In early 2011, the minimum buy price on the platform was $500K. By midyear, $300K. By early 2012, $100K. Early 2013? $50 (no K missing, just fifty bucks).
I believe you that it was a failure, but that doesn't follow from the minimum price dropping. Perhaps as they gained confidence in the system, they allowed smaller buys with smaller prices (but still just as profitable).
Advertising revenue can be completely offset by the government? That seems unlikely given how much these companies make off of advertising. It would be amazing that the Apple and the USG could hide that kind of massive money transfer off their books.