Why Read It Later/Pocket Went Free
Today we launched a brand new version of Read It Later (now named Pocket). As a part of this update we have made all of our apps free.
This is a big change to how we’ve operated in the past and I wanted to give some more insight into the decision. Personally, I always like to know how the services I love make money because quite simply: I want to know they will stick around.
I understand that there is a stigma of the Silicon Valley startup with a business plan of “We’ll figure it out later”, and that is not who we are. We decided to make the move to a new revenue model last year and today is just the first step in that process.
Why Go Free?
Paid apps are hard for a service like ours for two reasons:
1. It is hard to ask most people to pay for something they don’t understand
While the concept of “save for later” has been growing in popularity, it is not something that the majority of people understand, nor immediately see the value of. Integrating a service like Pocket into your day takes a big investment of time up-front. It takes a little bit before it finally ‘clicks’ and a user can truly see the benefit. No app store description or screenshot can do that for you. You just have to use it first.
2. Our value lasts a long time
Read It Later was profitable from the day it launched its iPhone app. Before today it was the number one paid news app on Android and Amazon and a top app on iOS. Read It Later made money, but that doesn’t mean it was doing it in a way that best fit our type of service.
I’m a visual kind of guy so let me explain with some graphics. (Phil Libin from Evernote showed me these a long time ago and unfortunately I couldn’t find the deck on the web so I had to recreate them. As far as I know, all credit for these should be attributed to him.)
Consider that if simplified, there are 3 different types of products out there:
In the first case, we have something like purchasing food. Immediately that hamburger has a lot of value (you’re hungry right?) but after you eat it, the value is largely gone.
In the second case, there are products that deliver the same amount of value to you every day. A newspaper subscription is a great example of this. Every day it shows up at your door and you get the same value from it each time.
In the final case, you see a product whose value increases over time. On day one, you haven’t invested much time into it and you probably don’t even understand how it helps you. However, as you use it more and more and put more into it, the value becomes increasingly clear. Services like Dropbox and Evernote are perfect examples of this.
By being a paid app, Read It Later was charging like the fast food case, even though the value of our product maps much closer to the second and third graphs. Put simply: From a business perspective, having a user pay $2.99 up-front once and then use the app for 4 years just doesn’t make a lot of sense.
After this realization about our previous revenue strategy we knew we had to change it. We’re moving towards a new model that better fits our business and our users. In the end this will allow us to provide a better service to all of our customers.
Finally, I want to say thank you to everyone who has purchased Read It Later Pro in the past. To be honest, RIL wouldn’t be here today if it was not for your support. You allowed me to turn a side project into a full time job and eventually, into a company. I can’t even begin to describe how awesome that is. It’s been a fantastic ride so far and I have put everything I have had into this company over the last 4.5 years.
I hope this post helps explain some of my thinking. We have a plan here. We’re not going to talk about everything in the works here - today is about Pocket and the awesome new experience we’ve created for all of you. I hope you enjoy it and I’m really excited for what comes next.