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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!”
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