Will iAd Kill Paid Apps?

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!

3 responses to “Will iAd Kill Paid Apps?

  1. I’m not sure how this is any different from AdMob, which most free apps get their advertising revenue from already on the iPhone.

    The difference here is that iAds will be a lot prettier and not abominable like AdMob’s.

    Put in other words: this post would only make sense if you’ve not ever used an iPhone or the App Store and seen how current apps already work. Shit apps have ads. Non shit apps are generally for-pay.

    I don’t think iAd will increase the number of free apps at all. It will just make the existing ones less unbearable to use.

  2. >>>Shit apps have ads. Non shit apps are generally for-pay.

    How long do you think that will continue? It seems to me that Apple is not going to want “shit apps” as the host for their pretteh iAds. And isn’t Apple putting everyone on notice that carrying those ads from other services is going to stop now?

  3. I haven’t yet seen that notice that no other ad services are allowed and I don’t think that that is going to come, just as Apple didn’t block the eBook readers because of iBooks.

    Steve does have a point about how it works now, but I have to disagree with his contention that only shit apps have ads. I use Twitterriffic on the iPod which is a pretty good app and it has ads, if you don’t choose to buy the Pro version.

    As the ads are not intrusive and I’ve even found some interesting stuff on them, I never really purchased the Pro version.