Underscore Price Dynamics

Marco Arment in his blog post Underscore Price Dynamics:

I’m sure of one thing, though: the market for paid-up-front apps appealing to mass consumers is gone. If you have paid apps in the store, you’ve probably seen the writing on the wall for a while.

Spot on. He is absolutely right and it has been this way for a long time. I’m certain Marco was experiencing this with Instapaper and may be one of the reasons he decided to move on.

We are at the end of an era. The entire software business is adjusting and we, as developers attempting to make a living (at least) from our work, must adjust.

Joel Spolsky commented on Hacker News:

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component.

The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Trello, which is free, but the business of providing administrative tools to large organizations using Trello can sustain the whole business.

This is more than just “freemium” or “advertising-supported.” Freemium and Ad-supported business models are special cases of this general model. The real insight is that the free product has a chance to reach an enormous audience which provides distribution/advertising/marketing making it trivial to go to market with your paid product.

What Marco is reporting here is that the old-fashioned “make something and get people to pay for it” business is much harder to pull off and likely to always be left in the dust by someone making the same thing for free, getting 100x the user base, and getting 1% of them to pay for some value added feature.

Very well said. We should all be searching for the same.

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