New business model alert: Lite is dead as freemium comes to iPhone

Apple has announced a change to its terms of service which paves the way for new business models on the iPhone.

Historically, virtual goods could only be purchased in paid apps. That led to a series of anomalies, in particular that developers had to follow an upgrade path of:

Lite version -> paid version -> virtual goods/add-ons

The change is likely to eliminate Lite versions. Developers can offer a single version with a clear upgrade path to new features or content. There are some limitations, though: no virtual currencies and no “rentals” – i.e. if a user downloads content, it can’t be time-limited.

I think we’ll see a lot of changes to the iPhone business models very quickly.

Head over to InsideSocialGames and TechCrunch for more details of the changes.