac, it'll cost you $14.99.

I personally don't like such "drug-dealer" models.

Do you get to try the features out before paying for them? It would be disappointing if you liked the app, wanted a feature - then found that it didn't meet your expectations/requirements after purchase.

How is that worse than if you'd had to pay for the whole app up-front? Your argument seems to be against paying at all, not against paying for additional features.

The other features are there from the start and the description in the App Store states that these two features cost extra. I don't see the big problem. Hell, you have to fork out $39.95 for the Mac app for one of these to even be useful. What's another $15?

Makes one wish that the Web had a decent micropayment system instead of the pain that is PayPal.

Wasn't Google creating one? When is it supposed to be released?

Both Google and PayPal charge a $0.30 base fee in addition to the percentage of the total, which is pretty meaningless for most transactions except it stops micropayments.

Given that, Apple is taking 30% off the top of everything they sell through the app store, so maybe the acceptable answer for micropayments is to charge far more in fees but make them entirely percentage based.

The transaction-fee kills micro-payments. The percentage-fee kills large payments.

It basically leaves a sweet-spot between the two where the cost of doing business is tolerable to both parties.

Will be interesting to see if PayPal's proposed micropayment system[1] gains traction. With a streamlined purchase approach combined with big partner involvement (Facebook et al), there's a possibility of a shift in attitude towards in-browser payment for microcontent.

[1] http://techcrunch.com/2010/10/26/paypal-unveils-micropayment...

Google Adsense?

> Google Adsense?

I recognize that you're being downvoted for not actually contributing to the conversation, but I'm going to use your comment as a springboard to make a point that's been bothering me.

I have serious doubts about the mobile ad space for the following three reasons.

First, what kind of user experience is it to "click" on an ad on your mobile device? I go out of my way not to read actual webpages on the 4" screen, and thus I am certainly not going to try and conduct a learning exercise about your product nor am I going to suffer through typing my payment details to buy something.

Second, and I think I recall reading somewhere that an ad platform seeks to change this [maybe they all do!], but chances are that I'm currently using my mobile device for something. Unlike the magic Ctrl-click to open an ad in a new tab, if I were to have a sudden urge to click on an ad, that is going to interrupt whatever it is that I am trying to accomplish right now. Strong disincentive to do anything of the sort.

Finally, it has been overwhelmingly my experience that an app which uses an ad network is going to have lag and is going to incur pauses while I am trying to do something on my mobile. Maybe on wifi it's less of a big deal, but the times that I use my mobile on wifi are minimal, otherwise it would be a netbook.

I agree with in-app purchases as one of the money-making vehicles for the mobile market. I believe, also, in trial versions and outright purchasing apps based on good reviews. But seriously: can we please skip past trying to replicate the success of the ad networks from the web?

Apple's iAd system seeks to mitigate some of these things. The ad content is downloaded separately by the device so there's no network loading time, and hitting the home button takes you back to the exact same place in the app you had been in rather than back to the home screen like every other instance of hitting the home button (much to the consternation of some who highly value consistency). And, they only have ads that are highly interactive and "interesting", going so far as to do the production themselves on all of them to date, afaik. So at least if you see an ad for something you're interested in and it says "iAd" on the side, you'll know that by tapping on it you'll be getting something that's made for a small screen and probably has some decent content, not just a bigger version of the ad.

I certainly agree with you, though: I don't tend to click ads on my computer, I certainly am not going to tap them on my phone. But, I suppose somebody does click them on the web so... maybe those same folks tap them on their phones?

>First, what kind of user experience is it to "click" on an ad on your mobile device? I go out of my way not to read actual webpages on the 4" screen, and thus I am certainly not going to try and conduct a learning exercise about your product nor am I going to suffer through typing my payment details to buy something.

I fully agree with this - yet at the same time - there is a lot to be said about the model that PINGER users (http://pinger.com) where they use ads as incentive to actually get something of value to you; free cell service.

While I think this is a great twist on the the mobile ad market, at the same time I am afraid what it does to the audience over time. Kids (who are a great target market for pinger) over a decade of use of such a service will have much much lower expectation/higher tolerance for the invasive nature of ad based/supported services in their life.

The potential of thought pollution in the future is very high. free diapers, so long as they display "amazon.com" on them at all times.

Everyone/everything will look like the moving billboards that are currently nascar and lance armstrong.

The Facebook Credits team has the same dream you do.

http://www.nytimes.com/2010/09/23/technology/23facebook.html

yeah - but I will never want all my payments requiring that I have/be logged into facebook.

In other words, you are more likely to be in the top-grossing list if your app is not free. (sorry for bringing freemium fans back to reality)

That's not reality. It's actually more deceptive than the original phrasing, because it assumes that there are a roughly equal number of freemium and purely paid apps and that entry into the top-grossing list is a matter of probability based on the initial purchase price. These assumptions seem very likely to be false in a way that favors paid apps.

If you want to argue that the freemium business model offers worse odds, you need to measure the percentage of freemium apps that make it onto the list versus the percentage of paid apps (and if you want your argument to be really credible, there are other factors you'd need to take into account as well).

Will the freemium model work for non-gaming apps?

Sure. It's highly effective for web-based business apps. No reason to think it wouldn't work on the mobile platform as well if the free version is compelling enough to encourage the initial install and the upsell provides additional value. This is particularly true if your app is a consumer of information entered by your users, as then they may have some level of reliance to your solution.

Reply on news.ycombinator.com