App Store Fee Cut Attracts Criticism From Major Developers Like Spotify and Epic

[Michael Scrip]

An analogy I give this is a consignment shop. The shop is wiling to sell your product. Part of the cut of the final sale will include the time the consignment shop took to look at your item, to post it in the shop, make sure it is to the quality of the shop, payment processing and then payment out to you. There is more to the cost of selling others your crap than just the payment.

Exactly.

We often hear "the credit card companies only charge 3%... why does Apple charge 30% ?"

It's a simple answer... the App Store is more than just a payment processor. Apple offers an entire platform and ecosystem... including tools, testing, and servers around the world, among other things.

Here's a comment from another user:

- we developers get up to 1 petabyte of user storage via CloudKit 100% free. Bear notes app does this and they manage 0 servers for their subscription-paid users.
- we could submit 1000 app and app updates in a year which translates to Apple paying about 1000 man-hours worth of paychecks at about $30/hr or ~$30k for app review
- we have free access to using Apple Maps instead of paying Google tons of money to use their mapping API keys (for those high volume users). this saves Yelp and Facebook a ton of money as well as small developers.
- we get many more new features every single year via the SDK compared to Android (like ARKit, Core ML, SwiftUI, Vision, etc... just to name a few).
- we get global distribution for free (including China, you know, where Google Play doesn't exist. also developers generally have to setup their own servers in China because of the great firewall, but if you used CloudKit, it just works without any extra setup).
- we get app store curated editorial with a chance to reach front page in front of 500 million customers a week.
- we have no credit card fees or international taxes to worry about
- Apple provides support to customers asking for refund for an app and app store support in general
- Testflight service is free (for public and private testing)
- app store automatically creates many different binaries of our app and distributes device-optimized versions to each customer. a 1 gigabyte app with many different permutations of versions across hundreds of servers around the world means Apple is hosting about several terabytes in the cloud for us from one single app
- push notifications/push notification sandbox servers
- Web SDK version of cloudkit/mapkit so that you can use it for a web version of your app
- Apple sign in
- Mac notarization service which improves trust by the user for downloading an app from the web
- yearly major releases of Xcode with new features
- analytics dashboard and crash reporting
- and the list goes on and on.

Original post

 

[rmariboe]

We should employ a similar income tax structure in America. 15% flat tax for everyone making less than $1M and 30% flat tax for everyone over $1M.

That’s basically how it’s done in the Scandinavian countries 😅
Eg, in Denmark (‘ish figures):
8% of first $10k
44% of $10k-$100k
59% of everything above $100k
Minus a lot of deductibles of course...

 

[Abazigal]

Spotify is shaping up to be one major hypocrite.

On one hand, they reassured their investors in their earnings report that Apple Music would pose no material threat to them.

And on the other hand, they are going all out against Apple, suggesting that Apple music subscription numbers are having a very real impact on their bottom line, and they are getting desperate.

So which is it now for them?

 

[lysingur]

People who think 30% is too high should try to host their own apps on their own websites exclusively for 3 months and move it to the App Store for another 3, also exclusively, and in reverse order, if you prefer, then compare their sales numbers at the end of the half-year mark.

After you have gone through this entire process, it'll dawn on you that Apple is providing much more than just "hosting the installer file" and that most developers currently on the App Store won't even break even without it.

 

[phenste]

One of the first advanced vocabulary words I learned was “capricious” when I was in, like, 4th or 5th grade. To that end, the statement from Spotify sounds like a 5th grader attempting to defend their position and sound smart after they are wholly and entirely proven wrong.

P.S. “and now also to small indies” in the same comparative breath as Amazon—is Epic even trying to pretend they have respect for anyone besides themselves at this point? Such a dismissive way to describe a swath of the App Store.

 

[macbookpro212]

This Small Business App Dev is in favor of Apple's announcement today !

In fact, I must have made the exact same proposal to Tim Cook at least a dozen times OR more over the past 3 OR so years !

I welcome the change, & believe 99% of App Devs will benefit !

What's needed next is One Day Per Week, perhaps every Wednesday, where ONLY Small Business Dev Apps are presented in the App Store !

All other apps are NOT presented on that day !

App Discovery, OR the lack thereof, is still the single-BIGGEST challenge for most Small Business App Devs !

It's a mature market. If you cant factor in marketing costs for an APP you are developing then you should stop developing your app.

 

[Colonel Blimp]

Getting so tired lately of spoiled crybabies.

 

[I7guy]

My position has always been that regulators and courts will be the arbiters of this. Conversely, you have a lot of people here saying that Apple hasn't done anything wrong and that developers can pound sand and go elsewhere if they don't like Apple's terms. The former is yet to be determined and the latter 'my way or the highway' position may be exactly what gets Apple slapped down.

Whether or not Samsung can disrupt the entire TV industry by offering excessively low prices depends upon the extent to which they do so. In the short-term there's no problem, consumers get a great deal. If in the long-term they succeed in their attempts to actually eliminate most other players, they could very well find themselves under an antitrust investigation.

"Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize."

Predatory pricing - Wikipedia

en.wikipedia.org

The smartphone manufacturer market is diverse to be sure, but the OS and app store market is not. And while anyone can come in and launch new ones, the reality is that currently Apple and Google exist as a duopoly and may be subject to antitrust measures, hence the US and European investigations.

From what I have been reading and the commentary, it might come down to how narrow the courts/regulators define the scope. Sure Apple and Google as two companies are a duopoly in the mobile operating system space, although Huawei and Samsung seem to have their offerings. They certainly aren't anywhere near a duopoly in the app store space, although they are in the mobile operating system app store space (there may be more, but whether they are relevant I can't say).

We'll wait and see where all of this goes. Especially the "small developer break".

 

[cocky jeremy]

Yes, because if there's one thing government is known for, it's moving swiftly lmao. How many months have we been waiting for another COVID relief bill now? Some incredibly faulty logic you used the reach that conclusion.

Umm... a few months. Apple has done this for 10 years. Hardly a good comparison.

 

[cocky jeremy]

They're being investigated currently (and Google) in multiple countries. This has been rather newsworthy.
It does apply to Apple and that's why they did this half arsed move hoping it might help their cause.

The scope of these investigations and hearings is just so big. Consumer data, charging competitors unfair prices that give your competing products an advantage, potentially having to divest said products (Apple Music for example), anti-competitive business practices, inconsistency in who gets deals and who doesn't, using a walled garden echo system for monopolistic purposes. The EU wants to strip them from even selling an iPhone that comes loaded with an App store because consumers can't pick their app store. (That's insanity but that's what they're driving for.)

That's because the EU is idiotic.

 

[Luke MacWalker]

This is a poor analogy. Every online store and physical store charges a markup but they have competitors that keep their greed in check. The market won't allow them to charge more than what their competitors charge or a fair market value, therefor benefiting consumers. In the case of Apple, we only have one choice for software for our phones, which means Apple can be as greedy as they want to be, and we, the consumers, ultimately pay the price.

In general it seems like Apple fanboys are viewing this as an Apple vs. developer argument and siding with Apple, because that's what Apple fanboys do, but it's actually Apple vs. consumers and consumers are ultimately getting the short end of the stick here.

True, yet so many apps are less than $5, while before the App Store their equivalent was more like $50. Hardly the short end of the stick imho.

 

[Luke MacWalker]

If this actually is 15% instead of 30%, it will eventually bite Apple in the ass. It's in Apple's best interestes to have as many developers as possible at the same 30%. The law will catch up with Apple in regards to this.

Saying the App store fees are equal for all then pulling this %$#@ is going to get Apple into hot water.

I think Apple should just say the rate is 15% until $1 million then 30% over $1 million for everybody, every year, and that’s it. They would let few millions dollars on the table but it wouldn’t make a big difference both for them and big developers and then nobody could argue there are special cases. Everything clear, clean and simple. Not that it would stop the whiners whining, but it would make their case clear…

 

[Luke MacWalker]

People can hate on Epic and Spotify all they want but there are some legitimate questions around this new program. It’s hard to justify the 30% as reasonable when Apple cuts it in half for 98% of developers. And it’s hard to see it as much more than PR when the majority of App Store revenue is driven by the 2% that won’t qualify for this reduced rate. Also how does this new program support the narrative that the 30% is justified for all these things Apple does for developers? Is it more expensive to review an app that pulls in a lot of revenue? Does that app take up more bandwidth or Apple employee support? Seems like Apple is saying we’re going to charge you more because you can afford it not because your app is more expensive to host/maintain/review/support. It’s like making people pay more in taxes just because they can afford it not because they consume more government services.

I suppose the narrative is reversed: “the normal rate is 30%, but we will discount it to 15% for help small businesses to help them grow (and benefits from them providing more apps and more income as they grow).”
I think it’s not uncommon in other businesses. For example banks often offer free debit cards and discount prices for students, theaters have discount tickets for students, jobless people, old people, etc.

 

[ackmondual]

Cry me a river. I feel no sympathy for multi-national corporations.

however, I can totally get behind a fee cut for small businesses.

Including Apple?

 

[dannys1]

The funniest thing about extreme capitalists is that they're all for a free an open market where anyone can do anything and monopolise what they want and hoard billions until they're not the ones benefiting from suddenly - suddenly the likes of Sweeney and Spotify want socialist like regulation introduced to help them out.

If Epic has their store in the position and success of Apple you can be 100% sure that Sweeney would not be complaining at all. I mean he runs a company that has made billions by selling kids virtual pixels that don't even exist for MORE than you can buy actual action figures in shops which cost real money to manufacture. Crazy.

 

[dannys1]

People can hate on Epic and Spotify all they want but there are some legitimate questions around this new program. It’s hard to justify the 30% as reasonable when Apple cuts it in half for 98% of developers. And it’s hard to see it as much more than PR when the majority of App Store revenue is driven by the 2% that won’t qualify for this reduced rate. Also how does this new program support the narrative that the 30% is justified for all these things Apple does for developers? Is it more expensive to review an app that pulls in a lot of revenue? Does that app take up more bandwidth or Apple employee support? Seems like Apple is saying we’re going to charge you more because you can afford it not because your app is more expensive to host/maintain/review/support. It’s like making people pay more in taxes just because they can afford it not because they consume more government services.

Epic should be charged 50% seeing as they make all their money selling virtual widgets to kids.
If Spotify ever got a cut from the 30% ALL of it should go to the artists, yet it won't and they continue to pay the lowest rate in the industry when they rely on those artists or they don't even have a product.

 

[vipergts2207]

Umm... a few months. Apple has done this for 10 years. Hardly a good comparison.

You're only proving my point here, that government is almost always glacially slow to respond to anything. Additionally, look at the chart below and tell me what the difference is between 10 years ago and now.

Smartphone sales worldwide 2007-2023| Statista

In 2021 almost 1.5 billion smartphones were sold to end users worldwide. In the fourth quarter nearly 25% of all smartphones sold were Apple.

www.statista.com

Almost everybody has a smartphone now, unlike 10 years ago. Smartphones (as well tangentials, like the software that runs on them) have taken on a far greater role in consumers lives than they did in 2010. It's also a much more valuable part of the economy than it was then. This is only becoming even more pronounced as people continue to move away from computers to having only smartphones and tablets, they latter of which is also similarly locked down like smartphones.

This goes for the app store and developers as well. From it's inception until summer 2010 Apple had paid out $1 billion dollars to developers. Just in 2019, Apple paid out almost $39 billion to developers. To act as if market conditions as well as consumer habits are the same as they were a decade ago is asinine.

Apple Has Paid $1 Billion To App Developers (And Other Key Stats) | TechCrunch

Today at the WWDC event in San Francisco, Apple CEO Steve Jobs took the stage for his keynote address. During it, he gave some key stats about three key pillars of Apple's recent strategy: the iPad, the App Store, and the new iBooks store. First, the key iPad stats:

techcrunch.com

Yearly Apple App Store developer earnings 2022| Statista

In 2022, Apple paid a total of 60 billion U.S.

www.statista.com

 

[v3rlon]

I appreciate that Apple fanboys are just perfectly happy paying all that extra Apple Tax to get their apps and music subscriptions. It just wouldn’t feel right to them if they weren’t being fleeced in one way or another, in every way possible by Apple.

From Epic Games Website:

Why does Epic think it’s fair to ask for a percentage of a developer’s product revenue?
Our aim is to provide powerful tools, a scalable and productive workflow, advanced features, and millions of lines of C++ source code that enable developers to achieve more than they would otherwise be able to, so that this structure works to everyone’s benefit.
In this business model, Epic succeeds only when developers succeed using Unreal Engine. Many of the industry’s leading developers and publishers have signed up to license Unreal Engine with royalty-based terms over the years, and now this level of access is open to everyone. And, don't forget, we continue to offer custom terms.

So why should Apple get a percentage of developer's revenue?
Well, you get linked to the store for over a billion devices. You could always try putting it up on the Web and hoping to reach as many jailbroke devices as you can find. Hell, make a "must have" app and DON'T put it on the App Store. Look at how Doom made PC/DOS systems "must have" for true gamers back in the day. If your game is THAT good, Apple will deal with you somehow (until Zynga clones it and adds a -"ville" to the end of the title).

That App Store has more than a few lines of source code, dedicated hardware, and tech support. This "works to everyone's benefit."

There are credit card processing fees (on the low value transactions <$5, it is probably a significant percentage which is why a lot of stores won't let you swipe a CC for less than $5).

There is some amount of curating that goes on to make sure those apps aren't violating terms, privacy of end users, and so on: the infamous "walled garden." I don't mind paying a little tax for this service. It is worth 10% of my App Store purchases to have that extra layer or protection.

If I want to browse ever crappy ad filled Tertris clone every wannabe coder ever stuck a banner to, there is a store and multiple devices for that. Go play over there. I am on Apple to avoid that nonsense.

 

[iiiiiMAC!!!!!]

blah blah blah. Every online store and physical store charges a 30% fee. Quit your whining.

If everybody raped children on a daily bases would that make it ok?

 

[archer75]

If everybody raped children on a daily bases would that make it ok?

Of course not. But then you’d go after everyone and not just apple.

 

[keybraker]

I am on the fence for everything about this 30% store margin.

In one hand it is their store, they made supported, advertised and pioneered it and they can do whatever they want with it, if you don't like it don't support it, if you don't want to sell there don't.

But on the other hand it is a big duopoly in the biggest part of the western world, so even if you don't want to sell there, there is nowhere else to go. And I am not talking about another store in iOS, I am talking about another platform.

This is the same problem as with amazon and their monopoly, they really do have one and it is pretty frustrating, on the other hand they played fair under the capitalistic model, killing all competitors by not making money. Eventually if you achieve this by capitalistic means, is it unfair ? If it is shouldn't you break the company ?

 

[deevey]

I think the cut should apply to the FIRST million. Anything above is 30%