Tuesday, February 24, 2009

App Store Price Erosion Should Be A Wake-up Call For Publishers

Awesome story at The Business Insider highlighting the rapid price erosion that all of us are observing in the iTunes App Store. The average price point of a Top 100 paid Apps has fallen to $2.55 and there are now zero $9.99 Apps in that group. The story speculates that some developers may be making up for lower margins with higher volumes, but they are waiting for feedback from the community. They also, point out that Apple (AAPL) is probably unconcerned about the trend since under their inverse razor blade model they are using content as a loss leader (or perhaps break even) to help move hardware. As I've expressed before, the mobile content industry needs to maintain a healthy level of concern about the growing dominance of the iPhone retail channel, in terms of consumer and industry mindshare, given the divergent business motivations of its owner.

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