I considered creating an iPhone game where each player would participate in a shared world that would be designed around the constraints of the high-latency EDGE network. The game would be free on the app store, but would cost $5/mo after 30 days. (I'd prompt each user for billing info from within the app.)
The reason I didn't devote my energy to that project is because I don't want to develop a product that hinges on a billing mechanism that circumvents the app store, because that seems like it could (perhaps rightfully) piss Apple off, since they wouldn't be getting their cut, and my game would be vaporized at Apple's discretion. Not that there's anything wrong with that -- it's their platform, and they can manage it how they like. But the lack of "subscription" billing for apps probably precludes many larger projects.
I think that problem stems from apples vice grip on the app store environment and iphone development ecosystem rather than lack of marketing creativity on the developers part.
I think marketing outside of the AppStore would be a lot more viable if there wasn't such a significant pressure to down-price your application. There's just no ROI to be found at .99 + marketing expenditures, IMO, unless you're realizing something on the backside like a subscription service, etc.. but then you might as well price your app for free and use iTunes for its marketing benefits in that regard.
If the only reason people are setting the 0.99 price is App Store promotion but you decide to use a different method of promotion, then you can set a higher price.
I agree with you in principle but I disagree in reality. Due to the influx of equal parts quality and junk, a lot of consumers have experienced buyers remorse on the AppStore. Particularly in the first few months... remember the flack the AppStore was receiving for the junk?
That said, there's a significant barrier that even a premium 'niche' app must now overcome aside from generating awareness. Couple this with the app likely having very few reviews, not in the Top 50, etc.. then a buyer will become very cautious. (Myself included). In addition, user review system is broken (1-way channel), significantly less than 20% of customers will leave feedback, and upon uninstalling the app rating defaults to 1-star.
I've been struggling with trying to figure out how to best overcome this as a marketer. It's difficult, costly, frustrating, and the .99 trend certainly doesn't help things when 12,000 apps are battling for 50 slots on a poorly weighted popularity curve.
That was exactly my point. If apps were sold the same way DVDs were, then placing in the App Store wouldn't matter as much. My feeling is it's actually possible to sell apps this way. For instance, the Ocarina app had so many people writing about it that I believe it would still have sold many copies at $5, especially if the people writing about it could easily toss in an affiliate link.
