Apple has just announced that it will now support in-app purchasing for free applications on the App Store. This is absolutely huge news for developers, and will likely lead to a fundamental shift in the way applications are marketed and priced. It’s hard to overstate just how much this will change the App Store.
Up until now developers of premium applications have faced a major problem: they had no way to offer a feature-restricted version of an application for free that users could pay to unlock if they liked what they saw — a model that’s quite common on desktop software. This led to the creation of the so-called ‘Lite’ versions of applications, which generally offer a reduced featureset, but require users to download an entirely new application to access more features, which obviously isn’t ideal. Now, they won’t face this hurdle. They’ll be able to ditch the Lite version entirely, switch their currently premium app over to free (which will lead to more impulse downloads), and give users the chance to upgrade their featureset down the road.
This will also have a massive impact on free games that thrive on the sales of virtual goods, like Tapulous and Zynga. Up until now Tapulous has been unable to sell new songs through its flagship applications Tap Tap Revenge 1 and 2, because these are both free. In order to take advantage of the in-app purchase feature that Apple launched earlier this summer, Tapulous was forced to launch TTR3 as a 99 cent application. The app has still done extremely well, leading the Top Grossing charts for days, but it would have almost certainly gotten even more downloads had it been free.
Likewise, games like Zynga’s Mafia Wars and SGN’s Mafia: Respect and Retaliation have had to offer Lite version of their games, not necessarily because they wanted to restrict features to users, but because they had to charge something so that users could purchase virtual goods down the line. It looks like Zynga and others won’t be able to use virtual currency, which Apple has basically forbidden. However, don’t be surprised if they offer “packs” of upgrades that you can buy.
There have been various rumors as to why Apple restricted in-app purchases in free games to begin with. Some have speculated that Apple is concerned this will lead to many free apps that tempt users to download them and then do essentially nothing until you pay to unlock them, which is still a valid concern. Others believe it has to do Apple’s payment system, which may lack credit card information for users who only download free applications.
Here are some guidelines Apple is giving to developers for their integration of in-app purchases into free games:
1.1 You may use the In App Purchase API only to enable end users to purchase content, functionality, or services that You make available for use within Your Application (e.g. digital books, additional game levels, access to a turn-by-turn map service). You may not use the In App Purchase API to offer goods or services to be used outside of Your Application.
On Currency: 2.1 You may not use the In App Purchase API to enable an end user to set up a pre-paid account to be used for subsequent purchases of content, functionality, or services, or otherwise create balances or credits that end users can redeem or use to make purchases at a later time.
-No virtual currency
2.3 Content and services may be offered through the In App Purchase API on a subscription basis (e.g., subscriptions to a magazine, comic series, or financial reporting service); however, rentals of content, services or functionality through the In App Purchase API are not allowed (e.g., use of a particular game item or digital book for a pre-determined, limited period of time).
Note: This means that content owners won’t be able to let their content expire. This probably won’t be welcome news to many of them.
Updating with more
big big news.
huge!
This is going to be big, here’s another revenue stream for Zynga and the other big players
I think they still have a policy on not using in app purchases for “virtual currency” but I’m not 100% sure. In any case, this is huge!
missing link for in-app purchases. huge.
I wonder if this works with urban airship
this is a big deal for developers. lots of frustration with the old policy.
This is great news and it will finally eliminate the need for multiple versions of the same app hopefully helping to de-clutter the app store.
That said, implementing in app purchase is non-trivial. Developers have to actually handle the last-mile delivery of content to the device. Apple does the transaction but then the app developer has to get the content to the device.
If you want to get up and running quickly with in app purchase and have somebody else handle the backend piece, check out Urban Airship. Yes, this is shameless self-promotion but I think its relevant …
This is a really huge deal for SGN and for all iPhone developers!!! Thank you Apple!!
I agree this is huge and overall a very good thing but you’re going to start seeing a lot of bait and switch apps.
that true, but i bet apple is going to be watching very closely for that. which will in turn piss off a lot of developers, once again.
Remember kids, it’s not piss… it’s raining Apple juice!
@MG
In a fit of bad timing, Apple approved our new app yesterday and we turned it active today a few hours before this news came out. I wish Apple had the free apps with in app purchases two weeks ago
. We would have tried to release a free app with a paid upgrade for some features. (hello shareware!)
Personally, I think that this distribution model just makes the store more awesome and solves a lot of problems, but I’m sure that Apple will have some issues with it.
By the way, we do have an MG Seigler easter egg in our app
Wow!
This brings up the other obvious question. Can apps charge for physical goods? For example can I buy goods from Amazon iPhone app and pay it via my iTunes account?
Never mind. Just saw the update to the post around purchase guidelines.
Although it will be cool to think of my iTunes account as my wallet to buy any type of goods.
Lot of opportunity for mCommerce like apps. Especially using WiFi or Bluetooth. Think MasterCard Paypass built right into the iPhone…
Excellent news. The threshold for upgrading to a paid version of an app just become extremely low.
Speaking of which, how does the rev-share model for in-app purchases look? 70-30 to the developers favor?
Correct, it’s the same 70/30 split as regular paid app downloads.
This is really bad. Now there will be no way to tell if a game you are downloading is actually free or if it’s just a demo and you need to pay more to get the full game.
This will also hurt true free apps that work on advertisements or are just free, unless apple keeps the “Top Free” section open only to those which do not have any in-app purchasing ability.
Why have they just now done this. It had to be a pain to develop two separate applications. Golf clap for Apple!
I know this is good for developers, I am one. However I worry about bait and switch apps. Lots of games with one level, etc…
Hopefully natural selection will fix that.
Some of the guideline changes are a bit of a punch in the face to me for some of the projects I’m working on – but this is a truly, truly tremendous move for developers overall. I can’t friggin’ wait.
Excellent news. Good idea all round. Saves having to download twice, saves having to develop 2 applications and saves space and clutter in the app store.
Has anybody mentioned yet, that this is BIG and HUGE ?!
small
True that it’s big news – though game devs. have found the workarounds you mentioned, it still hobbled experience for players. And forced devs to lose out on potential income.
Will be interesting to see how quickly this rolls out. Much as devs. grumbled there’s no argument that Apple’s tight control kept them from having to serve as a platform to a bunch of other payment cos. See FB, for example, they don’t even get a cut of transactions made on FB platform, and they play host to a whole ecosystem of outside players microtransacting on FBs dime.
As an iPhone user/parent whose kid plays lots of games (mostly free but some paid) I’m also a little scared.
There will now be concern for all the iTunes affiliates that generate their revenue from linking customers to specific apps in iTunes. Right now, they get 5% of the sale of the app.
If developers start to make all apps free with the potential of purchasing down the road, the affiliates MIGHT not get anything from it….
I’m not sure if Apple has come up with a way to deal with that scenario or if the affiliates will get the 5% if the app is purchased in app within 30 days.
If something isn’t worked out, this could see the end to a lot of the app tracking sites out there.
The old policy was stupid. So glad it changed. Having it only for payed apps eliminated almost every practical reason of using In-App purchaes.
How is this going to affect app ranking and visibility in the app store? Will Apple start ranking apps according to in-app purchases? This is an extremely important question for devs who rely on visibility in rankings. As usual, we will likely remain completely in the dark due to Apple’s paranoic avoidance of announcing any plans. Don’t get me wrong, this change is potentially an excellent one, but how can devs who rely on Apple for their income make sound business plans when major changes are just dropped on us in absence of any explanation of what their actual intentions are?
Was just going to ask the exact same thing. Anyone?
about time
WOWOWOWWOWOWOWO>>. I will be rich now
Thanks for the news buddy
note:
2.3 Content and services may be offered through the In App Purchase API on a subscription basis (e.g., subscriptions to a magazine, comic series,
are they kicking the tires of this before the tablet is announced?
Wait, so that last section (2.3) makes me think that now the map apps that charge you per month will be outlawed. Is that true, or am I reading it wrong?
I’m interested to see how the ‘Top 10′ lists will be affected – given that many of the ‘Top Free’ apps may actually be little more than a blank screen with a ‘buy now’ button to unlock the features / content.
Perhaps they just need a separate category for apps with in-app purchases.
This is similar to what was done with Xbox Live Arcade Games for the Xbox 360. In fact it is the exact same executable so there aren’t any additional downloads required.
Ultimately this is beneficial both for the developer and the consumer; I’m not surprised to see this happen.
There is actually nothing new about the non rental.
That has always been part in the in app store contract.
What you sell must be a final sale.
Thats why virtual currencies and things that can be missused as such are clearly missallowed.
After so many mistakes in a row in the last weeks, Apple finally did something right.
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Finally, somebody did something right. Unbelievable.
big news!
This is good news and it will finally get rid of the need for multiple versions of the same application.
They got a pack of 152 premium iPhone apps you can download over on http://opiniongoodies.com
*thumbs up*
This is great news indeed!
I’ve been working on new version of my application. With very few market options out there. I needed a solution. Then Apple released this new information, I quickly integrated the store SDK into my app.
My app called “ez level +” an it just got approved yesterday. It’s one of the first FREE app’s to offer in-app purchase model.
http://itunes.a...d302326354?mt=8
our apps
http://itunes.com/Hamway