Micropayments and the power of free
WriteRoom is an iPhone app for taking notes that has a few nice features. I know about the developer, Jesse Grosjean, from some of his Mac work, and when I saw last night that the app was on sale for 99 cents, I bought a copy.
But that sale was actually part of an experiment Jesse’s been running with WriteRoom’s price, and he’s now publishing the data he’s collected. And it raises some interesting perspectives on the ongoing debates around micropayments.
WriteRoom used to cost $4.99. And last Thursday, at that price, it sold nine copies.
Then Jesse decided to make WriteRoom free for three days. In that long weekend, his application was downloaded a whopping 16,347 times.
Then, starting Monday, he brought back a price — this time, only 99 cents. In the first two days at that price, he averaged 72 sales a day.
Now, selling iPhone apps isn’t precisely analogous to selling individual news stories, for a variety of reasons. And any number of external factors could have influenced Jesse’s numbers. But it’s also another bit of evidence of how enormously price-sensitive people are in a digital environment. As Chris Anderson will tell you, free is an entirely different animal from any price — even one as insignificant as 99 cents. If you can afford an iPhone, you can afford 99 cents for an app. But even for this relatively upmarket crowd, that tiny sum was a huge barrier. Journalists who think their audiences will happily start paying a nickel/quarter/dollar for every story they click on should take note.
(This is also why I always counter arguments for micropayments with a push for macropayments. There are in fact people willing to pay for news content. But they’re a smaller share of your audience than you might think, and they’re also willing to pay more than a nickel or a quarter. If you’re going to try a paid-content model, to me it makes a lot more sense to make sure you’re getting all the revenue you can out of those bigger fish than to waste energy chasing after the folks who will never pay anything.)
Joshua Benton | Aug. 27, 2009 | 12:06 p.m.
Tags: iPhone, Jesse Grosjean, macropayments, micropayments, paid content, software, WriteRoom
It may take a little research (re: money), but if you could figure out which of your audience members were willing to pay for Web content, you may also be able to figure out a few other commonalities among them and create a niche product you could charge for. OK, that’s easier said than done, but it’s better than just killing off all your traffic by putting up a paywall around your entire site.
Those who bought the iPhone app and those who downloaded it for free are two very different groups of people. If an app is free many will download it out of curiosity only, and then never use it. Similarly many pdfs downloaded from websites and even mp3 and videos are never looked at.
see cnet story on iPhone apps
Don’t you think the phrase “selling iPhone apps isn’t precisely analogous to selling individual news stories” would be much more accurate if you said “selling iPhone apps isn’t remotely analogous to selling individual news stories”?
Like music purchased online, the iPhone app is something you cabn keep and use over and over again. That is almost never true for a news story.
There are some lessons to note from the WriteRoom experiment – perhaps the most important being that news sites need to experiment and play around with variable pricing (for ads) and promotional models.
Equating app sales and news sale, however, is simply misleading.
P.S. WriteRoom for Mac is a good and useful tool for long-form writing.
Hi Howard: I think they’re more analogous than you do (obviously!). They’re both areas in which a large sea of free products compete with a smaller number of paid ones. They’re both undergoing a market shift in which individual producers are losing their traditional pricing power as a result of that new free competition. The App Store has reduced the transactional friction of spending small amounts of money about as much as anyone has, a huge goal of the various news micropayment planners.
You’re certainly right that iPhone apps have the potential for longer life than an average news story. But (a) iPhone apps actually have a much shorter useful life than you might think, as David Sanger’s link points out, and (b) that fact strengthens my argument that micropayments are likely to be ineffective, not weakens it. If the introduction of a very small price so radically reduces people’s interest even in a good with a long potential lifespan, it’ll do much more to dampen interest in a transient news story.
P.S. If you’re paying $25 for WriteRoom, you might as well pay the $39 for Scrivener, which has all the full-screen anti-distraction elements of WriteRoom along with a thousand other useful elements for reporters and writers.
Based on my experience as co-founder of BitPass, a now-defunct micropayment system for digital content, we learned that micropayments for music downloads work well at places like iTunes, whether on the Mac or on the iPhone because the content is branded, i.e. people already know what they’re going to get from having heard it several times on the radio. iPhone apps are like unbranded music downloads. Without a good preview option, people don’t know what they’re getting. WriteRoom would likely benefit from a free Lite version and paid full version, where the Lite version contains a time-limited preview of the full version.
We definitely agree on paywalling. I know that. I just can’t seem to shake off that editor’s habit of bemoaning sloppy thinking or construction. Most plainly: apps ≠ stories.
I am a licensed user of Writeroom and tried Scrivener. I find the thousand other features distractions I don’t need.
In fact, I do almost all my writing nowadays on a minimalist, free Mac word processor named Bean. I recently got new Mac and haven’t even reinstalled MS Office.
The trick with making micropayments work is to separate the desire to acquire from the pain of payment.
Credit cards, FasTrak passes, Skype, Amazon 1-Click, SMS messaging all do this to fantastic effect. People buy without thinking and absorb price increases more easily.
Here is a more complete description of how, if it IS possible to transition online newspaper readers to customers, it might be done:
http://bit.ly/1E0Scn
Best regards,
Philip Haine
productvision.com