As children younger and younger are becoming smart phone and tablet users, it does not take much ingenuity to imagine the host of problems that could arise. For parents engaged in a 2011 class action lawsuit against Apple, one such problem became clear: children and the “freemium” business model do not mix. The lawsuit arose following parents’ sky high credit card statements, which revealed that their children had been downloading costly game extras in response to targeted advertising in what their parents thought were free game downloads.

The freemium business model describes the strategy of big name players in the tech industry including Dropbox, LinkedIn, Skype, and Apple, who provide their products and services at no charge in hopes of building a future, paying customer base.

While Dropbox and LinkedIn are almost exclusively used by adults, who make daily financial decisions and usually pay their own bills, Apple’s App Store came under fire in 2011 when children were charging hundreds, even thousands, of dollars to their parents’ credit cards through ad placements in top free games such as TapFish and Zombies vs Ninja. Although children were unable to purchase games without their parents’ Apple password, they successfully purchased hoards of freemium extras advertised while the children played their free games.

Following the law suit, Apple changed its model to require an Apple password before a user could purchase game extras. The policy change may protect parents from their children, more likely to fall prey to impulsive consumerism, but it will not protect adults from ourselves. In 2011, 77% of Apple’s top 100 grossing mobile apps used a freemium pricing plan. Although Apple’s highest grossing apps are downloaded for free, the average in-app purchase is approximately $14.

Users may be surprised to learn how quickly their game extra charges accumulate, especially when at $.99 and $1.99 increments. Which raises the question: does the freemium business model promote consumer autonomy or manipulate unsuspecting users? For many, “It’s a trap!”

-Kate Haywood

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2 Responses to TapFish or TrapFish: Can Your Free App Download Stay Free?

  1. Samantha says:

    Very interesting post! I can definitely relate! I have downloaded free samples of games before and have felt the need to download the full version. It is interesting because most people would probably never have paid the $1.99/game just off the bat. Yet, people get hooked by free samples and then pay the money the would otherwise have not spent. It is a smart business model. Yet, I am glad that Apple has made the upgrades password protected. To children, they are just making the game more interesting. But to their parents, it is more money out of their wallets.

  2. Sonal Patel says:

    Great post, Kate. Every time I play a game on my phone, I always wonder who actually pays for the game extras – now I know! It’s no wonder parents are finding their bills so high. Those games are addictive, and it’s quite disappointing when you get to the last free level… While this model obviously works and brings in revenue, it just seems too tricky and borderline annoying. It reminds of the days when your phone was on “roam” and you’d be charged a higher price per minute. Hidden or perhaps, not so blatant, charges are dangerous in such an area. Especially when parents are not watching their kids as closely as they need to in order to prevent game extra purchases. Perhaps there should be a parental lock on the phone that prevents such purchases – although, if that’s how app developers are making their money, that seems unlikely. Requiring a password is a good move, but kids are smart and likely to learn the password…