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Apple Planning to Change 30/70 Pricing Formula for In-App Media Subscriptions
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I usually learn about things here before they are on Apples developer portals. I'm here any ways, so as a developer I appreciate seeing the information here
.Also, apple is usually really slow on emails. By the time Apple sends an email on a change, I have already read it on here and many other blogs.
I think the fees should reflect fees that would be charged if it was a competitive market. What should be anyway. If you could just hop to the next bank, with different fees, what does it really cost Apple to keep the machine running. Hosting especially for ebooks/magazines in subscriptions is miniscule. Hosting youtube takes money but most Apps require basically no cloud investment for hosting. If they'd consider APIs part of the iOS investment, to keep just the reviews and the data centers going they'd need much much smaller fees.
If they didn't sit in their highway tollbooth, how much would they need to charge to recoup the costs? Even free apps don't need much because most of them produce little to no traffic. You put them on their once and then they practically produce no costs. And the rest is covered by what they take from add revenue. If you need any difficult hosting you need to do it yourself anyway (like multiplayer gaming).
I think lots of people here vastly overestimate the costs. Apple is used to high profit margins and they try to charge as much as they can. Since it is their garden they have free reign. If this was a services company trying to compete against others who can offer similar services, and they'd charge prices on a competitive market (that is costs + 10-30% profit (not 30% of what others make but 30% of their own costs), the fees would be very different.
I just don't agree with many Apple apologetics around here. Can they charge it? Yeah sure they own it. Do they have to because of all the work they do? Definitely not. Should they? I think not, they make enough money elsewhere and they tax an industry which only provides content for them. I think some regulation would be in order. As costs of running don't reflect fees. And quasi monopolies just charge to much as a standard. Costs for hosting are far smaller than for physical goods and fees should not be determined in comparison to how great it is compared to selling physical goods but in comparison to what it costs to keep the machine running.
Really google is the same thing and everything applies there as well. These companies own an entire market but can charge anything they want.
If they didn't sit in their highway tollbooth, how much would they need to charge to recoup the costs? Even free apps don't need much because most of them produce little to no traffic. You put them on their once and then they practically produce no costs. And the rest is covered by what they take from add revenue. If you need any difficult hosting you need to do it yourself anyway (like multiplayer gaming).
I think lots of people here vastly overestimate the costs. Apple is used to high profit margins and they try to charge as much as they can. Since it is their garden they have free reign. If this was a services company trying to compete against others who can offer similar services, and they'd charge prices on a competitive market (that is costs + 10-30% profit (not 30% of what others make but 30% of their own costs), the fees would be very different.
I just don't agree with many Apple apologetics around here. Can they charge it? Yeah sure they own it. Do they have to because of all the work they do? Definitely not. Should they? I think not, they make enough money elsewhere and they tax an industry which only provides content for them. I think some regulation would be in order. As costs of running don't reflect fees. And quasi monopolies just charge to much as a standard. Costs for hosting are far smaller than for physical goods and fees should not be determined in comparison to how great it is compared to selling physical goods but in comparison to what it costs to keep the machine running.
Really google is the same thing and everything applies there as well. These companies own an entire market but can charge anything they want.
+1 Anyone whining about what Apple's fees to sell through their networks does not understand distribution. As a software developer with annual sales around $10mm, 20-50% margin to our channel partners is normal.
Good to see Apple back off of the fees for subscription based services. It will help bring on more content I'm sure.
I totally agree with you BUT there are a few things that give a different connotation to the whole story.
First of all, as you said it, it's Apple's garden. They can invite whomever they wish and impose the rules they wish. If one doesn't like it, then so be it, go someplace else, do something else.
Second, sure, 30% it's a bit too much, personally I'm not very fond of it but also not very annoyed by it.
After all, they created an awesome ecosystem for developers and they changed lives for the better for some of them.
I don't think we should judge them for the way they do business as long as they charge for something they created and maintain. It is a monopoly on the iOS app market? Yes, sure it is, but again it's their "garden" and they can do whatever they wish.
However, I would judge them and be extremely annoyed if they change rules overnight like it happened with AppGratis where they literally destroyed a healthy business which was also a great service for Apple's customers. But yet again, it's their turf and can do whatever they wish. I'm not happy about it but that's the way it is and for now, for me, it's a risk worth taking.
It's the same concept as going to visit someone where the hosts can do whatever they wish in their home and even throw you out if they choose to do so. If you still want to visit them after knowing all the rules and what might happen, it's your own choice.
Because they own an entire market, it doesn't mean they should be forced to change their business model. They're here to make money and along with them hordes of third party developers. Sure, it could be better like a tiered revenue share but it's not our call and it shouldn't be.
You must understand that Apple changed lives for the better for many developers (including me) even with their 30% cut. Sure, there were ups and downs in my relationship with them but the final outcome was positive for me (and them).
They do lots of money? Sure and that's good!
One more thing: you think 30% is a lot? Think about how much would cost a developer to have its own website on which to drive lots of traffic (thousands of prospects per day) which must be payed for (like ads, buy traffic etc.), the server(s) to sustain it, manpower to process sales, process refunds, provide customer support for their store, provide cloud services and so on (sure, some apps have their own backend but for the majority, the free iCloud Framework with its online services is a bliss) and many other things...
Sure, all these have different meanings depending on the revenue the developer has because all the services I've enumerated have fixed prices but for the developers that are making < 5000USD per month (which are the huge majority - me included) I think 30% is pretty OK.
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A hugely pedantic nitpick, but just for the record, the 30/70 split was NOT what got Apple in trouble in the book price-fixing case. In fact, before Apple came up with the 30/70 split, the general rule was that ebooks were sold by the distributor on a wholesale model, and the vendor that sold it paid somewhere around 40-50% of the listed price. This was why Amazon would take a book that cost $21.99 and sell it for $9.99--the cost to them of the book was $10.99, and they'd take a bath on the extra dollar just so they could say that new hardcovers were $9.99. Likewise, they'd have $7.99 mass markets that they would sell for $5.99--$4 of that would go to the publisher, and Amazon would keep $1.99.
Under Apple's pricing scheme, Apple would pay $5.59 for a $7.99 book.
If that was the entirety of the pricing scheme, NOTHING would ever have been wrong. Where Apple got in trouble was that it insisted that publishers adopt agency pricing--meaning that the publisher would be the one who set the price, and the vendors that sold it were merely agents of the publisher, and unable to set prices on their own. This was not illegal in and of itself, either.
It became illegal because the publishers actively colluded with each other to adopt the scheme. At that point, it became concerted action between competitors to fix prices.
Apple got roped in because (according to the DOJ) it acted as a facilitator/co-conspirator to the concerted action in question.
Appeals are still pending as to whether this theory will fly.
But short version: 30/70 split had nothing to do with it; the fixing of prices by publishers in a concerted manner had everything to do with it. As long as Apple doesn't go to media streams and tell them that they all need to work together to make this happen, and as long as they're fairly transparent about their negotiations, they shouldn't get into any further trouble.
Fingers crossed.
Under Apple's pricing scheme, Apple would pay $5.59 for a $7.99 book.
If that was the entirety of the pricing scheme, NOTHING would ever have been wrong. Where Apple got in trouble was that it insisted that publishers adopt agency pricing--meaning that the publisher would be the one who set the price, and the vendors that sold it were merely agents of the publisher, and unable to set prices on their own. This was not illegal in and of itself, either.
It became illegal because the publishers actively colluded with each other to adopt the scheme. At that point, it became concerted action between competitors to fix prices.
Apple got roped in because (according to the DOJ) it acted as a facilitator/co-conspirator to the concerted action in question.
Appeals are still pending as to whether this theory will fly.
But short version: 30/70 split had nothing to do with it; the fixing of prices by publishers in a concerted manner had everything to do with it. As long as Apple doesn't go to media streams and tell them that they all need to work together to make this happen, and as long as they're fairly transparent about their negotiations, they shouldn't get into any further trouble.
Fingers crossed.
Its not just processing payments since most apps are free. Bandwidth is not cheap. People have always bashed Apple for this since the start of the app store. When you have billions of app downloads and billions more app updates it tends to use A LOT of bandwidth and its not free. That 30% share from just paid apps and in app purchases covers more then just handling payment processing.
They can't afford it? Seriously? Have you checked Apple's bank balance anytime soon? They have $200 billion thus they can afford it.
I wonder if ApplePay is coming to OS X (and then maybe the web). There's no reason they couldn't have you authenticate with your AppleID password. Eventually, integrate touch ID hardware into future desktops and laptops. Imagine all the things that could be sold. The cut they take from that is far less than the IAP 30% cut, and ApplePay being available to other devs would mean they could do their own payment solutions for things outside of the App Store for well under 30%.
Glad you see it my way. Thanks.
When someone is sarsactic, they don't agree with you...... And it this case it was not subtle sarcasm
We also have some excellent judges on here! Just as clueless as our armchair lawyers but a lot more aggressive in telling people they are wrong !!! Judge jury and executioner....
If the devs benefit, I see this as a win. Apple is being generous here! Why the debate over secrecy?
Well, yeah but you were the first one to dish out moral judgement. I didn't berate others for them discussing the topic of the article, you did. You made this a moral debate, it is pretty hard to disagree with a moral accusation without making a moral judgement on the person making the accusation in the first place.Yeah and that's exactly what you're doing, berating me. Oh the irony.
Its not that they can't afford it, it costs billions of dollars each year to run the app store. Between multiple data centers, tens of thousands of servers, hundreds of gigabytes per second of bandwidth, and not to mention thousands of FREE apps that are north of 100 MB in size that get millions of downloads and when they push an update tens of millions of update downloads in a single day. The cost adds up really fast.
The $99 bucks a year most developers pay Apple for access to the store doesn't even come close to the cost of bandwidth there apps use in just users downloading them.
If you truly think the 30% Apple collects is only for their payment handling services......
LOL, if it was "highway robbery" the developers wouldn't agree to it and wouldn't put their apps on the App Store. And there goes your argument.
Developers have little choice, since Apple has ensured that theirs is the only official store from which apps can be purchased.
If Apple allowed more than one app store, then we'd see competition based on royalties, versus actual service and how much each app store advertises.
Another common mis-argument is that developers "owe" Apple. That's a two way street. Apple owes many / most of their smartphone sales to the fact that developers have created apps. Without third party developers, the iPhone would be just a feature phone. So one could argue that Apple should share their own profits with developers, instead of the other way around
I remember how long it took for the Slingbox app to show up for iOS and it's hard to blame them. Sling had its own years-old app purchase download site, which any Slingbox buyer knew about. They had no reason to want to give Apple 30% for hosting a service they already had.
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They can also give away free iPhones to all their customers, guess they should
I think if the change is real it is more to bring in more content, so we have more streaming services like HBO, Showtime, etc. Apple might be able to get more of them onboard with lower fees.
Actually, everyone has a choice.
Apple created an ecosystem and said "come if you wish". Developers heard the call and they came.
Nobody forced them or am I wrong?
Developers owe Apple the ecosystem composed of devices, software, api's and so on while Apple owes the developers what? The fact they (we've) made apps for Apple devices? Are you serious?
Nobody owes nobody nothing. It's just business.
Let's face it, if Apple's App Store fails like Windows Store, everyone will jump ship, without any second-thoughts.
It's all about the MONEY! No loyalty or anything else! The most profitable app store is still Apple's so that's where most mobile developers go to make money first.
It's not just "basically handling payment process", it's also for distributing the application file and, if your app is good, promotion.
Developers have little choice, since Apple has ensured that theirs is the only official store from which apps can be purchased.
If Apple allowed more than one app store, then we'd see competition based on royalties, versus actual service and how much each app store advertises.
Another common mis-argument is that developers "owe" Apple. That's a two way street. Apple owes many / most of their smartphone sales to the fact that developers have created apps. Without third party developers, the iPhone would be just a feature phone. So one could argue that Apple should share their own profits with developers, instead of the other way around
I remember how long it took for the Slingbox app to show up for iOS and it's hard to blame them. Sling had its own years-old app purchase download site, which any Slingbox buyer knew about. They had no reason to want to give Apple 30% for hosting a service they already had.
I never said once that developers "OWE" Apple, but they should be thankful that there's an easier avenue for them to make money such as the App Store. Be real about it, most developer's apps would never get noticed if they had to advertise from their website or even through ads infused on other company's websites.
Don't kid yourself, the iPhone didn't become such an early success because of tons of developers. The original iPhone itself was quite revolutionary in it's own right. I'm not discounting developers because of course their products expand the usefulness of the iPhone. You're making it sound like Apple's products are the only hardware the developers apps are put on, which of course isn't true, so they DO have a choice.
In fact there's Android and Windows Phone so don't give me that about them having "little choice". They could code for Android only and still make money. Is Google not taking a cut in the developer's revenue? How about Microsoft? Does Microsoft not take a cut?
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You don't quite get what competition means. Sure, developers can make apps for android and windows, but those would be separate apps in separate OSs. Within iOS, all you have is the appstore so no, there is no competition. Because of this, Apple can charge whatever they want and the price Apple charges for subscriptions is highway robbery. And don't give me the BS about Apple deserving 30% for hosting apps that are less than 50 MB (I as a consumer can get 100GB for less than $10), and doing POS which banks do for 2-3%, and advertising which Apple doesn't even do. People find new apps from user recommendations and ratings.
I could see Apple starting every developer off at 30/70. After the first 25,000 purchases, 25/75. After 250,000 purchases and/or subscriptions 20/80. 2.5 mil and over is 15/85. And since Apple is taking on responsibility for collecting payment, chargebacks, etc, it only makes sense that they get their share too.
Or they could offer tiers for developers (Personal, Personal Pro, Business Basic, Business Pro, Media Basic, Media Pro). And you pay a lower fee for low volume or higher fee for high volume and it gets you the 15/85 up front.
Or they could offer tiers for developers (Personal, Personal Pro, Business Basic, Business Pro, Media Basic, Media Pro). And you pay a lower fee for low volume or higher fee for high volume and it gets you the 15/85 up front.