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Further, I'm not sure that by charging for application promotion you get higher quality apps. Probably the cost of promotion will actually reduce the development budget.
Got to disagree with you on this one - I don't think there's anything wrong with this move. You can pay Google to have your website featured, and I'm pretty sure that this hasn't results in less websites being developed.
The truth is, advertising on the big social networks isn't monetising very well. Application platforms allow companies to actually engage with users rather than attempting to push interruptive adverts. The social networks can monetise their application platforms slightly by showing adverts around canvas pages, but this is very minimal - and nothing like the brand engagement of using the app itself. So, instead of shoving more and more adverts into the already crowded site, charging to have your application features on the app homepage and in relevant app category pages makes much more sense, is better for users as they only see it when looking for apps rather than just adverts around the site, better for brands who can effectively promote their applications, and better for MySpace who get to monetise the app platform properly.
This won't impinge on good applications which aren't paying - you only have to look at the huge viral success of many apps without any paid promotion to see that when an application does it right it will spread virally using the powerful viral channels on most social networks. And, if the platform is monetising well for MySpace, they'll put in more resources and time - so benefiting non-paying developers too.