It was just yesterday that Apple announced they would allow free apps to enable in-app purchases, and developers are already jumping on the "get the app for free, buy the content later" business model as quickly as they can. ngmoco came out swinging, as Touch Arcade reports, with both a free intro version of Rolando 2 out for purchase, with later chapters of the game as add-ons. They've also been working on a shooter called Eliminate, and we're now told that title will be free as well, with extra content to buy later.

The creators of Urban Rivals, an app that is based on a virtual trading card game, have let us know that they too plan to go the free-with-microtransactions model as soon as their app is released, and though we haven't actually heard from Tapulous, Andrew Lacy told us outright that the only reason Tap Tap Revenge 3 had a 99 cent price tag on it was because of Apple's limitation, so we'll expect that app to go free as soon as it can.

Clearly, there's a drive for this model on the developer side, but the question will be just how much this echoes with consumers -- certainly the "download a trial, buy more later" model has worked well on other platforms, so we can expect it to work here on the App Store as well. But on the other hand, just as when the App Store first opened for business, it's a very "wild west" moment -- everybody and their brother is offering up in-app transactions, and they're all of varying prices and quality.

My guess is that we'll see a few "hits" -- a few free apps that everybody buys content for (Tap Tap Revenge 3 is a good guess; considering that because you know most of those songs, there's much less guessing on what the quality of the transactions will give you). At the same time, there will likely be apps that everyone agrees aren't worth the in-app purchase (it's the old story of "horse armor" when Xbox Live started doing microtransactions). Until we find a good balance, where quality meets price, odds are that it'll be tough for consumers to know just what's worth it, and thus tough for developers to convince them that their content is.

How hard is it to make a living at App Store? Are the naysayers right? Do you need a full-fledged business plan and established company even to step through the door? Or can you make it as an independent, finding your own fortune and success. Today, TUAW talks to a handful of App Store developers to hear their stories and discuss their experience.

Today's scheduled panelists include Bryan Mitchell, author of the extremely successful Geared game for iPhone, Scott Lawrence, developer of LlamaSlate, LlamaClock, among others, Darrel Plant, creator of Bedeviled, a puzzle game, Youssef Francis of Brancipater, developers of FlowChat (an iPhone IRC client), and Jonathan Zdziarski, author of the best Nintendo emulator that never made it to App Store, plus an Amber Alert app that did. Jonathan is also the author of several iPhone books.

We'll be chatting about the challenges and rewards of App Store: how the little guy can make it big, and how the little guy can get beat down. Join us for this live chat and bring your questions.

Read on for the chat

Just after reaching 1 billion downloads five months ago, Apple announced this morning that the iPhone App Store has reached 2 billion downloads since its launch in July 2008. Also, Apple announced that 85,000 apps are available to download or buy from the App Store, and there are now over 125,000 registered iPhone developers with the iPhone Developer Program.

These apps are available now to the 50 million devices running the iPhone OS (iPhone/iPod touch), creating an ever-expanding group of users.

With over 75,000 applications to choose from, it's no secret that every iPhone or iPod touch user has a different set of "favorites". A new website, First & 20, is shedding some light on the mystery of home screens starting with some popular website designers, developers, and writers you may have heard of.

The website's concept is pretty simple - get a glimpse of the home screens of popular Apple or online notables such as Joe Hewitt, John Gruber, or Jason Snell. The creator hopes that the website will help you "see something you've never heard of" and discover some apps that are so good that they made it on the phones of top developers, writers, engineers, and bloggers in the Apple world. The reason behind just featuring the home screen is also simple. While many people may have the same applications, the question is "how many love it enough to have it on their home screen, one of their first twenty apps."

In my experience, the website has opened me up to a few new applications and even some new ways to organize them. Leave a comment if you find someone's home screen to be of particular interest to you.

$80 on apps? I didn't think it was that much, but after going over estimates in my head, that sounds about right, actually. A survey of 1200 App Store customers estimates that we've spent about $80 on applications so far, with an average of about 65 applications per customer. There's a little weirdness in those figures though: they also say that 65% of the apps downloaded were free, and that the average app price was $1.56. There's some extra information hidden in there: if 65% of the apps are $0, and the average price is still up above $1, that means people are spending way more than $1 on the apps that they do buy. More research seems needed there.

There's another surprising figure as well: of all the 1200 customers surveyed, altogether they only had about 15,000 unique apps on their iPhones. When you compare that to the latest figures of about 65,000 apps, that means you've got about 50,000 apps (definitely the majority) that are completely untouched by these customers. Of course, 1200 is a tiny sample when you're talking about the millions of iPhones sold overall, but if that is in fact a representative sample, that means that there are many, many more apps than people have actually downloaded and tried in iTunes.

Not hard to believe -- with iPhone developer numbers in the hundreds of thousands, tons of trashware on the store, and the relative ease it takes to crank out an app, it's no surprise that you've got way more apps than people interested in trying them. But then again, isn't that the way we want it?

There's a clever post at Gedblog this morning about The App Store and Domino's Pizza Tracker. Specifically, how the Pizza Tracker's functionality could aid the App Store review process.

Ged and his coworkers at The Iconfactory have been waiting 12 days (as of this writing) for Apple to approve Ramp Champ, their next iPhone game. As Ged describes in the post, the waiting wouldn't be so bad if they knew what was going on.

The Pizza Tracker lets you monitor your pizza's progress online, dispensing updates on who's assembling it, when it went into the oven, when it went out for delivery and even the name of the person who's about to ring your doorbell. With that in mind, Ged suggests an "App Tracker" that describes where apps stand in the review process. Additionally, such a thing could aid the reviewers themselves, as they could monitor what part of the process hindered an app's release.

As we heard yesterday from Phil Schiller, Apple is aware of the App Store's issues and working to solve them. This is a new business model that still has a few kinks. It's suggestions like this that will improve things. It's nice to know that Apple is listening.

See update from Apple PR at the bottom of the post. Despite what at least one developer was told, the ebook category is not 'banned from the store.'

Apple recently invited a great deal of criticism after it rejected Google's Google Voice application from App Store. At the same time, it pulled third party GV apps leaving their developers without recourse and forced to swallow refund costs that exceeded their initial per-sale earnings. Today Engadget notes Daring Fireball's story of a simple dictionary being censored. Now it looks as if Apple may be targeting the e-book section of App Store.

TUAW has learned that Apple has begun rejecting all e-book submissions because "this category of applications is often used for the purpose of infringing upon third party rights. We have chosen to not publish this type of application to the App Store." At first glance, this policy seems in line with Apple's approach to applications that promise charitable contributions. Apple cannot police the developers and will not allow possibly fraudulent postings on their store. Apple does not want to be in the position of vetting rights claims.

At the same time, Apple has been rejecting applications from content providers who do in fact own the rights to their materials and can prove those rights. A colleague who spoke on the condition of anonymity related that a project he developed for a national content syndicate was rejected without recourse. He still got paid for his work but the application languishes without an outlet.

Apple isn't stopping with content source providers. They're also targeting those who provide media browsing tools. Another developer who built an e-book reader received a recent rejection along the same lines. The application might be used to read copyright infringing books, so Apple will not let it in App Store. In an e-mail, he wrote, "Leaving aside the presumption of innocence, [what] about iTunes and iPod; shouldn't they be banned too? After all many users indeed are using them to listen to the music that is not always legally obtained."

It's obviously premature to assign an external motivation to Apple and TUAW has no evidence whatsoever that Apple is using these rejections to pave its way to a new market. At the same time, the timing of these rejections couldn't be worse. With Apple rumored to enter the e-book market sometime in the winter, this new policy could fly very close to regulatory scrutiny.

Update

Apple wrote to TUAW to clear up the speculation around ebook app approvals. From a representative at Apple:

"We have not stopped approving ebook readers and ebooks in fact we've approved 221 new ebooks to the App Store since 7/30/09. The book category in the App Store lists 6,000 apps and this doesn't cover the full scope since ebooks are included in other categories like medical, reference and education."

Addison-Wesley Professional, the publishers of many books on both Mac and iPhone development, is hosting the Voices That Matter: iPhone Developer's Conference October 17 and 18th in Boston. TUAW wants to make sure that the budding iPhone devs in our readership are able to attend the conference, so we have an exclusive discount code for you to use when you register.

The conference is focused at experienced Mac developers who are looking for a quick way to get the skills required to build, test, and distribute iPhone and iPod touch apps. The speaker list for the conference is impressive and includes:

• TUAW's very own Erica Sadun (Conference Program Chair)
• Aaron Hillegass, author of Cocoa Programming for Mac OS X (Keynote Speaker)
• Mac and technology pundit Andy Ihnatko (Keynote Speaker)
• Peter Bakhirev
• Lee Barney
• Erik Buck
• Bill Dudney
• Dan Grover
• Daniel Jalkut
• Steve Kochan
• Bill Licea-Kane
• Mike Morton
• Jonathan Rentzsch
• Fraser Speirs
• August Trometer
• Marcus Zarra

TUAW readers can save $150 on their conference registration by providing the special priority code PHNTUAW when registering. If you register before September 12th, you can combine your TUAW discount with Early Bird pricing and save a total of $350.

The iPhone app market is still going strong even in this execrable economy, so this is a great opportunity for Mac developers to get the smarts to make the leap to the iPhone market.

Small steps: reports from several iPhone developers indicate that Apple has showcased two key features on the Dev Center website that may improve the mood and attitude of anxious app submitters.

Feature #1 is a queue status graphic (seen here), letting everyone know how long the approval wait should be -- like the line signs at Walt Disney World, only far geekier.

Feature #2 is the presence of a new 'all issues' escalation email address, so developers with urgent bug fixes that need to be prioritized can get their questions answered -- something that the Iconfactory's Craig Hockenberry specifically asked for in his wrapup of the 1st-anniversary state of the store. This email channel has apparently been open for a week or two, but is now being publicized on the front page.

Several other tips & suggestions posts have also been updated in the past 24 hours, including notes on the keywording/tagging options and walkthroughs on changing your app name and assigning/adjusting the app's rating. If you're a registered developer, swing over to the Dev Center and take a look.

[via the delightful Nik Fletcher]

Booyah is a company I've had my eye on for a while -- they're a couple of veterans from Blizzard Entertainment (makers of the popular Diablo and World of Warcraft games, two of my favorites) who have been teasing a big-time iPhone app. Just today, they've finally showed their cards, and have released Booyah Society, a 3D, interactive, social network-connected "achievement system for life." If that sounds like an idea that's pretty floaty, you probably heard it right.

Basically it's a game system that more or less overlays on what you're already posting to Facebook and Twitter. If you do anything from conquering a new videogame to doing a new exercise to visiting a new restaurant, you can earn achievements and points for an ingame avatar and scoreboard. In essence, they're aiming to take the things we already tell each other we're doing, and put this game/scoring system on top of that. There are plans to use the iPhone's hardware to do some self-reporting (GPS to track where you've been), but for now, everything's basically on the honor system.

Will it work? Who knows. The app is available for free right now, and they're planning to include microtransactions in the future to let you buy things to dress up your avatar with, as well as looking at partnerships with other businesses (i.e., you can get a certain achievement by going to Wendy's and ordering some fries). Very interesting -- as with most social app ideas, this one seems like it'll make or break it based on who chooses to play it faithfully. They've got quite a pedigree with the Blizzard background, and built-in audiences with Facebook and Twitter integration, but whether or not people will find themselves invested in tracking these achievements and scoring points for their avatars, only time will tell.

Two big gaming companies have made stark moves towards some major iPhone development in the future. Electronic Arts has made what seems to be the strongest move: they've put together a division in the company specifically for making iPhone games, and not just any games. Specifically, the kind that cost 99 cents.

8lb Gorilla is the name of the group they've put together in-house, and apparently it's a bunch of young developers given the task of putting together quick and cheap games about once a month that can sell for 99 cents, keep customers happy, and still bring in a profit for EA. The first title out of the group is a game called Zombies and Me, which appears to be an action game where you blow up zombies with explosives. Who wouldn't pay 99 cents for that one, right?

Namco is also making moves toward the platform, though not that specific (or risky, though EA's gambit could pay off big if the young devs turn out a hit). They've created an "Apple Games" division within their company, designed to make games specifically for the iPhone and iPod touch, and presumably for any other platforms that Apple decides to release games on. We hear the Mac is pretty popular -- does "Apple Games" include those other computers they make? Yet another Pac Man remake is the first title from them, but hopefully more original releases are coming.

Very interesting to see major companies start setting aside resources specifically to target the App Store's unique market. Mac gamers have been fighting for years to get devs to pay attention to their platform, and now it looks like Apple's handheld devices, along with the relatively easy money of the App Store, have finally done it.

Developers whose apps meet the criteria for a 17+ rating in the App Store are now running into yet another roadblock, but this time it's not about getting their apps approved, it's about distributing them. Or, more specifically, distributing promo codes for them.

Typically, when a developer uploads a new version of an application to the App Store, they have the ability to create up to 50 promo codes, which they can then provide to media outlets for reviewing the application, give away to users in a contest, etc. Aside from some reasonable restrictions on their usage (you can't sell them, they expire after 28 days and are one-time use only), promo codes provide quite a bit of flexibility to developers of paid apps who wish to freely distribute their app to select individuals without having to worry about the hassles of exchanging device information and doing special ad-hoc builds.

So where is the problem? It's in the new app rating system that was released a few weeks ago. As it stands, neither the 3.0 software nor iTunes display parental warnings when using a promo code to purchase apps with a mature (17+) rating, so Apple has made the promo code functionality unavailable for apps that fall into that category. We were informed of this condition by a developer who prefers to remain anonymous.

This obviously puts developers of these apps in a bit of a bind, as well as eliminates the potential amount of sales that could come from being able to distribute promo copies. Developers in this position may be stuck doing ad-hoc builds or going back to the questionable practice of sending iTunes gift cards to reviewers.

And if you're thinking this just applies to the massive number of adult-oriented apps that have recently poured into the App Store, you're wrong. Apple specifies that any application that may contain high levels of offensive language, violence, sexual content, or references to drugs or alcohol receive a rating of 17+. But, according to Apple, apps that feature an embedded web browser or provide access to 3rd party content also automatically require the 17+ rating, regardless of the application's content or intended audience.

Here's hoping that Apple is already working on a solution to this, as the lost potential sales caused by this not only affect the developers of the individual apps, but the overall success of the App Store as well.

Update: Several developers have reported that they are now able to request promo codes for their 17+ rated apps. We have an updated post with details here.

We've talked about OpenFeint quite a few times on the site before (and even interviewed the creators), but while they're definitely one of the biggest names in creating gaming communities for the iPhone, they're not alone. A company called Scoreloop has today announced a service called "Scoreloop Community," made up of two different features: a web presence, and a downloadable application for the iPhone that hooks right into other developers' games and apps and allows players to create avatars, view friends and their activities, and share challenges and high scores with others. Just like OpenFeint, Scoreloop says they're offering an easy-to-implement solution for push notifications, letting players send and receive messages (as well as promote and encourage usage of games in the service) and earn achievements and tokens.

Of course, the real test for services like this will be in the implementation -- while OpenFeint claims a nice stable of developers, we still haven't seen too many apps take advantage of the latest and greatest versions (Pocket God is an extremely popular app that has implemented OpenFeint, but they use an older version of the software that doesn't have nearly as many features as the latest). Scoreloop says they've got over 50 game commitments from third-party developers already (it sounds like Zombie Pub Crawl is their biggest title yet), but even then, it remains to be seen exactly how devs will implement their functionality, and how players take to the service.

If you're a developer looking to implement push notifications and social challenges and networking in your app, it seems that there's no shortage of companies willing to step in and help you do exactly that (you can download the free SDK, if interested, on Scoreloop's site). But in terms of how consumers view and will use these networks, it's still a very wide open field.

We covered Jason Rohrer's Primrose when it first came out -- the creator of Passage, a critically-acclaimed indie game, had taken his first steps onto the iPhone with an abstract puzzle game, and in this latest interview with Edge, Rohrer says he's on the iPhone to stay. He says that when he first moved from strictly art/indie games to more commercial development on the iPhone, he worried that he was selling out: he wasn't a fan of cell phones at all or any Chinese-made gadgets sold by American companies, and yet the iPhone's platform seemed most "palatable" to him in terms of making games and a little money from them.

And yet he says the iPhone still has pros and cons -- even in an "open source, free software" world, Apple's system offers a choice: you can buy a packaged-up version of the software and throw a little money back to the developer (not a ton -- he says you've still got a better chance at making a living from Vegas than you do from the App Store), or you can still try building and installing your own version on your iPhone. As an open-source developer selling apps on the App Store, he says, "you're charging for the service and convenience, not the content."

Still, he echoes the sentiments of lots of other developers: "There is no quality filter, except for the whims of the masses." Apple's App Store offers up an intriguing system for many indie developers like Rohrer, who want to earn a little money for their games without setting up all of the complexity and burdens of a more traditional publishing channel, but it's still tough to keep from getting lost in the mix.

With iPhone OS 3.0 only having been released yesterday, two big companies are already angling to be developers' go-to for setting up push notifications and other online services for the new apps. OpenFeint was the first service we've heard about -- they have been offering social networking connections to developers for a while, but with the new firmware release, they tell us that they're also hosting options for both push notifications and microtransactions to their stable of app developers.

That stable includes apps like Pocket God and Aurora Feint (Danielle Cassley of both Aurora Feint and OpenFeint told us a while back that she was very excited at the prospect of microtransactions with 3.0), and both of those games, as well as others on the service, are planning to include push notifications with "social challenges" -- you'll challenge a friend to complete a certain goal in game, and then get notified when they meet that goal. Look for those new features in an OpenFeint app near you.

And OpenFeint isn't the only service jockeying for developers' attention -- Urban Airship is also making a bid to host push notifications for iPhone game developers. They've landed one of the first push-enabled games, Tap Tap Revenge, and are looking to offer push to more devs, along with in-app purchase support as well. They don't quite have the library together that OpenFeint already does, but their service integrates, they say, in just a matter of hours, and their aim is to make it "brain dead easy" for developers.

The floodgates are open, and we're sure to see more and more companies jump in on hosting plans like this in the future. Prepare to be pushed.