Apple and Microsoft Reportedly Facing Off Over SkyDrive In-App Subscription Revenues

[viacavour]

I'm sure Microsoft and other developers would gladly take those responsibilities on, like they are accustomed to anyway.

From MS' perspective they would gladly own iOS themselves, and turn it into XBL.

But they are on iOS, so they follow the ecosystem, with someone else's unified user experience.

And yes, XBL fight piracy too, but they didn't expand as quickly as Apple. It is strange to break the rules, unless they want to pick a fight in the public like right now.

 

[BaldiMac]

But they don't, that's the problem. It has nothing to do with Apple's store. People download the app, that is the Apple transaction and if Microsoft sets the app to be free and Apple deems that you can have free apps then that is the extent of Apples involvement.

Apple now wants a cut for nothing. Microsoft built the app, the build the ability to take a payment in their own app. The have the servers to take that payment. This is not like walking into a store and buying a service. Apple is not pitching Skydrive subscriptions, Microsoft is not using Apple's services to bill for the service.

Again, if a company wanted me to carry a free product in my store that promoted their paid service without giving me a cut, I would have refused.

A commission or referral fee isn't "a cut for nothing". Microsoft wants to make money by distributing their app through Apple's App Store. Apple wants a cut in order to allow them to do that. It's a straightforward business decision.

You are essentially now saying that if a person buys something via Safari that Apple should be getting a cut of that.

No, I'm not.

Nothing childish about this, but I doubt you charged 30% commission

Sometimes more.

 

[bumblebritches5]

Allegedly. We really have no facts on this. There could be a valid reason outside of the payment issue that is stopping the update. Like privacy issues.

Screenshots aren't enough for you? So, you're the kind of person that doesn't believe anything until the company announces it, and further why are you on a RUMOR site then?

 

[gotluck]

From MS' perspective they would gladly own iOS themselves, and turn it into XBL.

But they are on iOS, so they follow the ecosystem, with someone else's unified user experience.

However, we're only talking about an app here.

 

[babyj]

A 30 meg download is piddly BS in comparison, and probably costs Apple roughly 1/1000 of a cent to host.

Your opinion isn't balancing out here.

I haven't got a clue what Apple pay for their hosting, I can only go off the prices I've seen from a major reseller of Akamai CDN. These are $0.07 per Gb data stored per month and $0.07 per Gb of traffic per month.

So hosting a 30Mb file would cost me $0.025 per year. I'm sure Apple get it cheaper but I doubt its as low as your claimed $0.00001 or 1/2500th of what it would cost me. So I'd say it's your figures which aren't balancing out.

 

[tbrinkma]

That is what the $99 annual fee is for.

What advertising do Apple do? They list applications and choose themselves what small minority of applications get to be on a featured list.

So, you ask what advertising they do, and then list an example of the advertising they do?

They also include apps in TV advertisements as well. If you think that sort of visibility (or that from being on a featured list) doesn't increase sales, you're really out of touch with reality.

 

[BaldiMac]

Only by a huge stretch of logic could you consider what Apple does as a referral or commission fee.

No stretch at all. It's literally what it is.

Do you believe that because a developer puts a link to their website from inside their app that was initially hosted by Apple that they're indirectly advertising for them?

No. I believe by distributing the developer's app through the App Store, Apple is directly advertising for them.

 

[Jonny Quest]

Say you work for Gamestop and someone bought a copy of World of Warcraft, should Blizzard have to pay 30% of each monthly subscription charge to Gamestop?

If that person came back into my shop to use my resources to purchase the monthly subscription, yes I would expect to be paid.

 

[tbrinkma]

No, the $99 annual developer fee is for the software, support, training videos, training documentation, and forums.

I would like you to develop software, box it up, and sell it at Best Buy. Best Buy is going to want near 50% of your 'suggested retail price'. And that doesn't include all the time and money you spend on materials to create the box and cd, and your own advertising to tell people to buy it at Best Buy.

And that assumes Best Buy will even accept your nicely boxed software if it doesn't come through wholesale channels (which will cost you about another 15-20% of your MSRP).

The people who complain about the 30% Apple takes really have no *idea* what physical retail costs, or what online retail *used* to cost before the AppStore became big. (In those old days it wasn't uncommon for a store to bundle crap-ware, like browser tool bars, with your app, keep 70% *and* charge you for their payment processing costs.)

 

[j4zb4]

This site seems devoid of common sense... Out of the 226 posts only 1 person showed it... "If this system of no cut on subs is permitted 90% of the apps would be subscription based"... Then what does Apple get enabling developers access to this super lucrative market...? Banana I guess...

 

[Jonny Quest]

The problem is its hard to argue that Apple is really selling the other product.

There are lots of apps that are free and just act as gateways to web services that work by charging their members a monthly subscription (like this Skydrive app, the Dropbox app, the Netflix app, etc). It's totally absurd that Apple should be getting 30% of their repeating revenue because somebody used a conveniently-placed purchase link rather than going through some other, more obscure method.

In short - Apple is doing no work for that 30%. They're just using the fact that they can cut you off via the AppStore to make sure they get some of your business's recurring revenue. It's not even a small amount - it's a third. It's monopolistic behaviour because Apple know that iOS users are such an attractive market. Apple aren't serving any content for that fee, and these companies have their own card processing provisions. It means that if you're Netflix, if somebody taps the "subscribe" link on an iOS device, you only get 2/3 of the revenue you used to get. And that 30% cut will be repeated forever.

Web browser vendors don't ask for a cut of every transaction that goes through a web browser (and every subsequent transaction of a repeating payment). No desktop operating system does.

Mobile operating systems are just becoming all about money and vendors and carriers and everyone just trying to take it away from developers (who aren't making as much as many seem to think).

So...

I own a coffee shop and a cleaning service puts their card on our bulletin board. No problem. People call them and order their services.

Now..

That card has my phone number on it and I'm supposed to forward all calls to the cleaning service. Now I have a problem.

If an app wants to use the Apple platform to make money the need to pay for the service. How is this so hard for people to fathom?

 

[tbrinkma]

If you add up all the man hours it took to create all the apps in the App Store, you'll see that the hosting that apple does is the side that sits on its butt collecting revenue.

And if you look at the numbers, you'll see that the revenue collected by Apple through the App Store only results in a very small profit (low single-digit%) after the expenses of running the App Store are factored in.

 

[Renzatic]

No. I believe by distributing the developer's app through the App Store, Apple is directly advertising for them.

...and thus deserve 1/3rd of their gross in perpetuum? Apple isn't referring me to the service, just the app. And yes, the two are separate.

 

[inkswamp]

I used to read his site every day from 2009-2011 (I stopped because of the bias - but I still read it every now & then). Just because I didn't spell it right in a random forum post isn't a dead giveaway of anything. I've spelled MacRumors as "Mac Rumors" but I frequent the site daily; it doesn't mean anything other than you over analyze pointless issues.

There's no over-analyzing going on. My response wasn't about you writing the site name incorrectly. You claimed Gruber never posts anything negative about Apple. I posted a link to something on his site that directly disproved what you claimed. When I did that, you shifted the goalposts and tried to claim he only posts bad things about Apple that are widely acknowledged. You're also wrong about that.

I only picked on the way your wrote the site name because that, in addition to your incorrect assertions about Gruber's bias, seemed indicative of someone not really familiar enough with the site to criticize it.

 

[nagromme]

Apple is right to insist on ONE, trusted purchasing method on iOS.

Apple is right to allow bypassing that using the Web—which remains open and uncontrolled.

Apple is right to demand a cut of the money from companies making money off the iPhone and iPad and the store infrastructure that Apple created and maintains (and which were not free to build). Apple processes the payment, provides post-sales customer support, and offers a user-friendly funnel for other companies to make money—subscriptions included.

And Apple is within their rights to set any amount they want. Competitors can take it or leave it.

But I have to feel that Apple is wrong about the amount. How about 10 or 15% on subscriptions? Keep the 30% on app sales, but take a smaller cut of services/renewals. I’m not shedding a tear for Microsoft, but the numbers just feel high to me.

(I realize that would mean back-end complexity resulting Apple’s cut for IAP varying: some IAP is a subscription, some isn’t... and some is a grey area, like virtual currency that can be exchanged for essentially app upgrades. So be it. Apple can write policies and face that complexity.)

 

[Handsome Bacon]

A major part of the dispute is Apple will collect that 30% royalty in perpetuity even if the user migrates away from iOS devices. In 5 years, if everyone has moved on to another brand and no longer use iOS apps, why should Apple be allowed to continue to collect ongoing SkyDrive subscription fees?

 

[Judas1]

Again, if a company wanted me to carry a free product in my store that promoted their paid service without giving me a cut, I would have refused.

A commission or referral fee isn't "a cut for nothing". Microsoft wants to make money by distributing their app through Apple's App Store. Apple wants a cut in order to allow them to do that. It's a straightforward business decision.



No, I'm not.



Sometimes more.

You got the cut because you yourself got a promotion for stocking an item that people wanted, and got more customers in the door. See, a mutually beneficial agreement. The subscription costs you nothing, and you didn't contribute to it. And you don't deserve a cut.

 

[Renzatic]

I haven't got a clue what Apple pay for their hosting, I can only go off the prices I've seen from a major reseller of Akamai CDN. These are $0.07 per Gb data stored per month and $0.07 per Gb of traffic per month.

So hosting a 30Mb file would cost me $0.025 per year. I'm sure Apple get it cheaper but I doubt its as low as your claimed $0.00001 or 1/2500th of what it would cost me. So I'd say it's your figures which aren't balancing out.

That's a very rough guesstimation pulled completely out of my ass without absolutely nothing to back it up. I just thought it sounded nice.

...but it doesn't change the fact that there are companies that give away far, far more and ask for far, far less in comparison to what Apple is demanding without going under. Dropbox and Netflix probably use up at least as much as Apple on bandwidth per month and charge considerably less for their services.

One month of Netflix is $8. I can watch 10 movies during that month. That's about the cost of one or two rentals on iTunes, delivered to me at about the same quality. I pay considerably more for Apple's service. I've had months where I've thrown $40-$50 at them, and only downloaded roughly 3GB of data. Netflix? I eat up that much data watching an hours worth of movie.

...so if giving away even a single app for free nets Apple a huge loss despite making more money elsewhere while using less bandwidth overall, why hasn't Netflix gone under?

 

[koban4max]

If Microsoft gets special treatment and we devs have to pay the 30% I'd be pissed off for that. At least in this regard all devs are the same.

Though I don't mind Microsoft gets 100% as long as I get my 100% instead of 70% and be able to add my third party payment from long ago.

if that's the case..if MS gets little favor...and you don't..well..you'll have to deal with that.

 

[alvindarkness]

It says they have offered to removed the subscription stuff but what about the sign up screen, I believe that may well be the problem. That is if there even is a problem, who knows the article is all based on nothing more than supposition with no evidence or facts of any kind. As far as I can see no app has been rejected or even been submitted for that matter, just like Google and the maps app a couple of weeks back, no substance to the allegations at all.

I think you hit the nail on the head. On top of it, people are also arguing over semantics, on the presumption the article is precisely written and perfectly accurate. I think the best step here is to just sit back and wait for more information.

 

[BaldiMac]

...and thus deserve 1/3rd of their gross in perpetuum?

Why do you keep asking what they "deserve"? Do you participate in some sort of economy where prices are base on what some random third-party deems fair?

Apple charges what they want. Developers have a choice as to whether to accept Apple's terms. That's how business works in a free market.

Apple isn't referring me to the service, just the app. And yes, the two are separate.

That's a distinction without a point. Are we supposed to pretend that there is some sort of law that says Apple must not consider services offered by the app in deciding whether or not to carry it?

 

[paul4339]

Some of you guys are deaf, dumb or just cannot read. Probably all of the above.

A major part of the dispute is Apple will collect that 30% royalty in perpetuity even if the user migrates away from iOS devices. In 5 years, if everyone has moved on to another brand and no longer use iOS apps, why should Apple be allowed to continue to collect ongoing SkyDrive subscription fees?

I guess as long as the iTunes billing service is being used it's 30/70 split, otherwise if MS wants 100%, they'd have to use their own billing service.

.

 

[Nickerbocker]

As much as I think that Apple is being a bit greedy when it comes to these subscriptions and in-app purchases, damn I just really really love the ability to cancel the subscription from my device .

Contrast that with my attempts to cancel my XBox Live Gold membership last year. No way to do it online. Nothing. Have to call support. Have to talk to a person, so be prepared to wait at least 20 minutes on hold. Have to deal with them pressuring you NOT to cancel. **** that, Microsoft! Bow down to Apple so they can show you how to do subscriptions in a way that isn't abusive to customers.

 

[tbrinkma]

http://www.theverge.com/2012/12/11/3753968/microsoft-apple-skydrive-discussions-ios-app-rumor



That sounds like they SUBMITTED the updated app to me.
Approval process doesn't start until an app is submitted to the process.

Is that the app update with the important fix *and* the removed subscription stuff, or is it the app update with the important fix but *still including* the subscription stuff?

One won't get through, one will (barring some other issue).

 

[Judas1]

...and thus deserve 1/3rd of their gross in perpetuum? Apple isn't referring me to the service, just the app. And yes, the two are separate.

Actually, apple didn't refer you to the app either. You heard about it somewhere else, and the only way to get it is through their store. They did zero advertisement in this case.