This is a tough one, because I think there could be solutions of monetizing outside of the traditional paid upgrade model. I'm not even sure he mentioned in-app purchases being a possible method of upgrading.
I do know Apple's push is to have a purchase-once, free upgrades for life model. It works well because they also fund themselves via hardware purchases. For someone making AppStore exclusive software, they may just need a bit more creativity.
Interesting arguments have been made that Apple wants developers to create more apps and not focus on making just one their viable revenue stream. I'm not sure I completely buy that premise, but it is an interesting one. What paid upgrades could do though is lower the initial price of an app since the cost could be spread out over upgrades.
In general though I think there is a shift underfoot to one-time, upfront costs for apps. That model doesn't prevent users from obtaining the lastest, upgraded user experience and ultimately that's what Apple wants everyone who owns an iOS device to always be experiencing.
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