Apple Shares Praise From Developers Happy With 15% App Store Fee Cut

[Unregistered 4U]

And if the Hey email app does ever get banned (again), then it’s really because its creator, DHH, has an overinflated opinion of his own importance and has gone one step too far in stirring the hornet’s nest.

I know, right? I still don’t get $99 a year for EMAIL. 🙂 But, HEY, some folks do. LOL

 

[gnasher729]

In my opinion prices won't get any cheaper though. They will take the extra profit.

That's the idea, and that's exactly what they should do. Apple wants small developers to have more money in their pocket, not reduce prices for apps from small developers. Reducing app prices makes no sense whatsoever.

 

[gnasher729]

Tim Cook was lying to Congress when he told Representative Henry Johnson, "We treat every developer the same." This is clearly not the case when developers are paying different commission rates.

And this is nonsense. There is one contract that everyone needs to accept to get on the App Store. One and the same contract for everyone. It doesn't matter if this contract leads to different people paying different amounts of money.

Before this change, a developer making $100,000 paid $30,000, and a developer making $10,000,000 paid $3,000,000. One developer paid 100 times more. I guess Apple never treated all developers the same according to your strange way of thinking.

 

[gnasher729]

There is a very good case to be made that Apple is acting in an anticompetitive way by not allowing third party app stores on their platform and probably fear that big tech regulation could force them to open up IOS to third party App stores so this is them trying to to show that they are reasonable and not anticompetitive by offering a lower rate.

There's no good case whatsoever. There's one big ex-developer, owned by a $750 billion Chinese conglomerate, that started a big stink, and came up accusing Apple of all kinds of things, and some people swallow it. So the cost of this may be carried by Apple's marketing department, but there is no legal reason to make that change.

 

[gnasher729]

How is revenue calculated? if the app has a subscription or is it merchant apps that provide service like Uber?

If they gross over $1 million, they pay 30% to apple? that’s nuts!

It's 30% on in-app purchases. Apple doesn't allow you to use in-app purchases for non-digital services like Uber, so Uber pays nothing. I wonder if you actually didn't know that, or if you just posted to have an argument.

 

[gnasher729]

this is a very curious move- when Apple was asked in open court they say the 30% fee was a) necessary to run the store and b) the fee is what everyone else is changing - now Apple seems ok going down to 15% - I am sure Epic its going back to court and say why I am not getting that fee? what work is Apple is doing differently that cost more to them?

Epic doesn't get that fee because (1) they were in breach of their contract and have been removed from the App Store; no revenue, no payment. And (2) because they made more than $1,000,000 a year in revenue.

 

[Abazigal]

I know, right? I still don’t get $99 a year for EMAIL. 🙂 But, HEY, some folks do. LOL

I have no issues with it. From all accounts, the service can be pretty useful for those who make heavy use out of their email. It’s creator however, is another matter.

DHH is known for his Twitter tirades against Apple. In my opinion, he knows how to play Twitter really well when it comes to spreading outrage and getting people on his side.

And the gist of his outbursts essentially boil down to him not wanting to pay Apple a single cent. He feels he is entitled to every last cent of his profits, and basically wants access to customers within the Apple ecosystem (and the benefit that come with it), without paying Apple anything.

And he would gladly burn the App Store to the ground to get his way, and frame his actions as looking out for the smaller developers who ironically are the ones who benefit the most from the current closed nature of the iOS App Store and stand to lose the most if companies like Epic and him get their way.

If developers like him end up getting banned, I won’t shed a tear, regrettable as it may be for the users who genuinely benefit from his email app. He is not the David to Apple’s Goliath the media is portraying him to be.

 

[Drumpf]

Curious now what the justification will be to keep the 30% for larger companies? I thought the argument was that it was necessary to cover the costs of hosting/distributing/curating the app store content. How is that suddenly cheaper for smaller developers only?

It may seem like a smart move by Apple but I can see it backfire spectacularly with regulators.

Not really. Apply only loses about ~2-3% in revenue from making this decision. The lions share comes from much larger corporations and thus easily justifiable to keep the lights on.

 

[threesixty360]

Curious now what the justification will be to keep the 30% for larger companies? I thought the argument was that it was necessary to cover the costs of hosting/distributing/curating the app store content. How is that suddenly cheaper for smaller developers only?

It may seem like a smart move by Apple but I can see it backfire spectacularly with regulators.

I think the App Store has always worked on the notion that the larger earners subsidise the whole thing. Free apps still cost the same as paid apps to host yet apple charge nothing for free apps. So there was always a subsidy model in place. This just increases the amount that paid apps subsidise free or low earning apps.

Free or low earning apps are over 90% of the App Store. High earners are in the same position as before really. If anything Apple will say they are paying more personally for the low earners to be on the store. Not sure what the larger companies have to complain about here?

 

[Abazigal]

Curious now what the justification will be to keep the 30% for larger companies? I thought the argument was that it was necessary to cover the costs of hosting/distributing/curating the app store content. How is that suddenly cheaper for smaller developers only?

It may seem like a smart move by Apple but I can see it backfire spectacularly with regulators.

That’s why Apple is positioning this as relief for smaller developers who have been impacted by the pandemic. Larger companies who are earning millions of dollars and have no problems making ends meet don’t need the subsidy, and they just come across as looking greedy if they start demanding the same treatment as well.

This also gives Apple the flexibility of ending the 15% rate at any time when it feels the financial impact of the pandemic has passed and is no longer a concern.

This allows Apple to get good press because the change impacts the majority of app developers while having only a negligible impact on their earnings. Meanwhile, Apple is able to continue collecting 30% from the companies it does care about - those earning more money (and a lot of it).

 

[jlc1978]

Curious now what the justification will be to keep the 30% for larger companies? I thought the argument was that it was necessary to cover the costs of hosting/distributing/curating the app store content. How is that suddenly cheaper for smaller developers only?

they really shouldn't have to, companies give small companies a break to help them get a chance to get bigger and for PR reasons; Apple's no different. Nothing says everyone must pay the same.

It may seem like a smart move by Apple but I can see it backfire spectacularly with regulators.

The problem with regulation is the collateral damage; they should let the market decide if Apple's cut is acceptable to a company. Otherwise, all the are doing is picking winners and losers.

 

[jlc1978]

The real irony to me is that the reason that the large companies are so pissed is that they don't need all of the support Apple gives because they have such deep pockets (they could build their own dev tools, pay for marketing campaigns, build distribution channels, etc.). Small devs are the ones getting the most out of their 30%, but now they don't have to shoulder so much weight! The app store's promotion of innovation continues!

Except that's not what they want' they want all Apple has to offer but pay less for it.

 

[jlc1978]

Thanks to Epic that the developers will be able to keep more...they are the creatives, not Apple.

True, but as someone once told me years ago, "No matter how creative you are, unless there is someone who can sell your idea it will never take off..."

Both sides need each other, neither's contribution is intrinsically worth more.

 

[I7guy]

Curious now what the justification will be to keep the 30% for larger companies? I thought the argument was that it was necessary to cover the costs of hosting/distributing/curating the app store content. How is that suddenly cheaper for smaller developers only?

It may seem like a smart move by Apple but I can see it backfire spectacularly with regulators.

The whole cost of expenses thing is a red herring, imo. 30% is a value added commission that stems back years in the software distribution industry. (And yes it does cost apple $$$ for the infrastructure and operations of the App Store)

 

[I7guy]

The real irony to me is that the reason that the large companies are so pissed is that they don't need all of the support Apple gives because they have such deep pockets (they could build their own dev tools, pay for marketing campaigns, build distribution channels, etc.). Small devs are the ones getting the most out of their 30%, but now they don't have to shoulder so much weight! The app store's promotion of innovation continues!

Seems to me some of these large developers feel they are entitled to a discount so their final commission is $0. They want access to apples customers, without paying Apple a dime for their (apples) hard work.

There is no menu of support items one checks off and based on what’s checked off determines the final commission. That could turn out to be a mess in and of itself.

 

[I7guy]

Wall Street estimates are it will cost Apple around $500M a year in foregone profits. Small devs are around 5-10% of revenues, which is $2.5B to $5B a year in total revenues, so 15% is somewhere in the mid $300M up to $700M range. It's not huge for Apple but definitely impacts their earnings per share.

So us developers should not just thank Time Cook, but Apple shareholders as well.

Could be offset by incentivized additional independent developers.

 

[teak421]

That sounds like they are using their monopoly on developer tools to manipulate the retail market for digital games.

No. It sounds like a good deal. There is Unity3d... Godot...Lumberyard...CryEngine, etc. Now, your logic would hold true if Unreal Engine was the only one, but... It's not.

 

[teak421]

True, but as someone once told me years ago, "No matter how creative you are, unless there is someone who can sell your idea it will never take off..."

Both sides need each other, neither's contribution is intrinsically worth more.

Nothing has changed... Apple is selling the creatives' work, just for a more reasonable price...thanks to Epic.

 

[4jasontv]

No. It sounds like a good deal. There is Unity3d... Godot...Lumberyard...CryEngine, etc. Now, your logic would hold true if Unreal Engine was the only one, but... It's not.

Sounds like a terrible deal. Once a developer decides to use unreal it would be financially devastating to try and remove it. Also, Epic is the only place you can get the Unreal Engine. Their pricing scheme controls the second hand market ensuring anyone who wants to use Unreal had to pay Epic.

 

[Mike MA]

Anyone one else feel like Apple did this just to rub it in Epic's face?

Even if this is the case, a vast majority is now better off than before. So, a good thing resulted out of this controversy.

 

[progx]

Epic would need to raise their rate if they were to match Apple's 15 percent rate. Epic only charges 12 percent.

From their FAQ:

Publish Apps, Games and Software on the Epic Games Store.

Learn how to publish apps, games and software on the Epic Games Store to access over 100M players on PC and Mac.

www.epicgames.com

What’s the catch? Is this 88% revenue share a special introductory rate?

There is no catch; the 88% share to the developer is the permanent rate. Epic’s 12% share covers the operating costs of the store and makes us a profit.

I found it on their site after I read your post. I had read an article when all this nonsense was going on saying Epic had the same model as Valve.

While it's nice, I can see Epic doing an about face if they managed to make a dent in the vast user bases Steam and GOG have built in the past decade.

 

[Unregistered 4U]

Sounds like a terrible deal. Once a developer decides to use unreal it would be financially devastating to try and remove it. Also, Epic is the only place you can get the Unreal Engine. Their pricing scheme controls the second hand market ensuring anyone who wants to use Unreal had to pay Epic.

Financially devastating sure, but it’s ALSO financially devastating to have your access to the engine you depend on removed because the CEO decides to pick a fight with one of your vendors. And anyone can tell you right now that having access to Apple’s customers and hardware is FAR more valuable than having access to Unreal, so the financial math is easy.

 

[McG2k1]

I hope these companies DONT forward the savings on to the customer and instead put that back into shoring up their businesses and employees.

 

[teak421]

Sounds like a terrible deal. Once a developer decides to use unreal it would be financially devastating to try and remove it. Also, Epic is the only place you can get the Unreal Engine. Their pricing scheme controls the second hand market ensuring anyone who wants to use Unreal had to pay Epic.

That's for ANY engine. You spend years learning it...developing for it, etc. You just don't move to another engine unless you are willing to spend a ton of cash and time.

If someone develops on Unity3d, you must also pay...There, you pay a monthly fee (or yearly)...you also have to pay for their multiplayer API's, whereas, Epic provides them to developers for free.

Making an engine choice is a big one...not something where you just one day use Unreal and then switch to Unity3d.

 

[teak421]

Financially devastating sure, but it’s ALSO financially devastating to have your access to the engine you depend on removed because the CEO decides to pick a fight with one of your vendors. And anyone can tell you right now that having access to Apple’s customers and hardware is FAR more valuable than having access to Unreal, so the financial math is easy.

Unreal Engine is available for all sorts of platforms, one being Apple. So, if you are an Unreal Engine user who develops games for the largest market (Windows), then who cares about Apple's customers and hardware?