Apple Planning to Change 30/70 Pricing Formula for In-App Media Subscriptions

[HobeSoundDarryl]

Why would Apple just generously cut their slice of the split as some in this thread are implying? If we're going to see 25/75 or 20/80, I would expect something else to slide into the deal to more than make up for the difference. My guess will be some kind of new part of iAd where one can take the lower split in exchange for giving Apple more iAd opportunity... or something else like that.

In other words, business people don't sit around a room dreaming up ways to trash revenue. It's always about "how can we make MORE money?" The action to reduce the percentage is probably paired with something else to more than make up for what would be lost. Else, why do it?

Nevertheless, if this actually benefits the content creators, that's great news!

 

[dusk007]

While I think a 30/70 cut is outragous for basically just handling payment process. Well most of it is done by the credit card company and those don't charge 30%.
Anyway I don't get why they don't just increase the prices on all Apple portals by that much. Sell it for 150% and point out that through other channels it is much cheaper and clearly mark what part is Apple's cut. Eventually that should be enough cause for Apple to cave in, when customers are unhappy about the Apple tax.

Basically all Apple provides is part of an integrated payment service. Margins for such a usually much much lower in the 2% kind of category. Everything else is abusing the power as gatekeeper to their walled garden. If anything they can charge on the first payment but not at each subsequent payment such fees.
I don't think they should get away with 15% or even 10%. That is a 2-3% business.

 

[garylapointe]

The article could be clearer about more or less of a cut...

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

Sure it will (could). Right now some companies don't even allow in app purchase (like the Kindle app) because they don't want to give up 30%, if Apple said they'd only take 10% or 15%, Amazon might be willing to do that (they give 8.5% to big referrers of physical media anyways) and that would change that you could buy right in the app.

I'm sure the same applies to other vendors too.

Gary

 

[Crzyrio]

While I think a 30/70 cut is outragous for basically just handling payment process. Well most of it is done by the credit card company and those don't charge 30%.
Anyway I don't get why they don't just increase the prices on all Apple portals by that much. Sell it for 150% and point out that through other channels it is much cheaper and clearly mark what part is Apple's cut. Eventually that should be enough cause for Apple to cave in, when customers are unhappy about the Apple tax.

Basically all Apple provides is part of an integrated payment service. Margins for such a usually much much lower in the 2% kind of category. Everything else is abusing the power as gatekeeper to their walled garden. If anything they can charge on the first payment but not at each subsequent payment such fees.
I don't think they should get away with 15% or even 10%. That is a 2-3% business.

Yes but Apple does a lot more than just process fees. There is even storage cost, and servers across the world that allow for customers anyway to download their app at a decent speed. They also have their teams doing App review, and people that develop documents for developers to learn from.

But I think on top of all that the major % probably goes to Advertising, providing contest etc. I dont think Apple makes much money of iTunes/App Store

Why would Apple just generously cut their slice of the split as some in this thread are implying? If we're going to see 25/75 or 20/80, I would expect something else to slide into the deal to more than make up for the difference. Why just jettison revenue if you are Apple? My guess will be some kind of new part of iAd where one can take the lower split in exchange for giving Apple more iAd opportunity... or something else like that.

In other words, business people don't sit around a room dreaming up ways to trash revenue. It's always about "how can we make MORE money?" The action to reduce the percentage is probably paired with something else to more than make up for what would be lost. Else, why do it?

Nevertheless, if this actually benefits the content creators, that's great news!

At the end of the day Apple benefits either way. They dont make a lot of money from iTunes/App Store. By lowering fees, they invite more developers, more/better content which at the end of the day will sell more Hardware.

 

[Thunderhawks]

Which is technically impossible since apps itself (including the app page with screenshots/video) and app updates, AppleID authentication and so on are served by Apple.

0% is never going to happen and shouldn't. It is more likely Apple will drop down to 80/20 in the near future for everything except media-based/external services getting 85/15 instead, which is generally fair.

Even physical stores charge more than 15% for shelf space.

Are you saying Apple is not listening when consumers say:

We want it all, we want it now and we want it for FREE!

To all those who say:

They can afford it, it's unfair, why are they getting anything etc.

It's because it's a business, it makes money and it can!

 

[HobeSoundDarryl]

At the end of the day Apple benefits either way. They dont make a lot of money from iTunes/App Store. By lowering fees, they invite more developers, more/better content which at the end of the day will sell more Hardware.

Does Apple have a problem now of luring developers or getting more/better content? All I see now implies that the bulk of developer money is made by being in iTunes/App Store.

If this change is real and if it really brings more developers and/or more/better content, then great! Personally, if this is real, I suspect something else is going on here where whatever Apple would give up is made up somewhere else. Again, I suspect something new about iAd.

 

[agsystems]

??? Why would this information need to be private?

Exactly my question...if this true...how this got out? why would Apple talk to anyone about lowering their prices?

 

[ttss6]

Maybe they'll be generous and lower it to 29/71!

 

[usarioclave]

So how about 0%, what they deserve for services that run completely independently from them?

The iPhone is a channel, and like every other channel it requires money to operate. It's silly to complain about it. In fact, the only people that complain either are business trying to lower the cost of the channel, or the general public, who have no idea what they're talking about.

 

[garylapointe]

If anything they can charge on the first payment but not at each subsequent payment such fees.
I don't think they should get away with 15% or even 10%. That is a 2-3% business.

I agree with the higher "referral fee" for the first payment and think it's a great idea. But I think of that for things more like a subscription service (Dropbox, MS office, Netflix etc.).

I think Apple has a bit more going on than just a 2-3% business though. There are services that charge more and they're surviving. They've got an ecosystem that they've constantly making better (which could result in more in app sales), the convenience of a click to buy makes worth more than some of the services that already charge more. Being a "relatively" valuable company shows they are doing something right and many of these vendors are willing to pay it.

Apple isn't just taking the commission, they're the store that sells the product in the first place and they get $0.00 for free apps.

If Apple had a rule that said if you charge $9.99 for an app, we'll only take 5% of the in app purchase, that'd certainly be more fair. (What if Apple had a rule that said it's a $5,000 fee to put "free" apps in our store?)

But I bet most developers wouldn't want to do that (either one). If that theory is true, it (may) shows that Apple is providing more than just processing payments.

I believe Amazon charges 15% for you to list items on their store. I think ebay/paypal charges a tiny bit less for items (I believe they charge the same for auction and just priced buy it now items). Way more than just 2-3%. I think they both even charge monthly fees to use the services as a store. This isn't much different than Apple; Apple even delivers the digital media for you and adds protection to the games/applications (not as relevant to things like DropBox or Netflix). Way more than just what Visa or PayPal (on it's own) does.

Gary

 

[JAQ]

I bet Apple has seen too many developers simply opt out of in-app purchases, requiring their customers to purchase them elsehow, with the result that Apple gets nothing. Apple has decided that getting a smaller fraction of something is better than getting all of nothing.

 

[Deelron]

People here constantly whine about Spotify supposedly screwing over artists. Apple has been doing it to content providers for years.

You mean screwing them by most content providers just not bothering with purchases in app anyway, in which case Apple gets 0%.

Makes sense to cut the fee, Apple would get some money from where they get nothing now, buyers get the convenience of purchasing in app and sellers may either continue the old way of doing it or give up a much smaller percentage with the idea of making more due to the aforementioned convince.

 

[Mike MA]

Let's face it, with the volume of sales, 10% for Apple would still make a lot of money and keep devs happy and maybe customers can see some of that savings on their end.

Well, I doubt. Especially as it should address those ones, which up until now don't participate at all.

 

[4jasontv]

Gary[/QUOTE]

Sure it will (could). Right now some companies don't even allow in app purchase (like the Kindle app) because they don't want to give up 30%, if Apple said they'd only take 10% or 15%, Amazon might be willing to do that (they give 8.5% to big referrers of physical media anyways) and that would change that you could buy right in the app.

I'm sure the same applies to other vendors too.

Gary

Don't think of it as Apple gets 30% of the cut. Think of it as a 30% markup, and you will realize its far less of a markup then many businesses. Amazon could raise its prices and make the same amount, but they don't want to be associated with higher prices.

 

[C DM]

So how about 0%, what they deserve for services that run completely independently from them?

Except they would be getting those particular subscriptions at least partially because of Apple (coming from the audience using Apple devices), which means some part of what is made would logically belong to Apple.

Why would Apple just generously cut their slice of the split as some in this thread are implying? If we're going to see 25/75 or 20/80, I would expect something else to slide into the deal to more than make up for the difference. My guess will be some kind of new part of iAd where one can take the lower split in exchange for giving Apple more iAd opportunity... or something else like that.

In other words, business people don't sit around a room dreaming up ways to trash revenue. It's always about "how can we make MORE money?" The action to reduce the percentage is probably paired with something else to more than make up for what would be lost. Else, why do it?

Nevertheless, if this actually benefits the content creators, that's great news!

More than likely the basics of supply and demand would balance it out, if not perhaps even bring more to Apple in one way or another.

 

[TallManNY]

As long as it helps bring more content to Apple TV that does not require a cable subscription, I think this is fantastic! Otherwise, less so. They need a tiered approach for the apps. Maybe keep the 30/70 but if it hits a certain level of downloads, then move to 20/80, and then to 10/90. That way the initial cost of vetting, approving, and hosting an app can be absorbed up front. since there is little incremental cost, as the app gets popular, they could improve the return to the developer. Obviously, with each update to the app they would probably need to restart.

Brilliant. Ding the little guys the full 30% because they waste people's time with annoying niche Apps. But the handful of mega successful Apps should get to move themselves into the 10% level and really clean up. Hey at a certain level, think Candy Crush, hasn't Apple made enough? Shouldn't Apple cap its return at a certain point? Otherwise where is the incentive to produce an even bigger hit than Candy Crush?

 

[Rigby]

While I think a 30/70 cut is outragous for basically just handling payment process. Well most of it is done by the credit card company and those don't charge 30%.

Agree. That's why I buy subscriptions outside of the app whenever possible. In the end the high fee just makes the product more expensive for everyone, since the provider has to price it into the product.

Anyway I don't get why they don't just increase the prices on all Apple portals by that much. Sell it for 150% and point out that through other channels it is much cheaper and clearly mark what part is Apple's cut. Eventually that should be enough cause for Apple to cave in, when customers are unhappy about the Apple tax.

Simple: Apple doesn't allow it. If you want to offer an in-app subscription, the price must not be higher than the price outside of the app.

 

[moo083]

I really hope whatever they do allow people to put their digital purchases in apps again. I use Audible a lot and its really dumb that you can't buy audiobooks in the app. you can't even use the Amazon app. You have to go to Audible's site, which is really dumb.

And you can only blame Apple for that.

 

[Glideslope]

Sooooo more like 20/80 or 40/60?

20/80. AAPL will be under $120 by the end of June.

 

[HenryDJP]

??? Why would this information need to be private?

Why do you need to know about it?

 

[HenryDJP]

This is one of the weirdest things I've ever read on these forums. I don't even know where to start.

Then you shouldn't have bothered replying.

 

[HenryDJP]

The article could be clearer about more or less of a cut...



Sure it will (could). Right now some companies don't even allow in app purchase (like the Kindle app) because they don't want to give up 30%, if Apple said they'd only take 10% or 15%, Amazon might be willing to do that (they give 8.5% to big referrers of physical media anyways) and that would change that you could buy right in the app.

I'm sure the same applies to other vendors too.

Gary

I like how you're supporting the companies who refuse offer in-app purchases in order to avoid Apple getting paid for not only hosting their app, but doing the POS services and advertising their apps, while the developer sits back and collects 70%.

 

[HenryDJP]

I really hope whatever they do allow people to put their digital purchases in apps again. I use Audible a lot and its really dumb that you can't buy audiobooks in the app. you can't even use the Amazon app. You have to go to Audible's site, which is really dumb.

And you can only blame Apple for that.

RIIIGGGHHTT. The only reason why you can't do what you were stating is because the developer refuses to allow Apple to get 30% of the revenue generated. That's ridiculous. Oh the entitlement.

 

[GFLPraxis]

As long as it helps bring more content to Apple TV that does not require a cable subscription, I think this is fantastic! Otherwise, less so. They need a tiered approach for the apps. Maybe keep the 30/70 but if it hits a certain level of downloads, then move to 20/80, and then to 10/90. That way the initial cost of vetting, approving, and hosting an app can be absorbed up front. since there is little incremental cost, as the app gets popular, they could improve the return to the developer. Obviously, with each update to the app they would probably need to restart.

This is a terrible concept. It's essentially the same as a regressive tax.

Basically, you'd be charging all the small developers 30/70 and all the big ones 10/90.

Right now, the App Store revenue curve is HEAVILY skewed in terms of the biggest apps; small devs barely make any money.

If anything, I feel like Apple should do a progressive one: 10/90 for all devs making less than 100k. It'd barely affect their bottom line but make a huge difference to indie devs and make it a more feasible job.

That said, subscriptions where Apple does zero hosting of the subscribed content is an interesting use case, because Apple is still hosting the actual app...and gets nothing for it, but takes a cut of the content they don't host.

 

[lazard]

RIIIGGGHHTT. The only reason why you can't do what you were stating is because the developer refuses to allow Apple to get 30% of the revenue generated. That's ridiculous. Oh the entitlement.

because a 30% cut for what is essentially a middleman role is highway robbery.