Charging within free applications: the implications
The power of free versus paid was put under the mobile application spotlight again last week, with Apple’s announcement that iPhone developers can now capitalise on payment within free applications, as well as in paid applications.
I first blogged about the potential of the in-app upsell and “Freemium” after a Juniper report a few months back, and this development from Apple now represents a meaningful step forward.
It essentially means upselling within free applications is a possibility. To get the premium version of a lite application or game you’re playing, you don’t need to browse out to the App Store and buy a whole new app. One or two clicks gives you the next level, or a new area of content, which you’ve paid for.
News organisations will have a desperately needed new way of monetising premium content. High profile columnists or bloggers with a substantial and loyal audience might provide an opportunity for subscription fees or one-at-a-time access charges to unlock a zone within a free application.
It might also help to unlock the lower spending end of the application consumer market. Mine is only anecdotal evidence, but a small number say they never browse outside of the Top Free application charts. Paid is perceived with nervous caution, or as a slippery slope to be avoided and never grazed on, even if it’s only a 59p application.
So exposing rich applications as Free may present a substantial new market, (or I may just have cheapskate friends). Once downloaded and snared with content, making simple micropayments to release additional content could become all the more irresistible.
Perhaps this is most significant for games providers, at least in the short term. According to a Mobile Entertainment item, a number of games publishers have already announced games which will be permanently free and funded by in-app payments, while others are set to be retrospectively released as free.
Developers have much more to play with thanks to this progress, but presuming the user experience of making payments is as smooth as we’ve come to expect from Apple, of course it remains the consumers that are in charge.
Publishers should tread carefully about precisely what content is monetised. If too much of it is what we’ve received for free until now, and what we still can get for free elsewhere, then it will turn consumers away. Unique value must be transparent.
(For the record: yes, the iPhone does still only represent a small fraction of the market. But for apps, it remains tricky to deny its trailblazing status.)