I caught a whiff of a bit of angst over a move that Marco Arment made with his Overcast podcasting client for iOS. When it launched it was free-to-use, but you could pay $5 to enable power features. Then last week Marco changed the pricing and made it entirely free. He wrote a long post explaining. And then came posts from his competitors observing that this decision puts them in a bind. How can they continue to improve their product if Marco gives his product away?
Now that last question is interesting. The two things aren't directly related: 1. Continuing to improve the product and 2. Marco giving his product away. The assumption, I guess is that their sales will go to zero unless they match his price. I think this is a fair assumption. There might be a small number of people willing to pay for a product when an equivalent product is available for much less money. I do it too. I tend to gravitate to products I can use in full for free.
However, I am a sucker for in-app payments in products I have an addiction to!
I think if I were in Marco's shoes, I might have done the same.
I haven't seen the numbers, but even without that info, I think podcasting is not an app business for listeners. Having an app with a growing user base, at this stage in the development of podcasting makes the most sense. Because in the next months and years I'm sure lots of money will be made here. But I think it will be less about the listening app, and more about giving people great stuff to listen to. And you can't do that without the data. And you won't get any data if you don't have any users.
Now people seem to think there has to be a linear relationship between code created and money paid. I come from the distant past where this was considered gospel. I made the mistake of charging for Frontier, a powerful system-level scripting environment, in its early days (1992). Ultimately it would have to compete with a product from Apple which of course was free, and even though our product solved many problems Apple left as "third-party opportunities" the users and developers gravitated to Apple. We went out of business quickly.
I was thinking linearly. I paid lots of money to create this software, now it's your turn to pay. Hah. They didn't have to and they didn't. I fucked up.
The market might have developed differently if in the early days of Frontier, when there was no AppleScript, we gave it away to everyone who wanted it. Then there might have been a base of software that required it, and a base of developers who loved it, and it might have been harder for Apple to sweep it aside. So the next time around, when we presented Frontier as a web development environment, we gave it away, and did much better. We still weren't able to make a business of it, but we did have lots of users. And of course this was after we were inoculated by AppleScript.
Podcasting will, imho, be no different. And ultimately it may well be owned by Apple or Facebook. Others would obviously like to own it as well, Amazon, maybe Google. And Marco might even want to sell Overcast to one of them. And you, if you were competing with Marco, might sell it to one of the others. And that sale might be worth many millions of dollars. It would take a lot of $5 app-store purchases to add up to that much money. But you won't find many buyers if you don't have lots of users. You don't have to beat Marco, coming in second or third will be good too.
I think that's probably what Marco saw that inspired him to go for max market now.