Is it a free market? The more interesting economic question is whether it is a perfect market. A perfect market is where everyone has perfect information with perfect competition. And the App Store is one of the most perfect markets ever devised by mankind. Not completely perfect, for reasons I’m sure people will point to, not least of which is that no two pieces of software are precise substitutes, but closer than what has been attempted before. And what happens in a perfect market where the marginal cost of producing a unit is zero? Pricing approaches zero the economists will say.

It takes someone who’s been through something to lead Apple and provide all the inspiration that all of us live by.

Frankly speaking, I don’t care who leads Apple so long as Apple survives; so long, as I get to use and buy well-designed products that I truly care for.

—Apple, is part of my personal identity.

It’s a designer’s art, to listen.

(Yes, unfortunately or otherwise, I’m rather enamoured of Slashdot. All thanks to a friend, actually.)

But it’s just that all the pieces needed are not exactly there. They’re converging but it still need some time.

There’s the external marketing ecosystem issue – which is just starting to building up.
Take a look at the Mac desktop software market – there are estabilished brands, well-respected review sites, users’ communities, some good year of word of mouth behind it – things the iPhone software market hasn’t yet.
Users willing to spend more for software don’t magically discover “serious” apps at the store, they are informed about them by a wide array of sources.

Then there’s the issue of the maturity of the iPhone platform – which again is not there yet. The OS and the hardware are awesome, and a leap forward for smartphones, but there are many rough edges to iron out before they can make a great mobile computing platform – which is, one that allow developers to build powerful apps that are clearly distinguishable from “ringtone apps” and can command a high price.
More ram, multitasking allowed for third party apps, advanced UI issues solved…
If Apple keep pushing the os and hardware development, there is much room to grow.
And hopefully they could widen a bit the scope of things they allow third party apps to do.

Once these pieces are in place “serious” developer will have a better time making their higher price apps stand out of the noise.

Menawhile, the AppStore model can use some improvements but it’s not going to make everything work by itself.

The ability to distribute demo versions would be the biggest improvement imho.

Everyone is relying on Apple’s Store to get them the sales they need. With each new app introduced, the ability to make your application stand out becomes that much more difficult.

Developers need to spend some time and money marketing their app in other ways. This will help bring in purchasers at higher price points because they won’t be instantly comparing to the $.99 app that has similar functionality.

Generate Buzz that links directly to the app at a price point that makes economic sense and you’re more likely to sell it at that price.

This could introduce a couple issues:
1. Apps could raise their price to the point where they could sell fewer items than those with lower prices, and still beat them in “sales”. A shovelware app author could artificially raise the prices on his apps, and this would give him incentive to do so. Without trial versions, users *still* wouldn’t know whether the app is truly worth it, or if the ranking is rigged.
2. The cheap 99-cent apps can continue to sell huge numbers (as an impulse buy), and could also easily push enough volume to outrank the more expensive ones. Without the ability for the consumer to easily refund their purchase, those look (incorrectly) like “satisfied customers”.

Someone above alluded to the idea that a customer could refund their purchase after they suck all of the fun out of whatever game it is – or play the trial until they’re bored of it. If this is a concern, then you need to rethink your model. Offer features in the “full” version that aren’t in the trial. Extra items, levels, etc. Or make the game addicting/fun enough that they won’t want to toss it aside before the 14 day refund limit is up. If your game/app can’t stick past two weeks or two levels, and push them to buy, then you need to rethink it.

Refunds and proper trial versions would make the app store more of a free market than it is now, and benefit the developer only in that it makes purchases less risky for the end user.

-bowerbird