I don't doubt that advertising and IAP are more successful monetization strategies than selling your app, but if I got into indie app development it would be because I wanted to make apps which I myself liked, respected, and would want to use. That immediately precludes advertising and makes IAP very challenging.
As I recall from his podcast[0], the author is specifically trying to make a business of indie apps, as opposed to making the best apps he possibly can. Or, to put it another way: he's making the best apps he can within the constraints of his business model.
(I'm not saying the apps are any better or worse for it; I haven't used them.)
He's probably right that in order to make a living as an indie mobile-app developer you have to go with the flow, but it does imply that making an app to satisfy your own standards would not make you any money.
Ditching app development because one more successful monetisation strategy doesn't suit you is a bit odd. Maybe BuzzFeed makes more than a highbrow monthly-fee publication, but they can both still have their place. You can still make money with a straight-up paid app, no ads and no IAP.
I tend to have a visceral reaction when indie devs proclaim that paid software is "over". (Which is not what David Smith is doing, but what a lot of commentary in this genre tends to look like.) It's not that ads are inherently bad — podcast sponsorships, The Deck, and affiliate links tend to be decent and respectful — but what kind of software future can we look forward to if the only way to make money is to sell our UI real estate to the highest bidder? There are many ethical lines that are all to easy to cross in the pursuit of profit. This is the same path that has turned mobile games into exploitative, IAP-driven casinos — and the web into a murky bog of autoplaying videos and 10-second load times.
Here's my opinion: pay-once software will never disappear. Not now, not on an infinite timescale. For things like Twitter clients or text editors, sure — it'll be very difficult to sell your wares at a premium when there's so much free competition. But certain pieces of software are just too unique to be cloned. Nobody minds paying money for Model 15[1] because it's the only one of its kind. Maybe instead of spending years and years working on a single productivity app, we should focus on building stuff like that.
The age of consumer pay once software is dead and has been for awhile - aside from non mobile games. Which software companies are actually still making real money from consumers? I can only think of one - Microsoft - and even they have moved to a subscription model. I'm a developer and if I didn't have an MSDN license, I could probably get away with only free tools that MS provides and open source software.
Adobe is still doing well, but they are also doing subscriptions and mostly prosumers who are running businesses.
I think one* of the reason is payment is hard.
There are lots of people without Credit Card ( Non-US specific ) and this makes paying requires a little more friction.
The key is to offer something in exchange for the ad view. Like in Sim City and Abyssrium, they actually give you something. When it becomes a choice, it becomes a willful transaction, and not only do users willingly and repeatedly watch ads for you, they don't mind it.
Unlike streaming content, in a game it's easy to reward the player. In fact, it's much easier than making the player pay for the game upfront, or pay for the reward.
In Tap my Katamari you only see ads when you choose to. You can watch an add to double the money accumulated when you where away. From time to time the king will come with gifts, cash or candy, but ocassionaly the reward will be "watch an add for plenty of candy" or "watch an add to get money/tap for N seconds".
This makes the person playing interested in watching the add, well, playing it at least while doing other things.
From a game dev perspective one example of this would be displaying an occasional opportunity for the player to opt in to see an ad in exchange for an in-game currency, additional player skins, or other type of reward depending on the game.
Intrusive advertising is a dead business model. Advertising in iOS apps is non-intrusive by design. Distracting, certainly, but you will not have videos that pop over content and play automatically while you are in the middle of reading the article.
"Advertising in iOS apps is non-intrusive by design."
Not sure what apps you're using, but in many ad-supported apps I use, the ads are always visible or takeover the full screen between screens - both very intrusive. There's one game my kids tried and they could barely go a minute without accidentally hitting an ad with their palm while tapping with fingers.
With the combination of the built in content blocking support that iOS has and the new Web View Controller that respects content blockers, ads are basically dead for web pages on iOS. Apps on the other hand are another story.
