“Why can’t all iPhone apps be free? Well, quite simply, because people are still willing to pay for them. Apple currently generates most of its revenue from up-front sales — whether it’s for MacBooks, iTunes or iPhones. And the pay approach for mobile games, ring tones and videos has long been used by other tech purveyors… ‘It is a historical business model,’ notes Kevin Burden of ABI Research. Buyers are willing to pony up, though, because of the cachet of the Apple brand,” Anita Hamilton writes for Time Magazine.
“Charging up-front for applications also gives Apple an edge with developers. “Part of getting developers to focus on your platform is making sure they will make money off of it,” says Burden. While this arrangement forces consumers to shell out for programs they may use only once, the economics of the iPhone App Store are much more attractive for developers. Normally, wireless carriers control the pricing and selection of the apps available for their handsets, paying developers no more than 40% of the proceeds. Apple, on the other hand, will give app makers 70% of all sales,” Hamilton writes.
“Few companies have figured out how to turn a profit by relying solely on mobile ads for revenue. Mobile marketing brought in less than $500 million in the U.S. in 2007; compare that to online advertising, which made $21 billion. For many developers, it’s just not worth the risk,” Hamilton writes.
Hamilton writes, “If Apple ever did decide to let all iPhone apps be free, it would be a radical departure from its typical way of doing business.”
Full article here.
Before you bang something out for Time Magazine (and before you slap it online or on paper, Time) shouldn’t you at least attempt to understand what you’re writing about? It’s simply not within Apple’s purview to decide if other companies apps are for-pay, ad-supported, or just totally freeware. Apple cannot “decide to let all iPhone apps be free.” Unless they’re going to buy out every developer in the world first. Obviously, that’d be quite impractical. Developers already have the choice to pursue the business model they feel will work best for their app.