The problem with In App Purchases (and what to do about it)

In App Purchases can make you feel like you're being ripped off, especially when you have to pay to win the game. What's the solution?

We've dedicated a lot of space here on iMore to the issue of In App Purchases (IAP). Rene and Georgia have discussed it on The iMore Show; Rene has opined about it separately; it's even come up on Talk Mobile. Now I have a modest solution for one way to deal with it. Read on for details.

What's gotten us here

When the App Store first came online, the first apps to show up included ports of apps and games from Mac OS X. That made a lot of sense, since iOS development required the same tools - and the same body of knowledge - that Mac developers were already familiar with. They priced their apps less than what the Mac versions cost - pay $30 for a Mac game, expect to pay $10 for its iOS version. Initially, they sold well. Some of them made more money on iOS products than they did on Mac products, too.

In fairly short order developers discovered that if they priced their apps even lower, they'd sell more. And those sales rankings pushed the visibility of their apps even higher in top-selling lists. The race to the bottom was on. In the blink of an eye, app developers were shooting for the 99 cent mark. And iOS app buyers came rushing in.

The shareware dilemma, and Apple's solution

Developers realized even before the App Store launched that they'd be working at a deficit compared to how they used to do business, because Apple offered no mechanism to give buyers a chance to try before they buy. Apple wanted to simplify the app-buying experience. Buyers would have to do with screenshots and product descriptions, or with info off the developers' web sites.

The old Mac shareware system that supported many of these developers relied on time or feature-limited versions that could either be unlocked by entering a registration code, or that required you to separately download a fully-enabled version after you paid a registration fee. That system was gone.

During the second year of the App Store's existence, Apple introduced iOS 3, and with it came a new payment mechanism for apps that has fundamentally changed the way games and many other apps are priced. That mechanism, of course, is the In App Purchase.

Pennywise and pound foolish

At first, IAP seemed like it might be a good solution to the problem of kicking the tires. Developers could offer apps for free and unlock features for an additional charge. It also paved the way for subscriptions, which have enabled digital publications - magazines, newspapers, etc. - to flourish on the iPad.

But the law of unintended consequences has reared its ugly head. Instead of being used to unlock features, IAP is instead being used to endlessly charge users - in particular, gamers. You can download some great games that cost nothing to download, but to play them, you'll get charged. And to continue to play them, or to unlock new content, you'll be charged.

IAP is, more often than not, used to flog paying customers until they finish the game or give up in frustration and stop playing or delete the app altogether.

What's worse, in the end, users who absolutely have to pay (witness the popularity of games like Candy Crush Saga as an example) end up getting charged more than they would have if they'd just bought the games in the first place.

Be careful what you wish for

Ultimately, we App Store customers have no one but ourselves to blame. If it weren't for our own desire to go cheaper and cheaper, developers could have continued to charge a fair price for their software. But the free market has run amuck, and developers have been forced to adopt different measures to extract money out of us.

One developer I've spoken with mentioned that they'd tried an experiment with one game: they released it as a pay-to-play title; they then released it as a free game with IAP. The IAP-enabled version dramatically outsold the pay-to-play title.

The results speak volumes about the way that App Store buyers perceive value, and their inability to perceive that they're being fleeced.

What to do about it

I don't see a radical backlash of developers simply charging money for their apps any time soon - the expectation has been set in the mind of consumers that zero is what the want to pay up front, and the expectation is there that they'll get charged for IAP if they think the game is worth it.

Accepting that IAP is here to stay, I'd love to see a system put in place whereby developers can cap the amount of IAP their games will accept. What the cap would be depends entirely on the developer, obviously, and how much they think the game is worth. So once you spend $10, or $20, or whatever, the game is permanently and completely unlocked.

Obviously, though, this is predicated on the assumption that a) Apple provided a way to do that and b) developers have any incentive at all to stop charging for IAP at any point in a product's life cycle.

Still, it'd be nice to know that there's a light at the end of the IAP tunnel - that if I value a game enough, I can just pay to get everything that's there, and be done with it.

So far, though, I'm not optimistic it will happen.

What do you think? Are you as sick of IAP as I am? Are you reluctant to download a game if you know you're going to get charged through the nose to finish it? How much have you spent on IAP? Talk to me in the comments.

Peter Cohen