According to a post on the company’s blog, the original pricing was based on them having 10 thousand users. They now have over 20 thousand, so the fee reduction was possible. (Whether they’ll keep reducing the fees if the membership base keeps growing isn’t clear).
The new annual fee is $36, down from $50 a year. $36 / year is only $3 a month, which isn’t exactly expensive. The new monthly plan is $5 / month.
Whether the twitter clone will grow in popularity beyond its existing userbase is hard to predict, but the open API has meant that several existing social media tools have added support for it already.
You can read the full announcement on their blog.