Crack Pricing and iPhone Apps.
I had an excellent conversation this week, discussing pricing and the iTunes App Store. The recent shift to allow for free applications to charge for in-app services or features, has created an ecosystem that is conducive to crack pricing - that is, the stereotypical ‘the first one’s free’ pricing scheme associated to the sales of addictive drugs.
The example in question was Boxcar, an extremely useful application that lets an iPhone user receive Push notifications twitter messages (@replies and Direct Messages). While this may not seem beneficial, for people who use Twitter as a major communications tool, receiving a notification that someone is trying to speak with you directly is a massive boon to their (my) continuous partial attention abilities.
Boxcar’s pricing is free. However, if you’d like to use the same service for anything beyond Twitter, including push notifications for twitter search queries, email, second twitter accounts, or facebook, the application begins charging you. While I don’t feel the need for any of these services, I can see how many users would - I already have trouble imagining using Twitter without Boxcar, it’s that good of a service.
Similar crack pricing models should be applied to applications for news services. Charging for the Globe and Mail application on the whole wouldn’t go over well, despite the excellent job that Spreed Inc did putting it together. But charging $.99 a month, for full sections that aren’t included in the general app, might hold enough value to make money.
You could argue that I’m talking about the old concept of micropayments. I often say I’m against micropayments as a model, because they have never worked, and most proponents misunderstand the issue: it’s not about charging people an amount below the threshold of notice - it’s about charging people in a method that is below the threshold of notice.
Apple has that system, in the iTunes music and app stores. I have yet to encounter another ecommerce system that is less work, especially on a mobile platform. Letting users pay for expansions within the application makes it even simpler, as the purchase process becomes indistinguishable from the use process.
I say the amount is less important than the process due to (admittedly) anecdotal evidence. Everyone I know who has purchased at least one album or app on an iPhone, continues to do so. Most of them happily report that spending three dollars isn’t much more of a barrier than spending one. It’s equally easy, and the instant gratification of downloading directly to the device helps.
Micropayments as a solution for news are worrisome, because the newsmedia are unlikely to develop a platform that allows charging in a manner below the threshold of notice. For the moment, iTunes offers one.
Any statements related to the creation of an ‘iTunes for news’ are missing the point entirely. iTunes is already there. Get to it.
