Should so-called “free” apps really be labeled as “free?”

It should no longer be a secret that apps in the app store offer in-app purchases. Some of these in-app purchases unlock content and features that transition an app from a trial version of the app into a fully unlocked version.

Gamers have even identified what is known as “paywalls” that prevent further progress within a game without the aid of virtual goods purchased via an in-app purchase. The question being asked is are such apps truly “free,” and if not, should they be labeled and marketed as “free” apps?

The word ‘free’ has been scrutinized in advertising long before apps were ever sold in an online app store. The Food and Drug Administration (FDA) here in the U.S. has published guidelines for the food industry to follow when referring to claims such as “fat-free,” “cholesterol-free,” and “sugar-free.”

The U.S. Federal Trade Commission has also published guidelines for how to use the word “free” in advertising and online commerce with promotions like “buy one get one free.” It now appears that starting next month, the word “free” may no longer be used when referring to apps that offer in-app purchases.

“Free” app troubles in Europe

In the past, the European Union (EU) has taken issue with how easy it was for app shoppers to inadvertently run up large bills by making multiple successive in-app purchases, especially when children were making the purchases. With stories of young boys and girls spending $2,500 on Zombies vs Ninja and $1,400 on Smurf Berries, parents were growing tired of being stuck with the bill. As a result, many companies like Apple have refined how such purchases take place.

This time around the EU is taking aim at labeling apps that include in-app purchases as being “free.”  Earlier in the year the EU started expressing a strong desire to change the way free to download apps are being marketed. In a press release the European Commission stated quite plainly that “Games advertised as ‘free’ should not mislead consumers about the true costs involved.”

Google for one has stepped up and starting next month will address how it labels apps that offer in-app purchases. This change may begin in EU markets but the way in which such apps are labeled could have a sweeping change all around the world.

Free app promotions from both Apple and Amazon

Keep in mind that it is not just the way apps are labeled that is at issue here. When Amazon first opened the Appstore for Android, it did so by kicking off a “Free app of the Day” promotion. Among the first free apps to be given away on Amazon’s store was Angry Birds Rio. Earlier this year Amazon continued using this promotional technique to by offering $100 worth of paid apps for free on the Amazon Appstore. The catch was that you had to download and install Amazon’s Appstore app for Android.

While Apple does not need to give iOS users incentive to download and install the Apple Appstore app for iOS, it does offer promotions for free apps each week. Its first promoted free app, Color Zen, hit Apple Appstore just last year in August of 2013.

Many of these apps are completely free, with no hidden in-app purchase required to unlock features or content. However, there are times when these free apps of the week come with in-app purchases that are required to unlock content and features that are not free. The first time a well-known app that I was playing was listed as the “free app of the week,” I was disappointed to discover that the free did not include any of the app’s in-app purchases.

Fool me once, shame on you. Fool me twice, shame on me.

Where to look before you download your free app

Free-to-play gaming has proven to be a very effective pricing model for app developers. That means changing the way such games are labeled in the app store is not going to make this pricing model go away any time soon.

The changes that Google will be making next month will be limited to Android, and may only take effect in markets within the European Union. For the rest of us, there are a few best practices you can utilize when it comes to shopping for apps in the app store:

  • Contains in-app purchases – Check to see if the app offers in-app purchases, and if it does, see what order the in-app purchase prices are listed.  When higher prices are listed above lower prices, you can expect to pay for virtual goods in order to advance beyond a pay wall within the app.
  • Listed as top grossing app – Look at the top grossing apps list to see if the “free” app you are considering downloading is listed there as well. Apps that are listed as “free” and show up on the top grossing app list are making all of their revenue from in-app purchases.
  • Negative reviews regarding usefulness of “free” mode –  It is also a good idea to check the reviews within the app store of the app you are interested in. Having to pay for in-app purchases is not necessarily a bad thing. You can also use an online service such as AppShopper’s Wish Lists to be alerted when an app goes on sale.

I’m not against paying for apps. With over 2,500 apps in my iTunes app purchase history, I am certainly no stranger when it comes to buying apps. I even give in when the kids ask me to pay for a bag of diamonds, a chest of gold or a pile of gems. However, I do wish it was a little easier to determine just how much an app is going to cost me before I start using it.