Ads are a completely valid way of funding development. As stated most people won't spend a dime on an app and developing them can take a lot of time. What Apple is doing is great, and definitely the right thing to do. But it's a bit like the sausage factory. People will happily eat sausages, but tell them how they're made and they'll be repelled by it. Similarly a consumer will happily use an ad funded app with tracking but might decline tracking. I think users in a lot of cases would actually prefer not knowing in a weird way.
If the options in front of you are
"Free app" or "Paid app" you'll happily take free.
If the options are
"Privacy invading tracking nightmare" or "paid app" a customer reluctant to spend money might not want either option and be overall less satisfied than if they had just gotten a free app and didn't know about the tracking.
Don't get me wrong though I think everyone should know.
I think we have a couple of options when working with this.
1) Less personalised ads. - We could rely on ad providers that don't need tracking but just show random ads. This will likely pay out a lot less, so we'd make the user able to pick an ad system; No tracking but more ads or with tracking and fewer ads.
2) On install, having a label that informs the user that they can choose the paid version of the app to not have tracking or use it for free with ads and associated ad tracking.
I think it's important here to have a full spectrum of knowledge delivered to the user. - To make sure that what they see isn't only a popup saying "The bad tracking is here for all your data!", but that they're also presented with he reason for the tracking first. That we make sure it's communicated to the users that the tracking isn't mean spirited, but it's there to ensure it's possible to deliver a free experience for them, while stilll paying the bills for ourselves, and that it's not to store their data, but to provide user-targeted ads and nothing else
