I don’t think it’s coincidental that Twitter just acquired Tweetie. That app will now go from being US$2.99 to free. There is no way to justify that drop in price other than to foresee it having ads in it. Someone has to pay. As a certain cult likes to remind everybody: TANSTAAFL.
A stream of revenue trumps a one-time payment every time. Period. End of story.
IBM selling its big computers was only the beginning of the money it made. It made recurring money from services for those computers. In the same way, before its bankruptcy, General Motors’ GMAC — its car financing division — made more money than the car manufacturing end.
Because, it’s worth repeating: A stream of revenue trumps a one-time payment every time. Period. End of story.
So that US$2.99 a pop that Twitter seems to be “giving up” suddenly becomes a sky’s-the-limit price for everyone who uses that app because of all of the iAds that will appear in it.
Is this going to be how the future will look?
User: Hey, I really like your app, but I can’t stand ads. Is there a version I can buy?
Dev: Sorry, no.
User: But didn’t it used to be $3.99? I’d be willing to pay twice that for no ads!
Dev: Dude, you don’t get it. We make like a hundred bucks from the ads off each user of our app. There’s no way we can afford to sell it anymore!