I actually think Apple are the ‘best’ when it comes to ‘anti-patterns’. What you are getting and how much it costs are made very clear, and if you sign up to a subscription it is very easy to manage and cancel directly from the subscriptions section in your iCloud account. That sort of thing is likely to go away when you shop in a 3rd party store.
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Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers
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The App Store does make it easy to subscribe and cancel which I love, but only for Apps that are using the IAP system. I can’t sign up or cancel my Netflix from the App, which is frustrating.
There are only a few games that I play on iOS or iPadOS because most of them are filled with garbage (Stellaris on mac is fantastic, not so much on iOS, SimCity on iPad has annoying pay to complete anti-patterns).
Apple should clean up this mess.
I think you’re probably right, that the Apple App Store will be the best when it comes to refunds and cancellation. I think Epic and Fortnight are going to get worse for consumers outside of the App Store. That doesn’t mean the App Store isn’t just the best among a series of bad options which is kind of damning with faint praise.
Apple cleaning up that mess would be giving them even more power than they currently have. The direction is to take power away from Apple and hand it to developers.
I think it would be Apple exercising power it already has, it already has the power to dictate against anti-patterns but I think they should use it to do so.
I would rather governments put in place some better digital consumer protection laws to prevent these kinds of antipatterns from being legal. In the absence of government action I would like Apple to do so.
Governments already prevent companies from engaging in some predatory practices I just think the list of predatory practices should be expanded.
Absolutely, but the direction here is to remove a layer of projection that consumers have as a means to benefit app developers.
Yeah, I think that this is going to lead to more scummy practices not fewer mostly to the benefit of companies like Epic.
I actually think consumer rights legislation should have come before any loosening of restrictions on the App Store. Loosening restrictions would also have required an EU funded body to which individuals could appeal if they believed an app was violating said consumer rights.
I know that throughout this thread I seemed to come down as though I was in favour of the DMA but mostly my argument is that the steps Apple took this week aren‘t actually complying with the DMA.
Not sure what you are getting at here. I'm not Apple. I certainly think Apple should continue to improve in many of these areas.
As far as your specific list... Some of those are consumer benefits. Some are neutral. The last one is just wrong. (Removing the reader exemption would not have the effect you are claiming.)
Getting a government to force a company to implement features that you want is wrong to me. But at least you are being honest about what you want here.
How? I work with several small developers. The DMA has no significant benefit for any of them. The potential downsides are worrying. Specifically around piracy and the fragmentation of the customer base.
Weird. I don't think I ever said that I think Apple is complying with the DMA in our conversations. Are you confusing me with someone else?
Again, that's my point about the DMA. It has a poor understanding of the benefits of existing market. To be clear, I'm not against regulation in the mobile market. I just think that many clauses in the DMA are bad regulation.
This is what the EU gets for attacking the lightening port and forcing side loading. This is the price you pay for telling an American company what to do. %$!& the EU! Victoria Nuland Knew it days ago.
What's the big deal. You make $9M/yr on $10M/yr of sales. Wouldn't there be an Apple fee of 30% under the old system?
App developers in the European Union who choose to opt in to Apple's new business terms must pay an €0.50 "Core Technology Fee" or CTF for every app install over one million installs, a model that has the potential to bankrupt free or freemium app developers.
Apple does not charge for the first one million "first annual installs" per iOS account each year, but after that, developers will begin racking up charges. A free or freemium app that goes "viral" and is downloaded more than one million times could be forced to pay astronomical fees, as demonstrated in estimates shared by developer Steve Troughton-Smith.
Under Apple's new business terms, a free or freemium app that gets two million annual "first installs" would need to pay an estimated $45,290 in fees per month according to Apple's fee calculator, or more than half a million dollars per year, even if no money is earned.
That's an unsustainable model for free apps, and freemium apps would need to be earning at least €0.50 per user to break even with the fee. A freemium app with thousands of installs from non-paying users could end up owing far more than is made. Developers will likely need to charge up front to ensure their apps make enough money to pay the CTF, as offering a free-to-download app could be risky if downloads exceed 1 million.
Free and freemium app developers can, however, choose to stick with Apple's current App Store business terms instead of opting for the new terms. In that situation, nothing would change, and app developers would continue to pay a 15 to 30 percent commission to Apple.
The €0.50 CTF applies to apps distributed both through the App Store and through alternative app stores if developers choose the new business terms. With the App Store, developers are charged the €0.50 fee and must pay a 10 to 17 percent commission to Apple. With an alternative app store, there is no commission. Fees can be estimated for the existing terms and the new terms through a dedicated calculator that Apple has provided to developers.
Here's a breakdown of the available options:
According to Apple, the CTF is applied for the first annual install, which is the first time an app is installed by an account in the EU in a 12-month period. After the first annual install, the app can be installed any number of times by the same account for the next 12 months with no charge.
- Current App Store Agreement - Developers pay Apple a 15 to 30 percent commission. Under one million in revenue is a 15 percent commission through the App Store Small Business Program, over $1 million results in a 30 percent commission. Subscriptions require a 30 percent commission for the first year, and a 15 percent commission for the second year and beyond.
- New terms, App Store distribution - Commission drops to 17 percent from 30 percent, and 10 percent from 15 percent. There is an additional fee of 3 percent for using Apple's payment system, so the commission would be between 13 and 20 percent for a developer that opts for the new rules and uses in-app purchases. The 3 percent fee does not apply for developers who use alternative payment systems. Developers must also pay €0.50 per app install per user each year after 1 million app installs.
- New terms, alternative app store distribution - No commission, but developers must pay €0.50 per app install per user annually after 1 million app installs.
Apple is waiving the fee for nonprofit organizations, accredited educational institutions, and government entities that are approved for a fee waiver.
Apple's Core Technology Fee could also be prohibitively expensive for apps like Spotify that have millions of users. An app that makes $10 million in sales through the App Store with 10 million "first installs" (aka, a 0.99 price) will need to pay Apple over $500k per month.
The EU app ecosystem changes are included in iOS 17.4, and developers who opt for Apple's new system will need to start paying fees starting in March when the update launches to the public.
Article Link: Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers
A) Your cut is not $9M/yr. As the tweet points out, the fee is $6.2M on $10M. After taxes your cut is $2M.
B) It’s an ongoing fee. So you continue to pay $500,000/month. Even if you have no new sales. If you have less than $6.2M in your second year, you are losing money. And that $2M you took home in the first year is gone by April of the second year.
Under the new system, Apple is trying to charge developers 50¢ per install. This means that they validate the app once, and then charge per install, which is essentially a subscription fee for developers.
It also forces developers to charge at least 50¢/year/app, or potentially go bankrupt.
If I released a free app under these terms - as I understand it, even if it's in the app store - and it goes viral, I would need to declare bankruptcy.
It's just
The new system is untenable and goes against everything the EU intended- it also won't last. It's just Apple thrashing about and lashing out, until the EU smacks them on the bottom again.
The poster said he would have to pay $1M/yr and he expects to make $10M/yr.
From the original article:
"Apple's Core Technology Fee could also be prohibitively expensive for apps like Spotify that have millions of users. An app that makes $10 million in sales through the App Store with 10 million "first installs" (aka, a 0.99 price) will need to pay Apple over $500k per month."
That doesn't sound correct.
Is that $10 million in sales per month or per year?
This would only apply to the initial download, Per Year. Unlimited in the year for the initial download (past the first 1 million)
"The fee aims to meet the needs of both users and developers. Since a first annual install is only counted once per account, developers can deliver unlimited feature updates, bug fixes, and security patches to users for 12 months with no additional fee, regardless of how many devices the user has. And when users upgrade or replace their devices, developers aren’t charged when users reinstall their apps through an iCloud transfer. "
How the fee works
The Core Technology Fee is based on the number of first annual installs for an app in a 12-month period.- First annual install. This is the first time an app is installed by an account in the EU in a 12-month period. After each first annual install, the app may be installed any number of times by the same account for the next 12 months with no additional charge. A first annual install may result from an app’s first-time install, a reinstall, or an update from any iOS app distribution option — including the App Store, an alternative app marketplace, TestFlight, an App Clip, volume purchases through Apple Business Manager and Apple School Manager, and/or a custom app.
- One million free first annual installs. Membership in the Apple Developer Program includes one million first annual installs per year for free for apps distributed from the App Store and/or alternative marketplaces.
- Fee for each first annual install over one million. Developers will pay a Core Technology Fee of €0.50 for each first annual install over one million in the past 12 months.
If you are charging for your app. It would appear the recommendation would be to add .50 euros to the price.
If you have a subscription service like Spotify. Then it's .50 for the install. While the end user pays Spotify their monthly fee of 11 euro. Spotify would owe Apple .50 euro once. So say the price for a yearly is $132. Spotify would make 131.50.
Except this fee applies every year and seems to include updates in the following year.
If an App is 0.99 up front and sells 10 million copies in the first year but then tapers off and only averages about 10,000 copies sold per year after that (not unreasonable considering the boom and bust of apps). The app owes 4.5 million in the first year and could potentially owe that again every year! That is completely unsustainable. The app is no longer making enough money to cover just the CTF!
The CTF means that an app with an up front price means that the price has to be high enough per user to cover 100% of that users lifetime installs of the app. The CTF needs tweaking, a per license fee is more sensible since each user who adds the app to their account is going to trigger the license fee.
That is why this pricing is potentially broken. You essentially can’t have a free tier because instead of having a free tier having marginal additional cost to the developer it now has a potentially infinite cost.
You can’t fix the problems with the CTF by just adding 0.5 to the price of your app because that only covers the first install, it doesn’t cover subsequent years…
Yeah, the article throws a curve with the phrase "apps like Spotify that have millions of users", because as you point out, Spotify has a monthly fee. Spotify was a bad example, but a regular $0.99 app that hit it big would have the problem as noted with no continuing income.
Of course, a developer could choose not to use the CFT model... which is probably why Apple made it like this in the first place.
We unfortunately live in a very misleading world when it comes to information.
I very much get the developer of a small app that is very worried it will cost half their income to make an App on the alt-store. Very possible that charging an extra .50 (for some) is not going to yield a good enough return since they will lose customers over it. But, at the same time I feel (which isn't important I know), that if you added .50 euros to the price. It should not matter much. Provided you're able to offer more than what you could via the AppStore. To entice customers to pay the extra fee. Or you are saving more in other ways to off-set the cost and maybe eat the .50 euro download fee. Every case will be different.
If your app was completely free, and you made money via Ads. That will be a hit to your income. If that isn't something you can deal with. Stay on the AppStore. If your Spotify or Netflix, it WILL make sense to go to an alt store. Since .50 is nothing in the grand scheme of things. People are only downloading your app because they already have a sub to it. Fortnite (EPIC) it will still make sense to move to an Alt-Store (Or own/run one). They will complain about the .50 since it still eats into their IAP. They "should" stop complaining about it since it is only .50 and they already charge like a minimum of what $5. So, it's no more than a 10% hit at the low end. And less as a user pays more for vBUCKS. Make the cost $5.50 (in euro equivalent). I'm sure people will still spend without much fuss. At least you can inform them that it's cheaper online (direct).
Again, you ignore the fact that this isn’t a one time fee per user. It costs you 0.50 euro per user per year, not just once!
Enticing developers to stay on the App Store is likely why the CTF will fall. The CTF might have been okay if they had applied it to apps in the App Store under the exclusive App Store terms but because it has such widly different economics for Apps subject to the CTF vs those not subject it is a clear steering measure that puts undue burden on App Developers who want to distribute through alternative stores.
You keep trying to make it out like this is a one time fee of 0.50 which it is not.
"Since a first annual install is only counted once per account, developers can deliver unlimited feature updates, bug fixes, and security patches to users for 12 months with no additional fee, regardless of how many devices the user has. And when users upgrade or replace their devices, developers aren’t charged when users reinstall their apps through an iCloud transfer. "
-From the looks of that, it would seem that you pay .50 euros "once" for the year. Which includes updates/fixes/etc. Across all user devices. The second year, the developer would pay "once" for that same user another .50 euros.-
Yes. A "fix" for this is to charge the end user another .99 euros "yearly". Or charge something per year (over .50 euros). I don't think it's that bad if the app is that good. If your app is Ad driven, then this model may not work for you. Unless your making enough from the Ad's to justify it. But, moving to a "price for the app, and yearly". May make more sense. Or stay on the AppStore. The AppStore may charge less for those types of apps. And only that for any install. That may work out less expensive for you.
Or charge it annually. Even just .50 to cover the CTF. OR, and this is what I think is a better suggestion. Charge a subscription for the Alt-Store. Use it to subsidize the "free" apps and off-set any costs (.50 euro CTF). 5 euros a year or something.
While this helps to keep the Boom and bust cycles more manageable. The fact that the "app" gets updates for the existing users, doesn't induce the "fee". They still exist and are being serviced by getting updates etc.
The CTF seems to be preferring everything be a perpetual subscription. It makes the most sense to making the .50 euro almost irrelevant. It would do exactly what you're asking to "save" during the bust times, and MORE than cover any BOOM times. Anytime the sub was dropped by the end user. The "bust" times don't force a high CTF for existing installs. Since they go away (they stopped subscribing). While more than covering the BOOM when everyone signs up and downloads millions and millions of apps. 5 euros or more annually would work, and they can offer discounts more easily. Promote "free" apps, etc. That amount alone would cover 10 app installs.
I'm not going to say it should be 5 euros. Just that it should be something. Or, .50+ any app yearly.
I hear you. But. And the Big But here is that a free App on the AppStore was not free to Apple. They made it possible because it was subsidized by pay for apps/IAP/subscriptions etc of other apps. Now moving off the AppStore to any potential 3rd party store. They will want to charge "potentially" less to the developer than Apple does (70/30). But, those free apps are still going to cost it "something" to allow it to be free. So either they (3rd Party store) absorb that cost and the benefits Apple still provides via their licensable IP (CTF). OR, charge .50 for Apps and have an over all cheaper model than Apple's. If they charge an extra .50 euros on a pay for app. Then the cost is mute. If they move to a sub for the alt-store. Then the cost is mute. Apple (it seems) still gets to collect a fee for their work. .50 can be a lot if your business model doesn't support the cost (as you mention above). So the alternative is to work with a 3rd party store that can cover it via other means (they have a sub for the store). Or you charge annually the .50 euro (or more) to deal with that 2, 3, and forever year in the future.
So it has to be a sub or you charge each year for an updated version. Or work with a 3rd party store that has a sub that can either lower your cost or maybe even eliminate it.
Or, of course. Don't leave the AppStore.
So your solution is to just have all apps become Subscriptions? That is no solution at all! A small utility app that wants to just sell for 0.99 is no longer viable at all… I don’t want all my Apps to become subscriptions.
Again, why should everything be a subscription? This is worse for users, Yay Apple, innovation by en********ation?
You can’t merge the CTF and the costs for Apple to run the store, for a start, even Apple isn’t claiming the CTF covers the cost of the App Store, second, the CTF applies to Apps outside of the App Store.
If Apple needs a budget to run the App Store they should actually create a universal fee For all apps. The App Store fee could easily be a per install per year fee because that actually does correlate with Apple’s cost.
The CTF license for IP would be reasonable if it was per user of the app, rather thanper user per year.
The “Don’t leave the App Store” incentive is almost certainly going to get Apple in trouble.
I get it. I miss the days of "buying" a game or app and being done with it. Updates forever for free.
But, those days are over. Everyone does a subscription. Even for stupid stuff. I had a sub for a desktop app that lets me span my image across 3 displays properly. I just wanted it because it did the job right and worked. But, after the second year I stopped purchasing it. I didn't need it as much as I "wanted" it. So I stopped. I'm just suggesting it as a solution. For .50 euro's (per year) I don't even think many will complain about it if charged. Now when it starts to add up to say 10 euros or something a year (collectively across 20 apps they own). Then maybe people might complain and start to cut back.
Subs started before Apple had anything to do with it. Remember they didn't exactly want to go that route for Music streaming. Spotify and others lead the way on that. They eventually followed with their own and other things under a sub model. This is the way.
Yes it applies outside the AppStore. As they are able to collect a fee (of some kind) on anything using their IP on the platform. Everyone complained the 70/30 split was unfair. Well, this is "A" solution to allow those that want off the AppStore and on to another store to do so, while Apple gets to collect a fee of some kind for their tech.
They are going to collect it some kind of way. Either on their store via 70/30 (or whatever it is now split). Or off the store (3rd party) via the CTF.
You then ruin it for the free apps.
Which is what the CTF does, but breaks those that "Bust" in year 2. While having to cover year 1 perpetually with no new income.
Well it's per user even with multiple devices per app per year.
What I think you want is that the first download per year cost .50 euro. Subsequent years that original download (so long as it doesn't change) should maybe cost less than the .50. Maybe it goes down to .05 or something over the years. So year 2 doesn't "hurt" when less people buy it and you still support the 1 year downloaders,. But, I think Apple will say that diminishes "their" value for keeping everything else going to enable that functionality.
Which is why I suggested a subscription. Wouldn't' have to be expensive.
I hate Ads, and would prefer to pay a little to avoid them If your app is only .99 euro. Then I'd personally be OK with paying that every year to keep it going. It's not a big cost. Yes, it will add up across MANY apps. However, I don't have that many apps to worry about. Everyone will be different on that, and we can get creative like. The develop lets the end user know "Hey, you haven't used me in awhile. If you don't want to, please delete. It saves us money!". Or "Hey you use this alot. Next year it will be another .99 euros to keep me. Please do! It helps us improve and make more apps like it!". Just a suggestion.
I'm pretty convinced it already has in the EU. And while I still completely disagree with the EU and these rules. I'm equally impressed by Apple's solution to it. I don't want them to go any further with Web downloads (which is a thing apparently). The "Store" route is my preferred method. The EU will figure it out. And so will Apple. I would rather they put their creative minds into building apps and products. Rather than how to out smart the government. But, here we are.
I have a few subscriptions but prefer to buy apps outright and then pay to upgrade to new versions when I need to. As I have said elsewhere, Apple makes the most money by encouraging subscriptions, that is good for Apple, not its users. We should not defend or applaud Apple for doing things that make things worse for the users just because they feel they need to chase subscription revenue to help their bottom line. The shift to services is, I think, what ends up hurting Apple more than anything, if regulators decide that no, Apple is not entitled to a share of every transaction on their platform then Apple is going to lose out on more money than they gained from trying to squeeze every penny out of their users.
I know Subs started before Apple, but that doesn't mean that Apple should be actively encouraging more developers to use them. Apple has a lot of power and I don't like that people think they should be defended for using that power to steer things into less than ideal directions.
I have said, repeatedly, that they should charge some version of the CTF. My issue is not that the CTF exists, but that it is a per-user-per-year fee. If it was a per-user fee it would be much more palatable as it would be a much fairer reflection of how a developer benefits from access to Apple's technology.
If they can exempt the first million downloads from the CTF they can also exempt truly free apps from any App Store fees. (By truly free I mean, no ads, no tie-in hardware, no subscription, no monetization of any kind).
It only does this by forcing everything to be a subscription, which is, as I can't seem to explain enough different ways, bad for users (and I'll add developers too this time since it forces developers to adopt a subscription model even if they don't want to).
What I want, is a one time 0.50 charge per user. That means that as the app grows and gains new users they pay more to Apple, but if the App has stagnant growth or doesn't grow they shouldn't need to keep paying Apple. This is exactly why the whole Unity developer license fiasco exploded. Many apps are still sold once to a user and then they get some free updates but don't earn new revenue unless they buy an upgrade to a new version. Trying to force all apps into the subscription model is bad for users.
These are making the app less useful for users and forcing developers to change their monetization to appease Apple's greed again.
Apple's continued attempt to try and squeeze every possible penny from users and developers is not a good thing. I think there were better solutions than what the DMA brought to us but Apple's continued insistence on doing the absolute worst thing for compliance is (I suspect) going to land them with another big fine.
Going to have a hard time fighting almost every company that is already and will continue to push subscriptions for everything they make.
When we used to have purchases that you owned till the next version,. A subscription solved that issue of having to "buy" it again for the new version. And provided continuous income for the developer/publisher/etc. It makes sense for somethings. And maybe not so much other for others.
However, these developers that want to sell (makes no sense to use the word sell) "free" stuff on any store. Well, it's not really free is it. They had to commit time and effort into it. And most likely some kind of money to get it going. Then some place had to host it, and provide a means in which to get it to you. This all costs something.
If Apple is entitled to collect a fee of some kind. We have to go back to what would make it fair (fairest) for everyone.
I think the rules they came up with work well enough. 1 million downloads are completely free. So small developers can try something. They can give it away. So, hype it up some. Let people know about your soon to be free app and it's free for the first 1 million that sign up to get it. Ok. Then you cap it at one million and let them know after that 1 million. It's 1 euro. You can decide to take them up on it or not. When you hear about how good it is. Maybe you pay for it maybe you don't. But at least the developer doesn't succumb to the "fee". And when they do, it's not costing them anything.
I also think that it make sense for a Microsoft or Amazon to make a store on the iPhone. Because they already offer subscriptions. So many that sign up will already be paying M$ or Amazon. They can either slightly increase their fee to cover the appstore's they make. So stuff stays free and prices are relatively low. Or they can do an add on for those that want it. Either way, it's an option that could work. EPIC can do this too.
I don't think any option will appease you or many others. But, at some point we will all have to accept whatever these rules end up being. I don't expect the EU to prevent Apple from making money on alt-stores or means in which to go around the AppStore. They will balk at the prices of course but, if they allow them to make money. Then it's going to come some kind of way. This looks like the least path of resistance. Charge a sub for the alt-store, it covers the free/low cost apps. The other apps just add .50 euros to the price and go to subscriptions. It doesn't have to be expensive on the subs since you just need to cover the cost of the CTF. Heck, they can bundle all that with a phone plan of some kind. T-mobile is really good at that.
