"Maybe you think I can only do this because Instapaper is already popular. But it built its popularity while charging a lot for an iPhone app from the start."
AND there was a free version out.
He's neglecting the "critical mass" factor.
The free version helped him sell the full version until it reached that "critical mass" that was required for the popularity of the full version to continue to drive sales of itself.
I've personally found that by just offering a paid version of an app from the beginning is quite frustrating. But once I put out a free limited version, sales took off. So, MAYBE I'll try losing some of my free versions to see what happens, but I think that free-to-paid actually works just as well.
Interesting that for all the arguments about charging for the iphone/ipad versions, he's not charging for the website service itself (which presumably costs money to run too). Perhaps there's value in 'free' after all?
> The free version helped him sell the full version until it reached that "critical mass" that was required for the popularity of the full version to continue to drive sales of itself.
From the investigating he did it didn't look like the free version drove the paid one. Evidently very few people signed up on the free app and later showed up on the paid one.
This isn't the right conclusion to draw from his investigating. All he showed was that, as you said, few people upgraded from the free app to the paid one. This does not necessarily mean that the free app did not significantly help the paid app sell. Maybe it was fairly common for one geek to buy the app, show it to his friends, who would then try it because there was a free version and not ultimately ever buy the paid version, but still talk about the app and introduce it to people who did buy the app. There are uncountably many other situations like this that could have happened and caused the presence of a free app to have helped the paid app; this is very far from a controlled experiment.
That section does not address the likeliness of Instapaper having gained a critical mass of users and people knowing about its existence before being able to pull the free version.
There was already a 'web only' service before there was a web app and together with the free version that has resulted in a lot of people 'knowing about it'. Once you reach critical mass, further sales can result from word-of-mouth advertisements and 'having heard of it once'.
We would have to do a verification experiment: go back 18 months in the past and pull the free version from the appstore. There is not a doubt in my mind that that would have turned out bad for Marco.
AND there was a free version out.
He's neglecting the "critical mass" factor.
The free version helped him sell the full version until it reached that "critical mass" that was required for the popularity of the full version to continue to drive sales of itself.
I've personally found that by just offering a paid version of an app from the beginning is quite frustrating. But once I put out a free limited version, sales took off. So, MAYBE I'll try losing some of my free versions to see what happens, but I think that free-to-paid actually works just as well.