As a heavy app user, I absolutely abhor the bait and switch, on top of annoyances such as in-app subscriptions (I don’t mind one time in-app purchases for keeping permanent feature upgrades).
In this case, it sounds like their users may have been feeling baited and switched, having invested their time into the product only to have to pay to continue using it without watermarking.
If my understanding of the above is accurate, then they may have already destroyed their trust relationship with their current users..
I don't think the users are feeling baited and switched. They got something for free that most people charge for, and in exchange for early testing got watermark-free level service. Eventually, everything free needs to be paid for.
$50 per year is reasonable. By posting about their project and having that carried on ycombinator, they maybe got the biggest audience of sympathetic users they could ask for. It's a great bit of viral marketing, and I expect they'd see a spike in interest from independent investors as well as a spike in paid memberships.
In this case, it sounds like their users may have been feeling baited and switched, having invested their time into the product only to have to pay to continue using it without watermarking.
If my understanding of the above is accurate, then they may have already destroyed their trust relationship with their current users..