I’ve been thinking a bit about the Apple App Store recently, perhaps because I’m starting to think more about developing a mobile application that will complement my site.
One of the amazing things about the App Store — perhaps the most amazing thing — is how easy Apple makes it for users to pay for apps with small amounts of money (micro-transactions, if you will). Are you a developer that wants to sell an application for just $.99 a pop? Easy. Just create your app, submit it to the store, and start earning money. You don’t even have to worry about going the advertising route. The strategy instead is primarily about providing a free version of your app that then gets users warmed up for your paid version.
Apps in the App Store aren’t that different from web apps. They are both internet-enabled at their core and provide rich communication and data retrieval services for their users. Sure iPhone apps run in Objective C instead of Javascript, etc. But that doesn’t matter to the regular user who decides to pay for an app on their iPhone. Both are apps either based, or quickly retrieved, from the cloud.
One of the problems that most internet startups face is the looming question of “how the hell am I going to make money on my site even if it becomes successful?” The internet industry is often mocked because it doesn’t readily provide dependable answers, at least not ones that are not easily undermined by general economic factors.
No web developer wants to deface their sites with Adsense or banner ads. Online advertising is (with few exceptions) anti-consumer and difficult to do “right” (as in, design to really capture users’ attention and generate modest rates of return). Wouldn’t it be great if we could just design sites that sell like iPhone apps?
Imagine visiting a site’s landing page, getting a description and some screenshots, and then seeing a button that says “$1.99 for full access”. If, as a user, you could click on that button, enter a password, and then immediately have lifelong access to the site — I bet you’d do it. $1.99 is a price lots of people are willing to pay, even if there’s a risk involved with trying out the site and then finding out you don’t like it.
I don’t know nearly enough to understand why this hasn’t happened, even though I’ve read a fair amount about how online micropayments for sites have been heralded for years but have never materialized. Apple has made things happen on the iPhone because they’ve created a closed system that makes it really easy for end users and developers alike. As a user, you give your credit card information to Apple once and they only charge it when it makes sense (since charging every micropayment individually would drive up transaction fees).
Why can’t someone do this for the web? It seems to me we just need a company that a) people trust with their credit card information and transactions, and b) knows how to build the right distributed technology that will get adopted by developers. Google comes to mind since it’s tight with developers and very trusted among users. Maybe browsers like Mozilla are better situated, however, since they control the “device” within which users browse the internet (just as Apple controls the iPhone). Then again, Google has its own shiny new browser (Chrome) so they’d have that going for them as well.
Such a payment system could revolutionize how websites are monetized - and consequently, how they are made. Businesses and their users would both stand to benefit greatly. Here’s to hoping this happens as the web matures.
Comments
I thought about how it would be done as I was reading - and I was like we need a browser to do it… and then you said it.
Really good idea - here is me hoping it happens.
What a fantastic idea!!!
Mark Hendrickson is blogging! As far as I can figure the iphone app store is basically two things: a simple payment service (stores your credit card, takes care of all the messy billing issues) and a directory of apps. That first part is basically equivalent to PayPal or Google Checkout — if you wanted to charge $1.99 for your web app you could use PayPal to create a simple payment service. The directory of apps is a little different — Apple surfaces new apps and popular apps, they do some curating, they allow ratings and reviews, and they filter out spammy apps. I think it’s this directory piece that’s missing. In a way your alma mater TechCrunch is the closest thing to this sort of web app directory.
Buuut I also think that trying to create some sort of web app discovery / payment platform on the web would be a tough sell — openness is fundamental to the architecture of the internet — Apple can pull this sort of thing off because they control the whole platform, but trying to do this purely on the web would be like herding cats.
Also I’m going to be in Mountain View next week — you / Henry free?
One of the problems with extrapolating from iPhone/Apple experience to the entire Web is that iPhone users are stuck to just iPhone and yet there are many free alternatives on the web.
If an iPhone user absolutely needs some functionality or absolutely wants to get some cool game, he/she would be willing to pay $1.99. (Most users, I suspect, live happily with whatever comes by default or available for free).
On the web, there are so many free alternatives; a user can not help but go to another site to read the same coverage or to get the same software for free, open sourced, or a free version for 30 days, uninstall later, and install a similar one for 3o days whenever you may needed the same functionality (image conversion or whatever).
Only well-established sites with passionate readers, say TechCrunch, may get some of their users/readers to pay; yet, even they may lose a majority of their readership due to $1.99 + payment request. They will also lose most of the community /comments contributors, and international readers, who all together make up what TechCrunch is.
And, there are not many sites/sw companies that can hope they offer so much value that user will pay and not leave. NYT, WSJ have tried various subscription options online; it has not worked for them yet.
Another issue is this has to be a browser based solution, and there are so many browsers and preferences out there. Once a user gives his credit card and pays, he is locked to that browser or has to remember yet another login and enter it in other browsers. (I am not the world, but when NYT or Forbes ask me to enter my login info, I just leave. I do have logins for both, but I am not willing to keep track of all logins outside of financial institutions and emails.)
“I bet you’d do it. $1.99 is a price lots of people are willing to pay, even if there’s a risk involved with trying out the site and then finding out you don’t like it.” This needs to be qualified in each particular case — how many would be willing to pay $1.99 for whatever the site is offering.
You would lose your bet in my case.
In the long term, this model may get some traction, just like people paid for cable, they will learn to pay for content and sw if it offers smth they can’t get for free; at this point with proliferation of bloggers writing about the same thing, and with proliferation of open source and free SW, most users, imho, won’t be willing to pay.
Mark,
I wanted to say what’s up since I saw your name on TC, but never knew if it was really the kid from the good old Oak Knoll days, but looks like things are going well. We’ve gotten a few posts on techcrunch about our company (RightScale) and I hope you take a peek at it when you go to launch your site and need a solid scalable infrastructure. Aright done with the sales pitch…
Hope things are well, seems like they are. Feel free to connect with me offline about what you are doing, I’m always interested to hear about cool start ups and I am certainly happy to offer some advice as it pertains to deploying scalable apps.
Later,
Hunter Williams
Mark, i’ve thought of that a gazillion times. Someone needs to make this service, but no one seems to do.
Maybe Facebook Connect with the ability to pay with Facebook Credits will help for that.
People on facebook easily pay a few dollars (or a lot more) to play their favorite game, so it can’t be that users are not willing to pay. It’s mostly that there is not a single, trusted authority to facilitate and guarantee these transactions. Paypal is an option, but having to set up and monitor a separate account may sound too complicated for most people.