Apple allows free apps to sell virtual goods

Matt Bowman · October 16, 2009 · Short URL:

The move is a coup for app developers and a boon for the nascent industry

Apple announced today that it will allow in-app purchases of virtual goods from free iPhone and iPod applications. This will be a big boon for the nascent app industry.

This summer Apple allowed “in-app purchases,” but only from paid applications on the AppStore. It expressly prohibited this feature in free apps. The about-face enables a "free-to-play" model that makes it easy to convert a freeloading user into a paid customer on the spur of a moment, without forcing an upgrade to a premium app version.

The typical case scenario for in-app purchases is games--users play for free and are invited to purchase a weapon to kick some additional monster arse. Zynga's games like Mafia Wars and Texas Hold’Em stand to benefit big time, as do Tapulous's popular apps, including Tap Tap Revenge.

And the possibilies go beyond games. Last night I ran into HearPlanet's founder Steven Echtman at the SF Mobile Conference, who said this was big news for his company. HearPlanet, one of Vator's Juice Pitcher Top 10 Winners, collects geographically relevant information and delivers it to your iPhone in an audio format--it's essentially an audio tour guide for any place on the planet. They have over 500,000 downloads and have begun being featured in Apple's advertisements.

Echtman said the revenue model hinges on location-based advertising and subscriptions to premium partner content. The App Store's new policy means HearPlanet won't have to upsell users to a premium app before selling them more valuable info.

Only virtual goods used within the application may be purchased (ie, additional game levels, subscription content)--Apple is not allowing apps to sell goods that would be used outside of the app.

HearPlanet's pitch at the Juice Pitcher last week is embedded below.

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HearPlanet turns your cell phone into an audio guide to the world.

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We provide an immersive experience that connects you to your surroundings and delivers information in a way that doesn’t distract or slow you down.

HearPlanet organizes information from a multitude of sources and delivers it in audio format, making it easy to consume when active and mobile.

600,000 users have installed the HearPlanet iPhone/iPod Touch application and we cover 300,000 locations worldwide. We organize vast amounts of content from numerous sources and instantly deliver what’s most relevant to users. HearPlanet tells you what’s right around (using geolocation) and offers comprehensive search for everything else.

Apple has featured HearPlanet in national iPhone ads including full-page spreads in the Wall Street Journal and the New York Times.

“Like having a tour guide in your pocket..."  National Geographic Adventure

"The best kind of travel guide – one that requires no reading…”  United Airlines

“If you like to go sight-seeing when you travel then you’ll love HearPlanet.”

“Get the scoop on landmarks, historic sites and more - in countless cities worldwide - without taking your eyes off the sights.” Apple Ad Campaign



Tapulous, Inc.


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Tapulous is a Palo Alto, CA based startup building a family of fun and social apps for the iPhone.  We are angel funded and have released two apps for the iPhone (as of early August, 2008): Tap Tap Revenge (a music game) and Twinkle (the app that lets you connect with people nearby and your friends on Twitter).



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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users.  Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist.  The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel.  Zynga is headquartered at the Chip Factory in San Francisco.  For more information, please visit


Steven Echtman

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Founded or helped found 4 tech oriented companies. Worked in all aspects of operations, product definition/development, UI/UX, marketing and more. Projects include mobile, web, cloud, SaaS, IoT, consumer (B-C), enterprise (B-B), etc.

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