So what's the price? What's fair? Who gets to determine fair for Apple and fair for the developer?C'mon... try and keep up with this entire situation. I haven't seen any companies stating they want 100% of the profit and not have to pay Apple anything. I haven't said it and I haven't seen any other companies state that. What they want are alternatives so it forces Apple to set more competitive commission rates and marketing controls which they currently have a monopoly over. And the "Devs can just charge more" is a TERRIBLE argument. Higher prices almost always reduce conversion (especially lower priced consumer products like game-related products) and the reduced conversions produces less revenue. That's like saying if Apple raised their commission to 90% then the Developer only has to raise their prices by 10X so the 10% they're left with becomes 100% to make up for it... so they'd raise their price of a $9.99 expansion IAP to $99.99. Yeah, that won't affect conversion at all and the same number of customers will buy.
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Judge Says Apple Has Until December 9 to Make App Store Change Letting Developers Link to Alternate Payment Methods
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I don't know the answer to this. All I know is the estimates are that Apple is making $20 Billion+ PER YEAR in PROFIT from the App Store. My opinion is the commission rates should be in the 10-15% range (and not 15% and 30%) and that would be fair to developers and still make Apple about $8B+ a year in profit AND spur more innovation and investment in the Mobile App space due to all the additional revenue developers would get to keep; which would GROW the App Store even more.
The markets don't work that way. Apple would grow less or not at all due to YoY losses in revenue. If we take the example you give that they make about $20B+ a year. They "need" to increase that year over year. They are a publicly traded company, business' exist to make profit, and have a fedusiary responsibility to return value to their shareholders. They have to produce products consumers want to purchase at prices the market will bare. If they don't grow they die and we all get nothing for that. Which is why I asked about what is "fair". Fair to whom?
Apple does a pretty good job of moving into new markets. Apple Watch, Home-AirPods, many models of the iPhone, laptops, tablets, desktops, services like AppleTV and +. Also, their 30% cut on the AppStore. In addition to everything else they sell. This has to continue for "growth" to continue. And everyone of those markets is a risk to them. They could fail at any one of them and lose any investment they put in. And I don't think anyone will jump to their defense and tell developers to make more stuff for the Mac so that we can continue to get those things they make.
For anyone to state a number that is fair, and I don't mean to be unfair to you in this example. But, 10 years from now if it was at that lower rate of 10-15%. Someone will come and say that amount is too high and it's hurting developers. And in order for that to work as it does today. Apple will have to find ways to lower their costs so that the 10-15% new fee shows an increase in profit YoY. If it costs them 5 today for that 10/15%, tomorrow it will need to cost 2.5 or 2. If someone complains in the future 10% is too much it should be 8%, then Apple needs to lower their costs (save) 3 or 3.5, and on and on. They are not a charity. They don't do this for the benefit of developers they do this FOR their business. Same as EPIC. They saw an area to make more money by doing zero new work. They didn't want to pay Apple anything for that $1 savings on some in game coin purchase. That is why I stated they want want to live rent free. Just to prove that it could be less when purchasing from them directly. Which in any sense of the normal world is an insane thing to do. No business would get away with that in any physical store.
This is what EPIC did. They only paid it back when ordered by a Judge. They literally skirted the 30% cut for a while. So yes, rent free and 100% profit to themselves.
I keep saying this but, it is Apple's customers. They want access to Apple's customers. If they want, they could partner up with another phone maker and place their store on that makers phone. They have options. No different than as a customer wanting a BMW but with a HEMI. And all the support and maintenance for however many years.
Why not? If Apple has to lower prices why can't devs increase prices? At the end of the day, there is a break even cost for a developer. They need to make X for this to be worth the effort. They want to make a profit of Y on top of that. Add the 30% to that cost and you get the MSRP of Z. Fairly certain a $59.99 MSRP for game A didn't cost the developer $42 to make. Charge more. The fee price didn't suddenly make it to 30% It's been 30%. Apple/Google has already lowered their fees. You're welcome developers.
Developers have a choice. They can sell the game outright at whatever price they want. Or, they can make the game free with in-app-purhases. OR the game can be free via Ad's. OR, and this is the big one OR, they can do a web app and pay Apple nothing.
Sure it will. I will not purchase something that went up 100X. I'd imagine many others wouldn't either. But, that isn't the situation here. Again, 30% was the price. In instances it is still the price. BUT, and the big but here is that they have alternatives already. Up to and including not selling it anymore on the AppStore. Going a full web app route or just not dealing with Apple at all and going a full on side-load on Android. Apple's business doesn't exist for developers to make money. Apple's business exist for Apple to make money. They do converge and drive sales for each other. You have an App I want, and Apple has a device I want. Sold. But, if that App did not exist on Apple's device. I the consumer can choose another platform where it does exist. Or do without completely.That's like saying if Apple raised their commission to 90% then the Developer only has to raise their prices by 10X so the 10% they're left with becomes 100% to make up for it... so they'd raise their price of a $9.99 expansion IAP to $99.99. Yeah, that won't affect conversion at all and the same number of customers will buy.
If your familiar with 7-Eleven. Or a similar convenience store. Where you can pay MORE for the same item in that store than say a regular grocery store. As the consumer you know your paying more, but are willing to do so for the convenience of being right where you already are. You can leave and get that same product elsewhere, no one is stopping you. But, you also don't get notified while in 7-11 that you can get that item for less across the street or online. There is a balance to this, and Apple nor Google in my view have done anything outside that norm. They neither prevent you from leaving the store, or having ever entered it. They should be able to control their store and the mechanisms that come with. And collect any fees they have set up. We can agree to purchase or not.
Exactly.
Bingo. More over Jobs felt sure that 30% (Which Apple pulled from Nintendo's playbook) wasn't going to be enough for the App Store (2008) to break even as out outlined in the court's ruling.
It was a happy "miscalculation" that "does not evidence consumers lock-in with iOS devices. While Apple’s calculated risk returned incredible profits, the reality is that Apple has maintained the same general rules with both consumers and developers since the inception of the iOS devices. Epic Games’ arguments that Apple has otherwise repeatedly increased prices does not persuade, where Apple’s rate has always been 30%"
Heck, before this whole thing begun only Humble Bundle (2010, 25%), Itch.io (2013, name you own %), and Epic (2018) had lower rates. And the only way Epic could get people on use their store was to effectively buy exclusives...even if the money had been collected for the program to be released on multiple platforms (Shenmue III).
Anybody with actual sense will realize this will result in more exclusive markets and a total balkanization of both the PC and iPhone market. We already started seeing that with EA's Origin store (2011) and it is going to get worse under the guise of "user/developer choice".
Part of me hope this whole open market argument spectacularly blows up in Epic's face and no one can have an exclusive even in the PC space. Imagine if Nintendo found out it had come up with a way to run its games on M1 Mac, ARM PCs, Android phones, and about every other device out there.
As the DMCA shows the little guy isn't helped by these new laws - they only help the already rich or the greedy. As Metallica found out the hard way be careful what you wish for as you may get it...and look the fool.
Business doesn't work like that. You're basically saying if a company's profit declines then they instantly go out of business and their stock collapses. That's not how it works. Companies lose revenue & profit in different areas all the time - they have acquisitions that don't return a profit, they do expensive write-offs for big losses, or things change in the market that affect their profits. Their long term prospects come down to their overall growth across the entire company. Apple losing several billion from the App Store in the short-term is not going to be the death of the company. Their other areas still show tremendous YoY growth. So equating a reduction in App Store profits to "they don't grow they die" is very out of touch with how business and publicly traded companies actually work.
In fact, Apple already gave up a lot of profit from the App Store when they lowered their 30% commission to 15% for developers doing under $1M/year in revenue; because they were feeling the heat from the bad PR. But doing so didn't "make them die" since their profit was lowered, and nor would that be the case if they lowered their 30% tier down to 15% as well.
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Yes they do. When they don't show a YoY profit their stock price tends to go down (unless) there is some other factors that created said environment. Generally if they can state with confidence that next quarter will make up the difference or show that the loss is a short term issue.
No, not instantly. And it also depends of the size of the company. Apple is VERY large. They can afford some mistakes, AKA their HomePod speaker. They are very diverse in their product mix. We are a long way away from what Steve Jobs showed as the mac matrix. However, If Apple had several failures. Say the watch and a new iPhone launch. Or if the Beats purchase didn't work out the way they wanted. Yeah, it could cause a big enough ripple that if Apple doesn't fix it pretty darn fast. They could start to lose investment. Apple has always been the company that no matter how successfully they have been. Is one product away from collapse. You know "DOOM"!.
True. However, Apple has a lot of linking products. If say the AppStore sales slipped $12B. You will see the market react pretty harshly on the stock. Very likely MORE than it should. Because if sales are down, then so too must the iOS ecosystem (Pad's phones). There most likely would not be a situation where the iPad/iPhone sales went UP, but AppStore sales went down. Or Apple TV sales went up but it didn't also grow Apple Arcade or TV+.
Apple has been rather unique in how investors examine them. Other companies you may get away with a little more loss here and there so long as the total looks good and so to their future outlooks.
I'm willing to bet my stock in Apple it would drop 15% from it's current position if they reported a $12B loss in AppStore revenue. Which would be outrageous of course, but the panic FUD would come real quick.
Death of the company, no. But, it better get sorted out by next quarter. And again, it's very unlikely that such a loss in one area for Apple would be the annomoly. It would most likely indicate a broader problem. Which is why the sell of would be so harsh.
Yes, which is wonderful. However, Apple is again unique when it comes to AppStore sales and iOS devices. Outside of the supply chain issues we are facing. Demand is still strong. Eventhough they don't have enough devices to sell. So in that instance, a slowing of growth in the store will be understandable and it will be expected to go back up once supply catches up with demand. Apple is still viewed as the iPhone company. And when you state a $12B loss. That's going to turn some heads. A few hundred million, no big deal. A billion, maybe acceptable. 12?? Oh no.
Again not for Apple. Just ask yourself, would you invest in Apple if they lost $12B YoY in the their AppStore? Would you value Apple at $2.5T? They would have to have another area not only make up the difference, say a new vehicle. Or state very clearly that even with losses in the AppStore. We are driving more sales of iOS devices because developers are willing to charge our customers less for the apps. Or they are all willing to make it perfectly cross platform with M1 Mac's at no additional charge to our customers. So while we are losing revenue, we are more than making up for it in higher sales of our devices. And over time we anticipate growth in YoY AppStore sales as more devices purchase newer apps.
Again, for those making up to $1M a year. You cross that line you pay 30%. I don't know the numbers YoY for this change to the fee structure. But, I imagine it was not $12B loss.
There's a big difference in sales dropping due to things out of Apple's control and it being some sort of indication that a market is shrinking or other elements hurting the company's growth as compared to sales/profit dropped due to something Apple specifically did, like lowered App Store commission rates. They can easily set "guidance" upfront for how profit would be lower in the short term for the App Store due to those changes and it wouldn't have as much of an impact on their stock. It's completely different when a company reports a major loss in profit that the market didn't see coming.
Yes, but in this instance. If it's due to governmental changes/laws/etc. That is out of Apple's control to some extent. They could of course fight against such changes in court. But, that takes time too and of course the end result is "uncertain". And because it's Apple, past is not prologue for them. They will suffer a drop in stock price for it. Doom and gloom the end is nigh will be stated. Then cooler heads will prevail and the stock stabilize once everyone realizes it will take some time before any official change is made (if one is made).
Much of an impact will depend heavily on how much loss it will be. Again, few hundred million in a quarter,.. OK. 1 or $2billion.... You got some explaining to do. $12B??? You lost your darn mind? Where you making that up at? You found another country to sell your iPhone in we didn't know about? Did you triple your sales in India or China? Cause $12B is way too much to be forfeiting for some developers. Beats ain't cost more than $3 billion and we still selling that.
Again, the issue is really due to it being Apple, and not some other company. Practically any other company. To this day I don't understand how Tesla is worth about $1T, and they are not the largest car company on planet earth. They barely sell a car most people can afford. Let alone the most popular vehicle in America. Yet Apple is just staring at $3T and they sell a device that is literally in a billion peoples pockets. Not to mention wrists, ears, back packs with iPad's and Laptops, and 3 models of desktops, software, OS's, etc. Apple should be a $5T company in its sleep.