One of the reasons why selling ads on websites is so often the business model for websites is because it's really easy and your customers, rather users at that point, don't need to do anything. They can just show up to the website. And everyone who just shows up, which takes no effort except one click, everyone who shows up makes you a penny or two. Where, if you were trying to sell something directly to customers for money, on the web they had to go through payment gateways, they had to type in all their address and billing information, they had to type in their credit card number. They might not trust you with their credit card number if it was a big deal. Y'know, the more barriers you put up there the more people will just say, "Eh, never mind," and they'll abandon buying your product.
So what changed with the app store is Apple already had everyone's billing information from iTunes. If you used an iPhone, chances were good that you already had a credit card hooked up to iTunes. And so you could buy things just by typing in your password.
And Apple made it even more of an even playing field in that whether you buy a free app or a paid app, it's the same process. You type in your password either way. So buying a paid app over a free one is no additional effort. And that changed everything. That for the first time brought very, very easy payment to the modern software world. That more than anything is why there is a business for paid apps of any reasonable size.
- Marco Arment
Planet Money: The App Economy, 7:08-8:40
The first thing that made things work was what Amazon and Apple discovered long ago: people will pay for things at lower prices and you'll make it up in volume. Stop your crying.
While Marco is right and enthusiastic about Apple making things more pure for sellers and more easy for users, this is not something Apple or Amazon or Google or Facebook should have. This NEEDS to be something anyone can hook into. You shouldn't have to rely on Square or Stripe or Paypal or credit cards. Maybe you'll need banks, but you'll certainly need a new type of system, with open and free specs for everyone, that can keep you from being a slave to holders of payment information. Instapaper does have paying customers, but only through Apple. 30 percent this year, 70 percent next year. TOS nice this year? TOS evil next year. Being able to sell things to people without having to piggy-back on someone else's service, and be at their service, and without inconveniencing your users is something the open web NEEDS to avoid being the sick man of the Internet. And it has needed this for far too long. iOS is the micropayment system that never got implemented. Everything's fine now with iOS, but everything's usually fine at the beginning. (It's only when you break a decades-long Microsoft-esque dominance with something like iOS that everyone can see how much things get held back.)
We do not need to replicate the credit card model online. And where the hell have been banks all this time? Where were they when credit cards ate their lunch?
The web is special and different. There are standards bodies that can actually get shit done in ways that governments sometimes can't. The web is open and free and, more than anything, gives us a second go around to make things slightly better than last time.
Being a good citizen means more than just making money off the system: