Parallels between the App Store and the cinema help to explain why up-front-paid apps are becoming obsolete
The debate over "Why won't people pay for apps?" rages on. In Marco Arment's latest post, he spells out all the most popular reasons that have been cited for why people don't pay for apps. I won't rehash them here. However, one reason seems to have been glossed over time and again. I'll explain it with a thought experiment.
Which option would be the most popular, and which the least?
The answer is that it doesn't matter: If cinemas thought that the "menu of options" approach were a good idea, they would have tried it already. They don't because having to make a choice like this would be a terrible customer experience. Offering multiple options introduces all kinds of cognitive burden to what is otherwise a simple experience: you pay, and then you watch. If cinemas offered these options, then yes, consumers would have more choice, but they'd also have a less enjoyable overall experience at the cinema and would therefore come back less often.
This is what's happening with app pricing. When a consumer comes across a paid app, even one with lots of positive reviews and maybe even a where-have-I-read-about-this-before brand, his mind runs through a few scenarios: Is this app going to be worth it? Might I find another app that's just as good for free? Or just as good but allows me a sort of trial through in-app purchase?
My point here is not that consumers are unwilling to pay the price; it's that all these thoughts are cognitively draining. The potential app buyer gives it a second and a third thought, maybe gets distracted or thinks "Heck, I'll decide later", closes the App Store, and never revisits the purchasing decision.
The paid apps that still sell really well on the App Store are Titles with a capital 'T'. These are games which have a recognizable brand outside of the App Store (e.g., Angry Birds Star Wars II, Grand Theft Auto, Disney games), games which built up huge brand equity in the earlier, less competitive days of the App Store (e.g., Angry Birds again, Infinity Blade), or are backed by huge publishers with big production and marketing budgets (e.g., Disney again, Gameloft). Consumers know these brands and trust them, so they don't ask any questions when making their purchasing decision. They just complete the purchase.
Funny enough, that's exactly what's happened in Hollywood. Movie studios have figured out that they can play it safe and still come out on top by investing in fewer mid-tier, low-brand-equity titles and more high-budget, big-brand Titles. These are comic book heroes (Spiderman, The Avengers), brands that are recognizable outside the cinema (Transformers, Alice in Wonderland), characters revived from earlier days of cinema (Star Trek, Oz), and movies where Johnny Depp plays an odd character beneath a raggedy costume and a lot of makeup (ok fine, it's not entirely foolproof) . When consumers are figuring out which movie they want to see, their eyes are not only drawn first to the brand name, but they end up picking the brand name movie because they don't have to think about it. The box office numbers bear that out.
The "no cognitive energy argument" (which could also be called "The price of your app makes me fat") has been noticeably absent from the conversation about why people don't buy apps. Perhaps I'm not the first to make this argument, but I also suspect there's a movie executive out there who could have made this assessment long ago.