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16.12.13

How to run a sustainable business on top of a mobile application

One of my favorite guilty pleasures is Susan Miller, a popular New York astrologer who has a cult following online. I read her horoscopes religiously and enjoy following her on Twitter for the fun mix of quirky updates and planetary advice she dispenses.

But in mid-November, I noticed a striking shift in the tone of her posts. Miller had recently refreshed her iPhone app and added a subscription priced from 99 cents a day to $50 for the year. Some of her readers were furious, and Miller was, by turns, apologetic and defensive.

"You got a great deal for a long time," she told one person on Twitter. "All $50 does not go all to me. So sorry to see you go," she tweeted at another.

When we met a few weeks later at her haunt of choice, the Carlyle hotel on Manhattan's Upper East Side, she told me that she'd had no choice but to raise her price. Her old application, which was priced at a few dollars to download and gave users free access to all of her daily and monthly horoscopes, wasn't bringing in enough money to sustain her business. The newly released version of her app is built around a freemium model, meaning it is free to download and offers abridged versions of her horoscopes. Users have to pay extra to read the full versions.
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