I was extremely surprised when Apple made the decision to drop its Single of the Week, after doing the same thing with its 12 Days of Christmas promo. As I wrote then, the free single seemed a win-win-win: consumers got free music, lesser-known artists got exposure, Apple got the goodwill that stems from giving away free stuff.
But thinking more about it, perhaps there is method in Apple’s madness after all. Let’s start with the obvious point: the company is about to launch an Apple-branded Beats Music service, and it would then make sense to say that this, not iTunes freebies, is the way to discover new music.
But it’s not just music: 12 Days of Christmas was content of all types, apps included, so I think there could be a bigger picture here. Bear with me while I make that case in a slightly roundabout fashion …
Compare and contrast Android and iOS. Android wins on raw numbers: it has by far the biggest market share, and while there are roughly the same number of apps available on both platforms, more Android apps are downloaded (as there are more owners to download them).
But where the money is concerned, it’s a totally different matter. Apple announced last week that the App Store generated over $10B in revenue for developers last year. Android revenue is lagging way behind. And while Google may take heart from the fact that Play Store revenue more than doubled last year, closer examination of the source of that revenue reveals that just 2% of it came from paid apps. The other 98% came from advertising and in-app purchases.
Flurry analytics shows that there is a risk of Apple following Android down this slippery slope:
The great danger here is that in-app purchases may not, in the long-term, be a sustainable business model. There has already been a backlash against in-app purchases in kids’ games after some high-profile cases, class action suits and regulatory scrutiny, with Apple offering refunds on purchases made by minors.
More recently, that controversy has extended to the whole notion of in-app purchases. Back in November, Apple changed the ‘Free’ button to ‘Get’ following objections that the free label was misleading when in-app purchases were required to make full use of the app.
And I think this may get worse. In the old days, it was pretty simple. You either got all the functionality in the free version and could pay to remove the ads, or you had a free lite version and a paid pro version that allowed you to try out the free app before deciding whether you wanted to lay out the cash on the paid one.
But with games in particular offering multiple in-app purchases, it can be hard to predict the true cost of an app. That, in my view, is somewhat distasteful. Perhaps even veering slightly toward sleazy? There is a lot to be said about the simple honesty of a single, upfront price.
What has all this to do with Apple apparently moving away from freebies? Perhaps it’s an attempt to change the culture. To move us away from an increasing expectation that content–be it apps, music, movies or anything else–should be free. To stand for the idea that content is worth paying for.
Sure, it may be sacrificing revenue in the short-term by doing this–as several commentators observed in the news piece. But if it can succeed in moving expectations away from things being free, perhaps it makes sense in the longer-term.
Think about Apple’s own positioning in the market. You know you’ll never be able to buy a cheap Apple product. You’re paying a premium for quality (though not necessarily a large one). What if it could adopt that same positioning for content? What if it could say ‘If you want freebies, head over to Android; if you want quality content, buy it here’?
I realize of course that I’m stretching a couple of small pieces of data very thinly. Perhaps to the breaking point. But there has to be some logic behind the decision; I do think the in-app purchasing model may eventually come under threat; and I do think Apple needs to do something to reverse the trend toward content being free.
If you’re a developer, what’s your view on the way the app market is heading? And for those buying apps, what’s your view on in-app purchasing and freebies in general as a means of enticing you to spend money later? Let us know in the comments.
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You shouldn’t have complained when they gave you the free U2 album ;)
Exactly. Those people that complain when they get something for free should have their own land called ‘Dumbasses of the World’. How can anyone possible complain about getting something free? Either you take it or leave it. Stupid, some people are so stupid.
Why do people moan about junk mail when it gets delivered? It’s free paper, amirite? What about unsolicited sales phone calls? It’s someone to talk to, and everybody needs that, right? Spam emails? Something to read when you’re bored. Stop complaining and enjoy it, morons!
Things only have a value if the end-user perceives value in it. Otherwise, it’s just useless crap that people don’t want shoved in their faces. You might like U2, but I don’t. Why would I want their album to automatically appear on all my Macs and iDevices, cluttering up my list of artists? I don’t.
There are loads of free apps on the App Store. If I want them, I go into the store and download them. I wouldn’t want them to automatically appear on my home screen on all my iDevices. Which is pretty much what Apple did with the U2 album showing in everyone’s iTunes library.
Actually I think you didn’t get why so many people got angry…
It’s not because of the free album in general but it was downloaded automatically to everyones’ devices!
When they announced that the U2 album is for free I thought “oh cool, I should checkout iTunes and download it” but suddenly it appeared on my iPhone…
I have no idea if you’re right, but I certainly hope so.
I hate apps that “require” in-app purchases for full (or even less than full) functionality.
I want quality apps, and I’m willing to pay for them up front without being hounded for add-ons and reviews.
There was a free DJ app on the App Store. It only worked with the 10 songs that came built into the app. If you wanted to load in your own music from your own device, it was a $9.99 in-app purchase.
Sure, it lets people try out the layout and functionality for free. But it’s an ass-backwards way to do it.
One major problem is that Apple hasn’t figured out how to do trial apps that either time out or become non-functional in some other way.
Once they sort that out (and wrangle in the mess that is the App Store), the end user’s experience will be much better.
I personally refuse to use in app purchases in games. I was appalled when I downloaded the Simpsons game and saw in app purchases for $99! Immediately deleted from my phone! I can see the use of in app purchases for value add-ons like plugins in audio software, but making you purchase items in a game just to be able to enjoy it? No way!
It’s now $119.99 in Canada. No wonder the tag line is Tapped Out.
I’m playing The Simpsons app for some years now, and I never ever paid for an in-app purchase. And yet I’m enjoying it.
No game I know of forces you to buy those in-app things to enjoy it. I’ve enjoyed playing lots of games without making in-app purchases!
I have purchased music based on the FREE Singles of the Week. Without the Free Singles, I may just stick to free iTunes Radio…and not buy as much music from iTunes. The Freebies got me into the store and then look around and see what else was new or discounted…without the draw, I am more likely to just stay in iTunes Radio and not look to buy.
I will make purchases for Songs and Apps. but if they are more than a $1 I sit and think about it before making a purchase. Sure, $2+ isn’t much but over time it adds up. I like when they had the one-time US 12 Days app as it had me pick up a few things I normally wouldn’t and listen to different music/use apps and look at those app developers other offerings.
The idea of Free lured me to the store…and I stayed there…without the free lure, I won’t go as often. So, they won’t lose $ with not having Free apps but they might not gain as much money from me otherwise. And I get that perhaps they have enough people buying they don’t need the free-lure but a $1 is a nice freebie.
I have paid for more apps than I have bought in-app purchases from that started as a free download. Somewhat of a problem with this is “knock off apps”, a paid for app comes out and then a clone comes out free with ads or IAPs. Apple needs to really look at stopping all these clones to allow for paid apps to stand for themselves again.
This is well thought out and makes a lot of sense. I don’t think the in-app purchase model is sustainable in the long run either. It is at the very least annoying and frustrating, if not sleazy as you say. Parents very fiercely protect their kids and when they see them being taken advantage of, it pisses us off. I’d rather pay a few bucks for an app and know it is complete, then be nickled and dimed for what in the long run is usually more than that.
I feel for developers who have a hard time making a sustainable living because so much of the app universe has to free with IAP crap. And I’m not talking about pay to remove ads. I’m talking about pay to get more coins, more dice rolls, move to the next level, etc. Look at the top grossing apps in the App Store and 99% of them are fremium games with IAP. Apple touts the $10B paid to developers. I’d love to know how much of that went to developers producing good, high quality paid apps vs. fremium games.
I think we already established from the previous comments that we hurt Apple’s feelings by not being “thankful enough” for the freebies. Because our thanks is obviously the biggest motivator for Apple’s business model.
I think they’re called “GETBIES” now. ;)
Nobody has mentioned this but Starbucks and others have free items they give out all the time. This does not look like it is going away. Pick up your cards or look at your messages in the Starbucks app.
Yes, yes, yes. I 100% see your point and I’m glad someone actually thought more critically about this as well. Apple doesn’t just do things without reason. From my point of view there’s always a thought out strategic marketing plan. It’s really about changing user behaviors and managing expectations.
Couldn’t agree more.
“We appreciate and respect our customers. We strive to earn your trust and support. We do not collect any information or enable in-app purchasing and we do not pay for reviews. Our goal is to simply provide a great customer experience.” Duane Bemister and Jake Jacobson, Wildwood Resources.
I’m a developer and I hate ads, freemium and all that so I try to make my apps paid or just don’t make money with them if it’s a really small project I actually made for me, not for the market…
“You know you’ll never be able to buy a cheap Apple product. You’re paying a premium for quality (though not necessarily a large one).”
But Apple does give away the OS.
Not really. You get it when you buy the phone along with a 3-4 year Service agreement, which is about how long most devices will support the latest OS. It’s not FREE, it’s amortized into the cost of the hardware.
Pretty sure he was talking about OS X, but you got the argument right.
Apple have only relatively recently started giving the operating system away. And so they should, considering it can only be used on their hardware (hackintosh excepted). Having exclusivity over the hardware and then charging for an operating system upgrades is scandalous actually – and Apple got away with it for YEARS.
Check out the iTunes 99 cent movie of the week. 90% of them are the total dregs. I think the bean-counters there run promotions.
There’s 2 flaws to your argument:
1. Apple’s long-rumoured $5 a month Beats subscription will further squeeze artists who are already vastly underpaid for streaming. This, if it comes to fruition, will wipe out your argument that Apple wants people to be paid well for creating content.
2. Apple makes money – ALL the money. It doesn’t spend money unless it absolutely has to. Artists are not paid to perform at iTunes Festival, they’re expected to do it for free in return for the exposure. Apple has stopped all freebies in their global channels – sales staff used to get a cheap plastic pin for hitting certain training targets, now they get a PDF. I could go on and on with examples.
At the end of the day, Apple has stopped giving away tracks because they simply don’t need to do it any more. People are queueing city blocks to buy their overpriced products (iPhone 6 Plus is twice the price of the similarly specced OnePlus One) and they’re raking in the cash. The recent absence of any Black Friday deals is just another illustration of this.
If you want a return to the days when Apple listened to its users and gave back to the people who helped make them great, you need to hope that sales fall off in a very dramatic way. While their culture of taking and not giving is making them so much money it will never change.
That obviously depends on what Apple pays artists. Beats Music reportedly pays significantly more than Spotify (which is admittedly a low bar). We’ll need to see what happens when Apple relaunches the service.
Uhh, Apple DID have Black Friday deals last year. They’re just not as spectacular as the deals you get from other stores that aren’t the most valuable company in the world (they’ve never been great deals in years past either).
Speaking as a developer who runs his own app development studio, most people don’t want to spend money on apps, period. Having a banner ad run on the bottom of the screen is typically a “good-enough” trade-off. The user can play for free if they choose and run through the game and the developer still gets revenue from the ads showing.
For our latest app, SiK Robot, we’ll be utilizing a blend of IAP and ads. You can choose to play the game all the way through and never pay a dime while having ads displayed in a banner at the bottom. Or you can get some cool add-ons through IAP including the ability to pay to have the ads removed.
I think this compromise is the best we developers can offer at the moment with the resources available in a manner that’s still attractive enough for users to download.
If you’re interested, my app studio is gozylo.com and the game URL is sikrobot.com
Will be arriving in the App Store for iOS only in early 2015.
Great thoughts here. I definitely agree this is quite probably the reason behind it. I was quite annoyed upon hearing the news, but given the fact that Apple has an ecosystem beyond the competition still means it’s a better bet for my personal tastes.
Developers should bring back the lite w/ads and pro w/o ads versions. No more of the crappy in app purchases! I’ve never done one unless it unlocks all features of the app and gets rid of ads. Because idgaf if i can buy 50 gems for 99 cents.