What is the deal with the in-app purchases coming out for iPhone 3.0? ADHERER

I am not going to rehash what a hundred others out in cyberspace have already talked about at-length, so if you want a full-on review of the supposedly-100 new features in iPhone 3.0 (how does Apple count, anyway?), check out Gizmodo or Lifehacker.  Some very good reviews are out there.

But I am curious about these in-app purchases.  On the surface they seem like a really good idea.  The keynote mentioned that magazines and other periodical-type content creators would love to have an app where people could buy more content.  Even so, the demos they showed were for buying stuff for your virtual pet or your “sim,” or for the next 10 levels in a game.

There was a good article I read (I wish I could find it now so I could credit it) where the author said that this was going to ruin the iPhone App Store.  His reasoning was that, say you buy a game for $2.99… you get the whole game.  But now, they’ll sell you the game for $1.99… a deal, right?  But then you get 1 or 2 levels and have to purchase more at $0.99 a pop.  In the end, you get nickeled and dimed to death and end up paying more.  It’s almost a bait-n-switch scam.

And then there’s the idea that only paid apps can do the in-app purchasing.  I guess this is to stem the tide of bait-n-switches; but come on, what sense does that make?  How great would it be to have a single game app that’s essentially a demo where the first level is free and then you can buy levels in-game?  That makes a lot of sense.  But with this model, even the demo has to be purchased.  Or else, the idea of 2 apps, one a free demo and the other a paid full app, is still alive and strong.

And remember the periodicals that were mentioned specifically in the keynote?  Well, one of the weakest points of the Kindle app is that you have to go to Amazon.com in Mobile Safari to purchase books.  Well, with this, Amazon could set the app where you can buy books straight from the app itself.  Oh, but wait!  The Kindle app is free, so no in-app purchases are allowed!  Or else, the formerly free Kindle app will have to become not-free.  Consumers lose.

Imagine the NYTimes app; they could have an in-app pay scheme where you can pay them 99 cents or whatever to get the full version of the Times, or else just stick with the free content that’s on the web anyway.  But hold on there!  In-app purchases won’t be possible in the free app; so the NYTimes app will have to charge for the initial installation.

In the end, this makes no sense to me.  Why would Apple be locking this feature down to only paid apps?  Does anyone have an idea?  Please let me know in the comments below.