Yep, and if they leave, good luck getting those developers back once they inevitably relax the rules...
Yeah right. They won't come back because they hold a grudge. That is good business. The good news is they will not be wanted back because competitors will have stepped in to fill their void in the IOS marketplace, and likely also taken some of their market share outside of IOS as well, so they might be struggling just to survive.
This remains to be seen. Myself and others I know are afraid our favorite apps will disappear from iOS.
I can't think of a single app I would leave IOS for to be forced to use android. No way no how.
Leaving Apple's ecosystem? Not a good idea when you're interested in mindshare, money, and appealing to the most well-heeled segment of the market. No one wants to be left off the iPad.
Not being in the IOS space will cause some businesses to cease to exist because competitors while thrive or sprout up there, build significant market share, and then leverage that to challenge those businesses in other marketplaces as well.
They don't have consumers best interest at heart, but if you're the underdog, your'e willing to make concessions. The biggest thing though, Google nor Microsoft are content providers. I take that back Google is not a content provider.
Google is one of the biggest content providers in the world.
You need to stop viewing this as a revenue discussion vs. a profitability discussion. Let's use some concrete numbers instead of abstracts...
You own a company that acts as a distributor of content. Since the inception of your company you have held contracts with the content owners that allow your company to keep 30% of the sales price and the remaining 70% is provided to the content owners. Let's say that you are selling content item A for $100. For each sale of A you receive $30 of revenue and provide $70 of revenue to the content owner. Let's assume that you had to pay $10,000 (+$99 developer fee) to develop your iOS application. Hosting/bandwidth fees for that content item is $0.10 per download (assumes that you have many other content items to spread these fees across). Visa/MC/Paypal charge you 3% for payment processing. Finally let's assume you have 100 downloads of A per month.
Payment processing per download is $3 (3% of sales price). With a revenue stream of $26.90 per download, you would need to sell 376 downloads before you break even on your initial costs (just under 4 months). For simplicity, let's say that you are a one person company and only have to pay your salary. After the first 376 downloads, every other download nets you $26.90 which can be reinvested into new apps or paid out as a salary.
Let's add in the 30% IAP fee...
Apple charges you $30 per download. The content owners are owed $70 per download per contract. The payment processing fee goes away as Apple is handling that for you. Since your company is still hosting the content, you still need to pay the $0.10 per download.
Here you can see the problem. You have invested $10,099 in upfront costs for your app development. And you are hit with a recurring expense of $0.10. Increased sales will only hurt you more.
The only path for your company is to renegotiate your contracts with the content providers or leave the iOS store. Then the question becomes, why would the content providers renegotiate their contracts with you, when they can work directly with Apple and sell through iBooks etc and continue making the same revenue per download (70% of the sales price)?
The drawback to this relationship is that the content purchased through Apple can only be used on iOS devices. Your company can continue to work with the content owners on other platforms as the 10% fee paid to other marketplaces, while it reduces your profit per download, it still does not eradicate your profitability.
This is the type of issue that apps like the Kindle and Netflix could face. Is it dependent on how the terms are written in the contracts with the content owners. This example uses sales price. Other examples could be based on distributor revenue (as you hinted at) and others can be based on a flat fee.
All I know is that if your model was based on a percentage of sales price you got screwed as 30% is a pretty standard rate. If you have a flat fee contract type, you likely got screwed (but it depends on if the flat fee happens to be less than the 70% of what you can actually sell the content for). If you are a revenue type (the least likely as the content owners would have to accept that they are selling there content for variable rates), then you are not affected.
This is the dilemma.
GL
If you are not making money raise your prices. it is not Apple's fault that your business model is flawed. If you want to participate in the App Store there is a cost associated that, in exchange for some real value. Decide if it is worth it or not.
By the way most content rights deals do not determine what the resell price is, so they can set whatever price they want on it. What if the content provider decides when the current contract is up that they want twice as much for rights fees? Costs in businesses can change all the time. It is the way of the world. If the business wants to be in the Apple App Store, they have to pay the going rate like everyone else.
As for the content providers going directly to Apple that will happen in a lot of cases, because it means more money for them while potentially meaning lower prices for the consumer. That is a big win-win. Companies that fill the middleman role are always in a dangerous position and know what lead their ability to be in business could easily go away at any time. The reasons for these middlemen almost always rely on inefficiencies that can be exploited to take out money and be profitable. They are almost always tenuous though...
Personally, if middlemen companies go away, who cares. The content will still end up on the IOS devices, and potentially for a lower price. That is a real potential outcome in a lot of cases here.. and that is good for Apple, good for the content providers and good for the consumers.
Obviously, as a true Apple fan you "hold this argument wrong". The fact that Apple demands that in-app subscriptions cost no more than the ones outside, combined with the mandatory and draconian 30% fee, guarantees that vendors can not sell the same subscriptions CHEAPER elsewhere. So, 30% fee guarantees high prices, and the rule disallowing vendors to sell cheaper elsewhere guarantees that he prices will be fixed at this high level.
Personally I do not think it's important though. This Apple strategy will obviously fail.
Most of these businesses already have competitors, those that don't and raise their prices will soon find themselves with new competitors.
The 30% fee does not guarantee high prices. Apple is charging for their services.
Again you do not understand what price fixing is, and ultimately these is a good thing as it relates to app pricing for IOS customers.
Companies could raise their prices across the board, but that is certainly not Apple's fault. Apple is asking for compensation for providing a set of services. The companies are not forced to make that deal with Apple if they do not want to do so.
If they raise their prices across the board, it will allow better run businesses to come in and undercut them.
