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

[Mackker]

I'm a developer and Apple is deserving its 30% cut.

It deserves the 30% cut for its services to developers, like hosting, free advertising (if the product deserves it), API's, completely free cloud services (iCloud) and so on..

Sure, I'd be happy to share a smaller amount with them but they deserve their cut.

But what I really don't like and comprehend is why they charge $99 USD per year to have an active developer account, especially given the fact that I'm making money for me and for them at the same time.

That $99 USD tax should either be completely eliminated or eliminated for the developers that are providing an yearly revenue after a certain treshold.

P.S. they don't deserve the 30% cut when it comes to the app review process (the looong time and the completely absurd rejections and vague answers of some reviewers).

 

[HenryDJP]

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

That sounds so ridiculous. Just like I said, "Oh the entitlement". Don't forget, developers are able to run their business and perhaps make more money (many of them have) they could've ever done on their own because of the App Store. They are not entitled to have their apps on the App Store. It's a privilege, just like having any job.

 

[skellener]

I'd love to see Amazon bring back direct purchase to Comixology. They killed it right after they bought it.

 

[HenryDJP]

I'm a developer and Apple is deserving it's 30% cut.

It deserves the 30% cut for its services to developers, like hosting, free advertising (if the product deserves it), API's (iCloud) and so on..

Sure, I'd be happy to share a smaller amount with them but they deserve their cut.

But what I really don't like and comprehend is why they charge $99 USD per year to have an active developer account, especially given the fact that I'm making money for me and for them at the same time.

That $99 USD tax should either be completely eliminated or eliminated for the developers that are providing an yearly revenue after a certain treshold.

P.S. they don't deserve the 30% cut if we're talking about the app review process (the looong time and the completely absurd rejections and vague answers of some reviewers).

That $99 is the cost of doing business. The business I am in requires me to not only renew my license every 24 months but I have to pay $150 just for the piece of paper that says I am able to continue my business. When you're an entrepreneur that's the cost of doing business. It doesn't have to necessarily be logical, sadly. But I get your point.

 

[youradhere4222]

I'm a developer and Apple is deserving its 30% cut.

It deserves the 30% cut for its services to developers, like hosting, free advertising (if the product deserves it), API's (iCloud) and so on..

Sure, I'd be happy to share a smaller amount with them but they deserve their cut.

But what I really don't like and comprehend is why they charge $99 USD per year to have an active developer account, especially given the fact that I'm making money for me and for them at the same time.

That $99 USD tax should either be completely eliminated or eliminated for the developers that are providing an yearly revenue after a certain treshold.

P.S. they don't deserve the 30% cut if we're talking about the app review process (the looong time and the completely absurd rejections and vague answers of some reviewers).

That's interesting. The $99 makes complete sense to me, as anyone who is willing to put any effort at all into a publicly-accessible app should be willing to shell out $100 to do so. It's a nominal fee, and it keeps out malicious or crappy apps. Sure, they go through the submission process like everyone else, but removing the fee would result in a lot more being submitted and this would increase the wait for apps to get approved.

As for the 30% cut, most apps don't require much to host, and the APIs, documentation, and other resources are paid for many times by some of the higher volume apps. Many including Clash of Clans and Candy Crush are reported to earn over a million dollars a day. Apple would still make plenty of money if they cut their share down to 15%, developers would have more incentive to develop for the platform, and a lot of the apps we use would probably get cheaper.

 

[manu chao]

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.

You mean you see no value in being able to buy content directly in an app instead of going via a browser to a website? Because the latter is the direct consequence of lots of content providers not wanting or not being able to pay Apple's 30% cut (if their own margin is less than 30%, they only way to sell something profitably would be to sell it for a higher price during in-app purchasing).

 

[manu chao]

I always thought subscriptions--and also one-off media (Amazon books?) not hosted by Apple--should have a lower split.

The iTunes music store already has a lower cut, I think it is around 15% (and the songs are hosted by Apple which is not true for most media content sold via apps like ebooks or news publications.

 

[LethalWolfe]

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

Not saying it's right, but that's pretty much how it works everywhere. If you are a big player and your bring in big money then you have better leverage with which to negotiate your terms.

That sounds so ridiculous. Just like I said, "Oh the entitlement". Don't forget, developers are able to run their business and perhaps make more money (many of them have) they could've ever done on their own because of the App Store. They are not entitled to have their apps on the App Store. It's a privilege, just like having any job.

The App Store is an arbitrary construct to make Apple more money and give it a tighter hold on its ecosystem though. There's no inherent requirement for having the App Store and if it didn't exist people would still be making software for the platform. For example, whenever possible I buy my Mac apps directly from the developer or publisher and not from the Mac App store.

 

[MH01]

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.

Cause this is not about YOU.

You pay full price, the Dev benefits, apple looses some %

Alas, one more minor point. It needs to be public knowledge, cause devs are not going to waste their time building something if they don't know what cut they get. Fundamentals of a business case actually.

And you do not want to get into shenenigans where devs get to negotiate individual terms with apple. Hence apple is open about the model.

 

[manu chao]

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.

Apple also hosts the app itself and distributes its updates and does app-review on them. And for those apps that are made to consume media (eg, the Kindle app), Apple doesn't get anything because the app itself is usually free.

A better comparison is music sold by Apple. There Apple takes around a 15% cut (though it also hosts them, though for songs this probably doesn't cost much).

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.

There are apps like Comixology where it really is a pity that you cannot buy stuff in the app. So yes, Apple has a problem making content available via in-app purchasing because of their high percentage.

 

[manu chao]

Why do you need to know about it?

Yeah, why should the media report about that whole ebook price fixing process? Why should the media report on anything else than consumer goods? Why report on the policy-making on any laws that apply only to cooperations?

 

[HenryDJP]

Yeah, why should the media report about that whole ebook price fixing process? Why should the media report on anything else than consumer goods? Why report on the policy-making on any laws that apply only to cooperations?

Glad you see it my way. Thanks.

 

[bpeeps]

I'm a developer and Apple is deserving its 30% cut.

It deserves the 30% cut for its services to developers, like hosting, free advertising (if the product deserves it), API's (iCloud) and so on..

Sure, I'd be happy to share a smaller amount with them but they deserve their cut.

But what I really don't like and comprehend is why they charge $99 USD per year to have an active developer account, especially given the fact that I'm making money for me and for them at the same time.

That $99 USD tax should either be completely eliminated or eliminated for the developers that are providing an yearly revenue after a certain treshold.

P.S. they don't deserve the 30% cut if we're talking about the app review process (the looong time and the completely absurd rejections and vague answers of some reviewers).

Because then every Tom, Dick, and Joe will sign up for an account just because they can.

 

[HenryDJP]

The App Store is an arbitrary construct to make Apple more money and give it a tighter hold on its ecosystem though. There's no inherent requirement for having the App Store and if it didn't exist people would still be making software for the platform. For example, whenever possible I buy my Mac apps directly from the developer or publisher and not from the Mac App store.

The App store has created a very nice living for many developers who's applications wouldn't have otherwise ever been installed on many computers. The biggest problems smaller developers have had over the years are consumers installing what's considered the "Standard" such as anything Adobe or Microsoft. With the invention of these App Stores developers have been able to have their products advertised to a much larger audience than they would have if only advertised on their own website.

You're trying to make it sound like it's a privilege for Apple to have developers selling their software on the App Store.

 

[HenryDJP]

You mean you see no value in being able to buy content directly in an app instead of going via a browser to a website? Because the latter is the direct consequence of lots of content providers not wanting or not being able to pay Apple's 30% cut (if their own margin is less than 30%, they only way to sell something profitably would be to sell it for a higher price during in-app purchasing).

I don't know where you got any of that from my post. My post simply stated my opinion that business decisions in terms of who gets paid how much should be kept between the partners in question.

 

[LethalWolfe]

The App store has created a very nice living for many developers who's applications wouldn't have otherwise ever been installed on many computers. The biggest problems smaller developers have had over the years are consumers installing what's considered the "Standard" such as anything Adobe or Microsoft. With the invention of these App Stores developers have been able to have their products advertised to a much larger audience than they would have if only advertised on their own website.

You're trying to make it sound like it's a privilege for Apple to have developers selling their software on the App Store.

All I'm saying is that Apple making the iOS App Store the only way to get apps was a conscious design decision by Apple in order to make them more money and in order to keep tighter control of the device than they could with OSX and the Mac. There is no inherent technical reason for the iOS App Store to be the only way to buy apps. If the iOS App Store was optional, like the Mac App Store is, I wonder how many devs would use it exclusively, use direct sales exclusively or use both.

But now that you mention it, yes, Apple should be very thankful that people develop apps for iOS otherwise it would be a dead platform. Given the struggles Apple went through in the late 90s/early 00s with developers leaving the Mac platform (or at least making Windows versions of once Mac-only software) you'd think Apple would certainly have a great appreciation for the third party support which has allowed their platforms to thrive in recent years.

 

[HenryDJP]

But now that you mention it, yes, Apple should be very thankful that people develop apps for iOS otherwise it would be a dead platform. Given the struggles Apple went through in the late 90s/early 00s with developers leaving the Mac platform (or at least making Windows versions of once Mac-only software) you'd think Apple would certainly have a great appreciation for the third party support which has allowed their platforms to thrive in recent years.

Oy Vey. Thank heavens there's an emoji to express how I feel about this post so I don't have to say it and get banned.

 

[GFLPraxis]

Not saying it's right, but that's pretty much how it works everywhere. If you are a big player and your bring in big money then you have better leverage with which to negotiate your terms.

Yeah, but the iOS ecosystem is pretty similar to an economy. Apple should have active interest in helping small developers succeed; they make money the more people buy apps.

The app store's revenue curve is already a huge problem for new developers.

This blog sums it up well. John Gruber actually threw in support behind the concept as well.

 

[Mackker]

That's interesting. The $99 makes complete sense to me, as anyone who is willing to put any effort at all into a publicly-accessible app should be willing to shell out $100 to do so. It's a nominal fee, and it keeps out malicious or crappy apps. Sure, they go through the submission process like everyone else, but removing the fee would result in a lot more being submitted and this would increase the wait for apps to get approved.

As for the 30% cut, most apps don't require much to host, and the APIs, documentation, and other resources are paid for many times by some of the higher volume apps. Many including Clash of Clans and Candy Crush are reported to earn over a million dollars a day. Apple would still make plenty of money if they cut their share down to 15%, developers would have more incentive to develop for the platform, and a lot of the apps we use would probably get cheaper.

I agree with you: most apps don't require much to host at the present time but how much did it cost/was invested to create the infrastructure that the App Stores are dependant on including the work behind them?
My guess is that it was quite an investment which still continues to this day.

C'mon.. do you really believe that 100 bucks is the "grand barrier" that keeps Joes' from providing jokes wrapped as apps?

Because then every Tom, Dick, and Joe will sign up for an account just because they can.

And, and?

Read the above.. you guys seriously overestimate those 100 bucks. And btw... there are plenty of s**tty apps out there and I make the bold statement that more than 80% of all the apps on the iOS App Store should not be allowed on the store. A great purge is required !

 

[bpeeps]

I agree with you: most apps don't require much to host at the present time but how much did it cost/was invested to create the infrastructure that the App Stores are dependant on including the work behind them?
My guess is that it was quite an investment which still continues to this day.

C'mon.. do you really believe that 100 bucks is the "grand barrier" that keeps Joes' from providing jokes wrapped as apps?



And, and?

Read the above.. you guys seriously overestimate those 100 bucks. And btw... there are plenty of s**tty apps out there and I make the bold statement that more than 80% of all the apps on the iOS App Store should not be allowed on the store. A great purge is required !

More crappy apps and unnecessary people signing up for dev accounts and not using them. Submitting crap, clogging up the already slow dev approval process. If you're willing to pay $99 for an account, you're a little more serious about developing than a 15 year old kid with some free time and xCode.

 

[LethalWolfe]

Yeah, but the iOS ecosystem is pretty similar to an economy. Apple should have active interest in helping small developers succeed; they make money the more people buy apps.

I 100% see what you are saying, but Apple has no incentive to change anything for small devs. For every small dev that gives up there are 10, 20, 100 more all clamoring for that one 'jack pot' app that will make them millionaires. If enough devs complain Apple might do something. If enough devs stop developing for iOS Apple *will* do something, but what are the odds of a critical mass of devs banding together to boycott the App Store?

Apple could just choose to be swell and do this, but currently they have no compelling business reason to do so. As long as enough beef is going through the grinder they aren't going to worry too much about how the cows are doing. Apple didn't rack up $178 billion in cash reserves (and growing!) by being swell.

I'm not a dev but a filmmaker and it's even worse for us because realistically you can't just submit a movie to iTunes and have it show up in the store. You have to go through a distributor/aggregator that has an existing relationship with iTunes. So not only does Apple get it's 30% right off the top, the distributor/aggregator takes 25% off the remaining 70%. We pretty much lose 50 cents on the dollar before the check even gets to our mailbox. Vimeo just launched a new service that splits the fees 10/90 with the filmmaker. Which is awesome, but what's Vimeo's reach compared to Apple's?

 

[manu chao]

I don't know where you got any of that from my post. My post simply stated my opinion that business decisions in terms of who gets paid how much should be kept between the partners in question.

Even if these business decisions affect what features a product you use has?

 

[Mackker]

More crappy apps and unnecessary people signing up for dev accounts and not using them. Submitting crap, clogging up the already slow dev approval process. If you're willing to pay $99 for an account, you're a little more serious about developing than a 15 year old kid with some free time and xCode.

Here I disagree: first, crap apps slowing down the approval process may or may not be the factor that slows down the approval process. Nobody knows how large is the review team or the number of apps per week they review but I can tell you from experience that on my apps, they waste maximum 2 minutes of "testing" (long live real-time analytics ) where they do very, very basic stuff.

Second, a 15 year old kid could provide a game changing product while a senior could provide a crap product, not only by implementation but also as a concept (the latter is more likely) and these statements are backed by facts.

 

[HenryDJP]

Even if these business decisions affect what features a product you use has?

Doesn't matter. It's going to affect what I use regardless. The issue at hand is THIS forum has members that attempt to be armchair lawyers and the discussions get way out of hand. They don't know the real business terms because chances are much of the real business is never put on the front page news because it's not shared. Whatever business decisions between Apple and the Developer is between them. The end result result will remain the same with or without my knowledge.
Let's hope that you never go into business and your business dealings with your partners gets put out for entitled people to see. 9 times out of 10 the information is never completely accurate nor is the full amount of information truly disclosed.

 

[bpeeps]

Here I disagree: first, crap apps slowing down the approval process may or may not be the factor that slows down the approval process. Nobody knows how large is the review team or the number of apps per week they review but I can tell you from experience that on my apps, they waste maximum 2 minutes of "testing" (long live real-time analytics ) where they do very, very basic stuff.

Second, a 15 year old kid could provide a game changing product while a senior could provide a crap product, not only by implementation but also as a concept (the latter is more likely) and these statements are backed by facts.

This doesn't really refute anything I said, you're just giving one off statements. Removing the fee = more people signing up for an account, period. It also equals more unused accounts that people created just because they could. Those who were deterred by the 99 price will now sign up. Sure a couple of them will have some great apps, but this will be the exception, not the rule.

I teach coding to teenagers during the summer. I know first hand the quality of apps they produce. There are some fantastic ones (that we do encourage them to submit to Apple) and some crappy ones. 15 year olds are just as capable as producing quality work as say a 50 year old. That wasn't what I was implying and you've missed the point of the statement in the context I gave. Ultimately if anyone is serious about dev work, they'll find a way to pay the fee.

Fee removed = More dev accounts = more apps submitted and a higher probability of them being crap. This is simple math.