Personally, I think the 10-cent sale is brilliant. 10 cents motivates you to put in your credit card number if you haven't - and then the difference between 10 cents and 99 cents for other apps later is pretty trivial psychologically.
I wonder if they are compensating these partners beyond the 10 cent price?
I fully agree. Apple has externally boasted about how many apple accounts that have associated credit cards. I image they follow this number closely internally. I think Google is now starting to realize the importance of this metric. Google should make getting customers to pay something a priority for every product/division.
A much better approach might be to make a deal with the carriers and simply have app store purchases show up on your phone bill. This way they get around the whole credit card problem and the phones come ready to shop right out of the box with the end user having to do anything.
Google has to be giving them something out of their own pocket; unless they've got a special deal with their processors the $0.10 is being melted down for cigar cases at Visa and etc. before Google sees any of it.
"10 cents motivates you to put in your credit card number if you haven't - and then the difference between 10 cents and 99 cents for other apps later is pretty trivial psychologically."
If the difference between 10 cents and 99 cents is pretty trivial psychologically, why would this stunt persuade anyone to put in their credit card number if they haven't done so for 99 cent apps?
Well it's 89 cents saving x 100 apps which is about 90 dollars worth of possible savings to tempt you. And there's every possibility that you'll miss out on some of them because they only last for a short period so they don't even have to deliver on their promise in traditional money-back voucher/coupon tradition.
I wonder if they are compensating these partners beyond the 10 cent price?