One of the most brilliant things about the iPhone is the sheer ease with which you can find and install applications, including paid applications. No fumbling with your credit card, logging into Paypal, etc. Just click, enter your password, done. This simple convenience, coupled with the low price of most apps (less than $5) means that many users don’t really deliberate much before buying applications. After all, what’s a dollar here or there, especially when it’s so easy?
Many of the early iPhone developers have made a small fortune with simple applications, seeing jaw-dropping returns on their modest investment. We’re talking hundreds of thousands of dollars in several months by guys working out of their studio apartment. As a result, more developers have flocked to the platform in search of their own personal fortune, increasing the quantity and quality of applications on the platform. Users are happy because of the convenience and control. As Apple gets 30% of every purchase, they’re quite happy as well. It’s a win for everyone involved.
Which brings us to Facebook. With 130 million users and more than 50,000 applications, Facebook seems well-positioned to introduce a payments platform to let applications collect tiny fees for the application, premium content, special features, and subscriptions. There have been persistent rumors of such a move, but so far Facebook hasn’t released anything. Granted, the vast majority of applications aren’t worth paying for, but the makers of these apps know that and are unlikely to try and charge users. On the other hand, there is likely a class of applications that have not been developed because the free model doesn’t really work for them.
Even if only 10% of users ended up using the micropayment service, if they each spent an average of $5 / month and Facebook took a 30% cut, we’re still talking about $234 million / year in relatively high-margin revenue, not to mention the huge influx of applications and marketing that would occur once there was a non-advertising revenue stream available to app developers.
Are they just taking their time in developing this? Why wouldn’t they do it?