The New York Times took an intelligent look at how content is selling on Apple’s App Store.  The best-selling version of David Pogue’s “iPhone: The Missing Manual” book is its $4.99 iPhone app version, not the paper book or PDF.  Saul Hansell understands the application’s success on the iPhone is because of the valuable convenience and service Apple provides rather than customers simply paying for content.

Apple has created an environment that makes buying digital goods easy and common. With an infrastructure that supports one-click purchases of songs and videos, it was easy to add applications in the same paradigm. Paying for software, especially games, is not new to Apple customers. So when you see the iPhone manual or the Frommer’s Paris guidebook, it feels natural to click. (And of course, your credit card is already on file with Apple.)

He adds that Pogue’s app “hard to use” with poorly formatted text and a lack of interactive features, but for $4.99, the book sells quite well to a captive audience.  The publisher raised the price to $9.99 and saw sales plummet 75 percent.

This is not an example of micropayments, like some would like us to believe.  As newspaper’s desperately try to convince the public content should be paid for, they forget to tell us why to pay for it, let alone give us a reason to.  Apple built a easy-to-use system that is so convenient, it’s worth a few dollars and cents.  But Apple doesn’t look to make money on it’s App store. Apple already makes a healthy profit on the iPhone itself, just like on the iPod. Any profit from songs or applications is icing on an already sweet cake. These so called micropayments supplement Apple’s massive profits – they aren’t the source.  Newspapers hoping to replicate this model will be sorely disappointed.

Another difference, Apple has no real competition.  No one else can sell or offer iPhone applications except Apple (unless you jailbreak your phone). And no other mobile phone system offers as complete a catalogue or convenient system to truly challenge the iPhone (Google’s Android is trying very, very slowly).  If and when Android or Symbian or Windows Mobile (ha) can and do challenge the iPhone, convenient service will not be worth paying so much for. It’ll be expected and the next innovation will be required.  That’s, of course, smart business – staying ahead of the competition.

Something of concern for Apple and micropayment fans is research shows iPhone users rarely use applications after 20 days.  Techdirt points out iPhone users not finding much value in the apps they download will be less likely to spend money on more, hurting the long-term viability of the store.

One of the many debates spurned by technology has been the morality of file-sharing and piracy. David Pogue of the New York Times wrote last week about his talks to various groups where he discovered a surprising reaction to these ethical questions. First he spoke with groups of varying ages and asked which of many hypothetical situations were wrong, like borrowing a CD from the library or making a backup copy of a DVD, or replacing your 2,000 vinyl records with copies of CDs from the library. Pogue says as he went through scenarios, more and more hands went up showing a lot of gray areas to the debate.

Then Pogue spoke to a college audience. He went through the same list and says no more than two hands ever went up out of 500 people. Even when he went for the extreme “You want a movie or an album. You don’t want to pay for it. So you download it.” Only two hands.

Pogue’s unscientific but nevertheless revealing social study shows not only is the file-sharing debate more complicated than media companies claim, but there’s a generational gap in how people view the moral debate. Simply, young people don’t think file-sharing is wrong.

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