Apple Officially Allows Users to Tip Content Creators With In-App Purchases

[firewood]

Nope. You made the assumption that the cost of goods sold was equal to their passthrough in IAP.

Which is true for apps. I'm an iOS App developer, and I get payments from Apple representing (roughly due to currency exchange rates) 70 cents for each of my my 0.99 apps and IAPs. And Apple's financials still show multiple Billions in profits and cash flow from the App store. This couldn't happen if their margin was only a few cents.

 

[konqerror]

Which is true for apps. I'm an iOS App developer, and I get payments from Apple representing (roughly due to currency exchange rates) 70 cents for each of my my 0.99 apps and IAPs. And Apple's financials still show multiple Billions in profits and cash flow from the App store. This couldn't happen if their margin was only a few cents.

Again it's unknown. Apple reports about $5 Billion in App Store revenue. Revenue is money received before expenses. Unless you can find their profit or profit margin from the App Store, that number doesn't indicate anything about their expenses.

And that's not a coincidence. Many people think Apple's profit comes fundamentally from one product, the iPhone, while everything else is low-margin.

 

[macduke]

What you're describing is not tipping. If I give a dev $1 and I receive 100 gold coins or diamond armor, that's not a tip. That's quid pro quo, a transaction, an attempted circumvention. A tip would be me liking this quote so much that I gave macduke a dollar for making it.

@macduke - Thanks for letting me use your quote as an example.

In that instance, MR is the app developer who has the relationship with Apple and they receive nothing. Macduke is the content creator, who has no relationship with Apple, and he receives the tip. That's what WeChat did, and that's why I have difficulty seeing where Apple warrants a 30% cut of Macduke's tip.

I've always wanted someone to make an example of me.
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Honestly though, that's rather good news for me. Apple as a company would think China is a huge market and therefore very important to them. But for me as an Apple user who doesn't hold AAPL stocks, I think Apple is focusing too much on China. Over the past few years, every major keynote like WWDC and the fall iPhone keynote involved something Chinese like English to Chinese translations, WeChat, some Chinese version of Uber, and more, like anyone besides Chinese cares. If this new tip policy affects Chinese iPhone users negatively and make people in that country move from iOS to Android, maybe Apple will realize the US market is more important and pay more attention to us.

I think Apple is big enough that they can pay attention to both. It's not a significant amount of time they spend on China in keynotes, and this last keynote didn't really talk much about China. I wouldn't really worry about it.

 

[fyun89]

A single card transaction costs 20-30 cents. Plus percentage fees. Plus assuming cost of fraud and support. A single chargeback eats up $10 plus the loss. Plus maintaining a PCI-compliant infrastructure. For a $1-2 tip, Apple's margins are going to be cents.

Sure, but considering the fact that they already have other services that should cover up these problems...
And this is about "tipping" the content developer.. so risk is relatively little.
Lastly, I've done some ecommerve business with PCI compliant website and the cost is no where near 30%

 

[Xgm541]

Apple gets some preferential rates, but the point that Apple's cut really isn't a full 30% after merchant fees is valid. Most people also aren't going to be making $1 transactions so the actual % that goes to the transaction cost will be driven lower by that fact. A lot of tipping is done by using virtual currencies that most people would purchase $5, $10, $20 at a time.

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Asia. It's a big thing in a lot of Asian countries. There are people whose full time occupation is being an online personality and their fans want them to sing songs online. I'm not making this up.
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The developer side of me cringes at a two tiered payment system where tips are a special class of income. I'm sure you could write an SDK that could address some abuses as you said, but I'm sure people will also come up with ever more inventive ways of shifting their revenue from official payments into tips.

That said, I also feel it to be a bit stiff to be taking a 30% cut off of tips, but I see the danger in making tips a special type of transaction.

Good point.

 

[tongxinshe]

Nope. You made the assumption that the cost of goods sold was equal to their passthrough in IAP. Example: assume Apple buys songs wholesale at $.50 each and sells it at $.99. Now Apple charges you $.99 and passes along to the app author $.70. See how that works? You can't equate the two unless you show that Apple pays at least $.70 a song.

Plus people on iTunes buy albums, movies, books, etc. all much greater than $.99 a shot, which by the way is now $1.29 for the big sellers... a sign that people weren't making money at $.99.

iTunes is not in the wholesale-retail model as you described above. Apple just gets ~15% of each song sales, the rest goes directly to the record companies.

 

[sd70mac]

Sure, but considering the fact that they already have other services that should cover up these problems...
And this is about "tipping" the content developer.. so risk is relatively little.
Lastly, I've done some ecommerve business with PCI compliant website and the cost is no where near 30%

Yes, a 30% cut is just too high these days.