Announcements for the new iPhone OS 3.0 today were endless, with much emphasis on cut-copy-paste and MMS. I believe that these features should have been there from day 1, regardless of Apple’s perfectionist processes, so I won’t elaborate on them. However, I believe that the new in-app micropayments have much greater implications on the future of the iPhone and mobile as a platform.
The ability to set up in-app micropayments is particularly intriguing, since it opens the door for additional revenues for developers as well as additional extensibility in features for consumers. Developers no longer need to resubmit the entire app for minor changes, and consumers can receive add functionality and features without having to update the entire app.
It will be interesting to see what effect in-app micropayments will have on app piracy, which is still an issue, particularly for small developers. The generic file sharing sites on which the major cracked app sites host apps typically show thousands of downloads for the more popular apps. It is unclear how many of those downloads would still exist if cracked apps did not exist. Owen Goss at Streaming Colour recently posted some rough sales figures for his game Dapple. Before significant attention from Slashdot, PocketGamer, and other sites, Owen had sold only 131 copies of Dapple. Without coverage from popular blogs, Owen might not have received enough attention, and sales would have continued at the same slow rate.
With the new in-app micropayment system, it is unclear how easily users will be able to pirate digital goods within an app. We can look to the existing MMORPG model, where significant revenues come from the purchase of digital goods, rather than the initial game purchase. The key is for the developer/publisher to set a balance of built-in and add-on features to purchase.
Furthermore, initial reactions fear that the system leaves the option open for uneven pricing schemes where the majority of the content needs to be unlocked through additional purchases. However, the liquid nature of the App Store so far, for example with pricing, leaves little room for error. The trite saying says, “The customer is king.” This is most reflected in the App Store, where a bad average rating can doom an app, even for popular apps. For example, I believe that Super Monkey Ball could have capitalized further on the hype, but dropped the ball on calibration. Any abnormalities and exploitations of the in-app payment system will be quickly reflected in the reviews. It is in the developer’s best interests to choose the right balance of built-in features and additional features.
