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Hand the software out for free and charge for user accounts on the server.

This turns the problem into one of "How do I prevent account piracy?", which is hopefully not dependent on characteristics of the iPhone.

edit: I'm not sure what sort of kickback Apple would like in this case. Be sure to check that out first.

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That could be accomplished in the upcoming 3.0 SDK which supports subscriptions.

It cannot be with 3.0. Subscriptions and one time charges are only supported for apps that initially cost money. You could get away with charging .99 cents for it initially and then charging a subscription.

You'd have the make the subscription cheaper to offset the app's cost, so you'd still be losing money on piracy. Plus, making the end user pay twice sounds annoying.

It sounds like Apple set it up this way to make sure they are getting a piece of all the money coming through the iPhone. I won't begrudge them that, but I feel for the developers.

That's the first time I have heard of that... is that official?

Yeah it was in the iPhone 3.0 announcement: http://i.gizmodo.com/5172200/iphone-app-store-revamped-for-c...

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