Apple in 2011 Considered Collecting a 40% Fee From Some Subscription Apps

[Mike_kr]

I still fail to see what the problem is. Its Apple's platform, they can choose the fee they will charge. They could charge 100% if they want. We have market to decide if the fee is too high or not. If it is too high, developers might not make apps for iOS and then users might not buy Apples devices if their favorite app is not there.

 

[PickUrPoison]

Does this mean that there would be 20% after the 1st year? Doesn’t sound like it

Rates for subsequent years are obscured by the pull quote in the source link. But they do say 40% for the “first year only”. In another part, they mention wanting to earn 30% based on a (hypothetical) average two-year subscription, which implies 20% for the second year.

 

[swm]

that doesn't mean all of America wants Mickey Mouse to be president

after seeing how things unfold, i'm not so sure about that.

 

[[AUT] Thomas]

No. Playstation Store existed in 2006 and took 30%. Apple App Store launched in 2008.

Just for the records: game and book market is different from the rest. As for consoles, the games have historically always financed the devices as the latter was sold usually without profit or even at loss. (These days this may not be the case anymore...)

 

[Cybbe]

Much ado about nothing, seeing how that did not come to fruition. Not sure why it is story worthy 9 years after the suggestion.

It shows that Apple looks at this as a profit centre and seeks to extract as much economic rent as possible. This is of course obvious to anyone observing the company, but it counters the claims sometimes made where reference is made to the cost of marketing, hosting etc. Given Apple's dominant market position, this would be relevant in an antitrust or unfair business practices case.

 

[nickgovier]

.

 

[ruka.snow]

But it's the industry standard in part because that's where Apple set it. If they had originally been debating between 40% or 50%, would you be arguing that 40% is perfectly fair but not 50?

Apple didn't set it. Steam set it and Apple followed. The App Store followed the structure of the industry leader at the time that had been running for years.

 

[mariusignorello]

So why the whole discussion about something typical that happens in pretty much any business pretty much all the time -- how should we price something, how can we make money off of something, at what point would changing the price of something result in something that's not desired, etc.?

Because god forbid Apple turns a profit. Some people on here get real jealous of Apple's money and act like they should get to decide what to do with it and how much Apple really "deserves". I'm glad we don't have socialism in the US because just from the handful of people on MR, it would not be pretty.

Businesses exist to turn a profit. It's what they do. A lot of decision making goes into pricing products, negotiating product placement for optimal sales, etc and much of the time this discussion isn't pretty or for the faint of heart, and ESPECIALLY not for those who don't have a business mindset. Business is not fair, empathetic or insert any other feeling.

It doesn't matter who the parties are, both Apple and the devs they do business with want to maximize profits and they should rightfully do so. Call it greed or whatever makes you feel superior, but this is business as usual and companies have been doing this for years. If you think Apple vs devs is bad take a look at big pharma vs patients or insurance companies vs doctors and then you'll have something to scoff over.

 

[imMango]

To be fair, it sounded like they wanted 40% of the first year and any subscription fees past that are 100% to the developer. Sounds pretty fair to me, they get their “finders fee” for the first year and are not involved after that.

 

[H2SO4]

No. Xbox, Playstation, and Nintendo heavily compete against each other, yet their rates are 30/70.

You’re using the xBox/Nintendo/PS analogy again when their business model has a significant difference.

 

[Onexy]

Amazon takes up to 65 percent (yes, you read that right) from independent publishers of books sold through the Kindle store.

I'm not suggesting that by "only" taking 30 percent (or 40 percent) is by any means fair. But Amazon is getting away with highway robbery.

Thats whataboutism.

 

[wilhelmer]

Steve Jobs, 2008:
"We don’t intend to make any money off the App Store. We’re basically giving all the money to the developers and the 30 percent that pays for running the store, that’ll be great."

Jai Chulani, 2011:
"I think we may be leaving money on the table if we just asked for about 30% of the first year."

🤔

 

[ZipZap]

It doesn’t matter if they set it at 90%. The market will either reject it or not. Obviously, very few developers have a problem with 30% but that doesn’t stop them from piling on and trying to squeeze more from Apple. If Apple’s greedy then so is every developer complaining while still doing business with Apple.

I think all developers have a problem with 30%. Given Apple's propensity to over-charge for EVERYTHING, I can understand why they feel cheated.

 

[Brian Y]

I still fail to see what the problem is. Its Apple's platform, they can choose the fee they will charge. They could charge 100% if they want. We have market to decide if the fee is too high or not. If it is too high, developers might not make apps for iOS and then users might not buy Apples devices if their favorite app is not there.

One of the main issues is that there's no alternative.

Say you sell an ebook. You can sell it via Amazon. You can offer it for download yourself. You could go with any number of sales platforms.

Say you sell a toaster. If you don't want to pay Amazon a listing fee, you can sell it yourself online. If amazon decides they don't want to sell your toaster, you can sell it through walmart, target, etc.

Now say you develop apps for iPhone. If you want to sell that app to iPhone users, you can only go through Apple. You must pay what they ask for. You must follow their rules, and you're at their mercy if they decide they don't want your product any more.
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Steve Jobs, 2008:
"We don’t intend to make any money off the App Store. We’re basically giving all the money to the developers and the 30 percent that pays for running the store, that’ll be great."

Jai Chulani, 2011:
"I think we may be leaving money on the table if we just asked for about 30% of the first year."

🤔

Back then, with all the initial setup costs, I imagine Steve's comment was true. They probably didn't realise how quickly/rapidly it was going to take off and turn into a cash cow.
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Steve Jobs, 2008:
"We don’t intend to make any money off the App Store. We’re basically giving all the money to the developers and the 30 percent that pays for running the store, that’ll be great."

Jai Chulani, 2011:
"I think we may be leaving money on the table if we just asked for about 30% of the first year."

🤔

Back then, with all the initial setup costs, I imagine Steve's comment was true. They probably didn't realise how quickly/rapidly it was going to take off and turn into a cash cow.

 

[robinp]

Right, I‘ve read through 88 comments and what a lot of annoying on topic waffle about percentages.

Time to get to the serious issues.

Why are the M and T inside square brackets? It’s just weird. Coming here to discuss the important stuff.

 

[Nicole1980]

No. Playstation Store existed in 2006 and took 30%. Apple App Store launched in 2008.

Here's why I think @boss.king got so many likes on his counter to your statement: You said 30% is "perfectly fair". If you had said 'within reason', or something similar, there wouldn't have been so much pushback. But PERFECTLY FAIR makes it sound as if you think it's completely reasonable ... and a good many of us would strongly disagree with that characterization.

For instance, even if you said 'within reason' I would have disagreed with you ... but not nearly as strongly.

 

[wilhelmer]

Right, I‘ve read through 88 comments and what a lot of annoying on topic waffle about percentages.

Time to get to the serious issues.

Why are the M and T inside square brackets? It’s just weird. Coming here to discuss the important stuff.

Thanks for asking this important question.

The original quote is "I think we may be leaving money on the table", with lowercase m and t.

In the screenshot, the quote is used as a heading and must therefore be set in title case.

For correct title capitalization, the m and t must be converted to uppercase. The square brackets indicate this modification of the original quote.

 

[Wanted797]

I wonder what a person who thinks Apple’s 30% cut is high would think if they knew what the music industry does to artists???

Also I just learned the 30% figure often thrown around is ONLY THE FIRST YEAR!

 

[malkovich87]

Don‘t know, but isn‘t this somewhat bad timing?
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I wonder what a person who thinks Apple’s 30% cut is high would think if they knew what the music industry does to artists???

Also I just learned the 30% figure often thrown around is ONLY THE FIRST YEAR!

And a follow-up question: those who think 30% is fair: would you want to pay 30% of your income to be able to use the road you need to take to get to work?

 

[sw1tcher]

Liar liar pants on fire

Apple tried to lure Amazon's video app by offering a lower 15% fee, email shows

In an email sent from Apple executive Eddy Cue to Amazon CEO Jeff Bezos in 2016, Apple said it would offer a 15% revenue share to Amazon for customers that sign up for Prime Video through Apple's payments system.

www.cnbc.com

In the summer of 2017, Apple CEO Tim Cook announced that Amazon’s Prime Video service would be launching on the Apple TV set-top box, after a long and noticeable absence.

An email released by the House Antitrust Subcommittee on Wednesday shed new light into the negotiations that led to that announcement. It shows an Apple exec offered Amazon a 15% fee on subscriptions that signed up through the app, which is lower than Apple’s customary 30% fee for most in-app purchases.

The email suggests that big players can negotiate for better business terms on Apple’s App Store, contradicting Apple’s public stance that all apps are treated the same on its platform. “We apply the rules to all developers evenly,” Cook testified on Wednesday.

 

[Zimmy68]

Ah, good ole' Eddy Cue strikes again. Maybe this is why they keep him around after failing all the projects the give him.

 

[Tesix2]

Amazon takes up to 65 percent (yes, you read that right) from independent publishers of books sold through the Kindle store.

I'm not suggesting that by "only" taking 30 percent (or 40 percent) is by any means fair. But Amazon is getting away with highway robbery.

That is not quite correct, Amazon only takes 30% for books priced $3-$10, there is a price banding policy.
Still, "never let the truth....", and all that.

 

[Madhatter32]

When you go to the grocery store and buy something, I wonder if you realize that the prime shelf space is actually paid for by the distributor/manufacturer. Also, when you go to any major retailer, I wonder if you realize that the distributor/manufacturer pays for mark downs, returns, new store alllowances and product/policy compliance. I do not see how the 30% entry fee into the Apple store is really that much different than what other major retaiers have been doing for decades.

 

[gnomeisland]

Thats whataboutism.

Not really. They are similar digital-only content markets where Amazon even had a bigger percentage of the ebook market I believe and offers comparable value to content creators. True, the other comparisons to pre-existing digital stores like Steam are more relevant.

However, if the question is whether Apple's practice is "fair" than establishing precedence is important. Whataboutism is when there is already a clear standard/precedence and you seek to distract by pointing out others (irrelevant) flaws.

 

[Rogifan]

If they don’t need Apple, they don’t need to program for iOS so they wouldn’t be on the App Store.

They don’t need Apple to market/promote/sell their app.