From Pay-to-Own to Pay-as-You-Go

In the ever-changing landscape of smartphone apps and games, user expectations have undergone a dramatic transformation over the past 15 years. What began as a simple pay-to-own model in the early days of app stores has evolved into a complex ecosystem of freemium, ad-supported, and subscription-based services. Today, users expect to download software for free, try before they buy, and pay only if the value is clear – whether through money, data, or attention. This shift reflects not just technological advancements but also a profound change in how we perceive value, trust, and ownership in the digital age.

The Early Days: Pay-to-Own and the Birth of App Stores

When the Apple App Store and Google Play (then Android Market) launched in 2008, the smartphone app ecosystem was a novelty. Apps were often rather simple and the dominant monetization model was pay-to-own. Users paid a small upfront fee, typically $0.99 to $4.99, to download an app or game, much like buying boxed software from a store. Back then, paying upfront wasn’t questioned… it mirrored the physical world of purchasing CDs or DVDs. There was a sense of ownership: once you paid, the app was yours, often without additional costs or internet dependency. It was the digital equivalent of buying a shiny new toy – yours forever, no strings attached.

This model, however, had limitations. High upfront costs deterred casual users, and without a “try before you buy” option, many hesitated to take the risk on unknown developers. App stores were less crowded, so the fight for visibility wasn’t as fierce. Paid apps dominated revenue in these years, but the seeds of change were already sown as developers sought wider reach.

The Freemium Revolution: Free to Download, Pay to Play

By the mid-2010s, the app market exploded with competition, and developers needed a way to stand out. Enter the freemium model: free to download, with optional in-app purchases (IAPs) or ads to unlock premium features, levels, or content. This approach, reminiscent of the “lite” or demo versions of PC software in the ‘90s, lowered the entry barrier. Users could explore an app or game without financial risk, and developers could reach a broader audience. Games like Candy Crush Saga epitomized this era, offering free gameplay while monetizing through microtransactions for boosts or extra lives.

Ads also became a cornerstone of monetization: users “paid” with their attention, watching ads in exchange for free access, while developers monetized user data behind the scenes. This shift slowly but steadily conditioned users to expect free downloads as the norm, however. According to old App Annie, by 2015, over 90% of apps in major stores were free to download, with revenue increasingly driven by IAPs and ads. However, this came with a trade-off: user trust was decreasing. Aggressive monetization (intrusive ads or pay-to-win mechanics) often frustrated users, planting seeds of skepticism toward “free” apps. After all, nothing says “free” like a 30-second video-ad interrupting your zen meditation app

Software as a Service and the Expectation of Free

Nowadays the app ecosystem is dominated by the software-as-a-service (SaaS) mindset. Users no longer expect to own apps; instead, they pay over time – whether through subscriptions (e.g., Spotify, Duolingo, Strava), incremental IAPs (e.g., Brawl Stars, Fortnite), or by trading data and attention for ad-supported content. The vast majority of apps are free to download, with monetization baked into the user journey. Data from Sensor Tower indicates that only 2-5% of users typically convert to paying customers in freemium apps, yet this small segment drives the bulk of revenue. For publishers this poses a challenge as they must delicately balance the price/value pair so that a few whales can keep the whole ship afloat (Enter a new job title: “Head of Monetization”).

This era has solidified a key user expectation: low-risk entry. Paying upfront for an app is now seen as a bold, even risky move for publishers. Why should a user commit before trying? As one user put it, “If I have to pay to download, I immediately think, ‘What are they hiding? Is this a scam?’”. It’s like being asked to buy a car without a test drive – hard pass.

This distrust is understandable in a market flooded with alternatives. Even trial versions with hard paywalls after a limited period feel outdated to many, as they clash with the seamless, user-friendly experience of freemium models. Publishers must accept a harsh reality: most users will never pay directly, and success hinges on balancing free access with sustainable monetization.

The Exceptions: Niche Markets and Premium Positioning

That said, upfront payments or subscriptions aren’t entirely dead. Well-established brands like Adobe or niche apps with clear value propositions (or dominant market positions) can justify premium pricing if trust and value are evident (or alternatives not in sight).

These exceptions are, well, exceptions – they cater to very specific audiences willing to invest for quality or privacy (e.g., apps like Signal that promise no data tracking). Yet, for most developers, especially indies, a freemium or hybrid model remains the safest bet to build an initial user base.

Complexities in the Modern Landscape

User expectations aren’t uniform, however, and several factors add layers of complexity:

• Privacy Concerns: With regulations like GDPR and Apple’s App Tracking Transparency, users are increasingly wary of “free” apps that harvest data. Some are even willing to pay upfront for privacy-focused alternatives, flipping the trust dynamic.

• Subscription Fatigue: As subscriptions pile up (streaming, fitness, productivity) users are starting to push back. One-time purchase apps could see a niche resurgence if positioned as cost-effective.

• Generational and Regional Shifts: Younger users (Gen Z, Gen Alpha) are more accustomed to microtransactions but less tolerant of upfront fees, while cultural and economic factors shape expectations differently across regions like Japan (higher willingness to pay for quality games) and India (price sensitivity).

Looking Ahead: What’s Next for User Expectations?

As we look to the future, several trends could reshape how users perceive value and payment. Privacy concerns might drive demand for paid, no-tracking apps, while subscription fatigue could spark a backlash against SaaS models. Emerging technologies like Web3 or blockchain-based apps (e.g., play-to-earn games) might redefine ownership, letting users “pay” through participation or crypto. But blockchain has been around for a while now, and maybe ads and data remain the currency of choice? Will alternative means of payment, as forced upon the app-store oligarchy by the courts, change anything? Or will we just keep doom-scrolling through ads, waiting for quality content to magically appear?

One thing is clear: user trust and perceived value will remain paramount. Publishers must design monetization that feels fair and optional, balancing user experience with business needs. Freemium isn’t just a revenue model; it’s a strategy for acquisition and retention in a world where users expect to try before they commit.

Adapting to a User-Centric World

The journey from pay-to-own to pay-as-you-go reflects a broader shift in how we interact with digital products. It’s not as simple anymore that publishing a “good app” for “good value” is enough: on top, users today demand transparency, low risk, and flexibility – publishers must adapt to this.

While upfront payments and hard paywalls are largely relics of the past, the future of app monetization lies in creativity: finding ways to deliver value that users are happy to pay for, whether through money, time, or data. As the app ecosystem continues to evolve, one question remains: how will developers and users redefine “value” in the years to come?