The strange economy of the App Store

A few App Store apps have already gotten the public browbeating for tweaking their prices, and here’s another: as Johnathan notes, there’s a new app on the top of the heap in the paid pile, and apparently the only reason “Units Convertor” (sic) is there is considering it used to be free.

We can’t necessarily shout them out for switching just to sit on top — what would you do whether you had a free app that was being downloaded like crazy and decided you wanted to produce some money from it? But being that free apps far outweigh paid apps in terms of distribution, even the #21 free app can quickly jump to the top of the paid pile. We’ve already posted about how developers might be getting a raw deal out of the

App Store (and some publishers have told us personally that they agree), but the economics are very interesting in there right now — you’ve got a basically free economy, and considering that most of the apps out now are easy to build, it’s just as likely that you’ll see a free version of an app that does the same thing as a paid app.

Of course, what’s happening in there actually mirrors what’s happening out here with software: some of the best applications around are actually being given away for free. We’re still in a strange place with the App Store and its pricing, and you have to think that eventually things will settle down and the developers who deserve to get paid will.

[Source] Mike Schramm