Just How Successful is the iPhone App Store?

The wsj column is misleading.

Gladwell did not say "Apple will soon be making more money from iPhone downloads than it does from the iPhone itself."

Here is what he said: "Apple may soon make more money selling iPhone downloads (ideas) than it does from the iPhone itself (stuff). The company could one day give away the iPhone to boost downloads; it could give away the downloads to boost iPhone sales; or it could continue to do what it does now, and charge for both. Who knows? The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws"

Overall, I agree with one of the key points of Gladwell's review (of the "Free: The Future of a Radical Price" book) - a point that Friedman made a long time ago - There is no such thing as a free lunch.

Here is one extract from his review "Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds."