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U.S. Antitrust Regulators Investigating Apple's App Store Fees and Policies

Nuno Lopes

macrumors 6502
Sep 6, 2011
275
285
Lisbon, Portugal
Oddly enough, the Telco is doing the exact same thing as Apple - taking a cut of the fee each month for delivering the channels alone and not developing content.

Well channels are the Apps of broad casting TV. That is why they don’t charge Apple to connect their to the network on top of the user subscription. They also don’t charge websites to let them pass through on the their tubes.

You mistake I guess, is that abstract comparisons of business models are being driven as a justification.

I would say the App Store markets more as a retail service for apps than TV channels. For that matter Apple has Apple TV+. Similar to Netflix. In which case either they make their own shows or license others. They could add third party channels but than probably they should also provide the streaming tube, the means of delivery the entire thing, not just the app no?

Finally, I bet Apple Store sells more apps than the competition given the fact that iOS does not provide side loading facilities. The practice of pushing apps towards subscription leads to stuff that I pointed in my examples. So indeed it’s hurting Customers as it’s hides the actual value of the service ... it’s just customers have not yet realized the hoax. This is the thing of conglomerates, they can leverage different and distinct components

All this because Apple feels entitled to revenues over services not provides And can enforce them through policy. Something that TC seams to be specially interested on as it can be used either to save lives or ramp up value in speculative ways.
 
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jlc1978

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Aug 14, 2009
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Well channels are the Apps of broad casting TV. That is why they don’t charge Apple to connect their to the network on top of the user subscription. They also don’t charge websites to let them pass through on the their tubes.

You mistake I guess, is that abstract comparisons of business models are being driven as a justification.

What I think you fail to understand is that because a distribution channel is different the fundamental underlying buisness principles are not magically changed. My point, which you missed, was the cable TV provider takes a cut of the fees for the service of providing access to the channels, just like Apple.

Right now, net neutrality regulations prohibit charging for preferred access; not a desire to let websites use the pipe rent free.

I would say the App Store markets more as a retail service for apps than TV channels.

Ok, but that doesn't change the business model.

Finally, I bet Apple Store sells more apps than the competition given the fact that iOS does not provide side loading facilities.

Which is why developers use the app store - it's profitable, even with Apple's cut.

The practice of pushing apps towards subscription leads to stuff that I pointed in my examples.

Using a subscription model is the developer's choice, not Apple's.

So indeed it’s hurting Customers as it’s hides the actual value of the service ... it’s just customers have not yet realized the hoax. This is the thing of conglomerates.

How? Developers often charge the same for apps on the Mac app store and their own website, there is no evidence they're willing to lower prices for using their own store; they simply pocket the extra 30%. They have no interest in undercutting their price to help the consumer. If anyone is hurting consumers it is the developer by keeping the extra money form non-app store sales.

All this because Apple feels entitled to revenues over services not provides And can enforce them through policy. Something that TC seams to be specially interested on as it can be used either to save lives or ramp up value in speculative ways.

Apple charges for access to their customer base, the same as any store, digital or brick and mortar. Whether or not the deliver the service is irrelevant; their service to the seller is access to a user base that is profitable to serve. Devlopers have to decide if Apple's cut is worth it. It really is that simple. 30% may be too high, though not an unusual gross margin, but expecting them to provide free or much lower cost access is just as unreasonable as saying a brick and mortar store has to let anyone sell things without giving the store a cut.
 
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Nuno Lopes

macrumors 6502
Sep 6, 2011
275
285
Lisbon, Portugal
What I think you fail to understand is that because a distribution channel is different the fundamental underlying buisness principles are not magically changed.

The business principles are common to all businesses. I’ve not been arguing principles, you seam to be confusing basic business concepts. For instance, the business models are usually different because of the nature of each business context. You have been jumping around business models To justify one business model without taking into account context.

My point, which you missed, was the cable TV provider takes a cut of the fees for the service of providing access to the channels, just like Apple.

You are making things up here. There are many different deals between cable TV providers and broadcasters. From Cable TV providers licensing to pay per view.


You also use the term revenue sharing thinking in terms of cut (percentage of revenue) that a TV channel shares with the Cable TV. But in fact that is not the case. Usually content providers pay a fixed fee for transportations and than receive monthly rights payments according to their market share (a form of licencing). Meaning its not the content producer or broadcaster that shares their revenue with the Cable TV but the other way around. All this is negotiated differently per channel.

So I think most people make their own mind based on erroneous comparisons.

On top of this, business models usually takes into account the nature of the goods transacted. For instance, is an App content, a tool or a service? You see this is fundamental because different types of goods have distinct production processes and costs. You see, a TV channel might an aggregation of content, but a hammer is not. The counter part in apps would be say Netflix vs MS Word.

This is taking too long to write ...

Apple charges for access to their customer base, the same as any store, digital or brick and mortar. Whether or not the deliver the service is irrelevant; their service to the seller is access to a user base that is profitable to serve.

You are making things up man. Really. When A one produces a thing the objective is to sell. For that mater You don’t pay Retailers for access to potential customers, especially at 30% markup of potential sales when the cost of sale is mostly on you side. That would be silly. You pay for the ability of the retailer to sell! For that matter what happens is that you set a retail price negotiated depending on the ability of the retailer to sell, and than the retailer adds its margin. You might suggest a MSRP at your will but that is just a suggestion. You see its about the retailers ability to selL not exposure to people passing bye.

Depending on the size of the retailer several things can happen:

- The retailer pays for the stock up front and than resells. (small retailer)
- You offer the merchandise without cost, the retailer offer shelve space and than receive the negotiated price per item per sale (medium to large)
- Large, you may pay for shelve space, offer the mechanize without cost and than receice the fixed price negotiated ...

The retail price is negotiated taking the above into account. Furthermore, considering that there are many retailer there is competition between and that influences the retail price negotiated.

If the retailer is not selling a product, either because of the product or the lack of fitness of the retailer, the product is simply removed. There is no benefit to you or the retailer to remain in the shelves.

On the other hand retailers sell goods not services. When it comes to services they sell the subscription one time, the service pays to the retailer when the subscription is sold. There is not revenue share over service subscriptions ... nothing. Why? Because in the end of the day the retailer does not provide the service, but the ability to sell the subscription or the good.

Now let’s look at the Apple Store ability to sell. The fact is that you cannot. Why? Because to access the store a device is needed, and the business model of that device is totally independent of the App Store. So all you have is potential customers given they bought the device. Furthermore there is no competition to the App Store within the iOS market share making it impossible to ascertain its value ... compared to what? No one else can sell better because one one else is able to sell. Meaning, the price of the device is not set to bring more customers to the App Store, but to maximize its value of the devices business. Whatever customers come to the store is mainly a side effect. This reality is way different from retail, way different.

NOTE: But you can try. The App Store sold 50B of goods. Sounds huge right? Well, but it also have 2 Million Apps. Do the math and check how good it it as a seller. Mind you, it’s better than other ecosystems but ... I’ve read that 25% make over 5000 dollars which you actually do the math it’s not really surprising ... meaning not good for the a particular dev ... toxic CDO.

For instance. Say Netflix. Customers subscribe to Netflix not within the App. So basically the App Store is totally incompetent channel for that matter, so why force 30% in subscriptions?. The same for Spotify or any other kind of service, including email, content curation or whatever. What sells the Service again its the Service, re-subscription usually don’t pass through retailers, so if you want to compare, at most Apple would charge a payment processing fee after the sale What the App Store does indeed, is make it harder to sell as the selling experience is artificially made worst than what it could be while offering a high cost solution!! Harder to sell but Apple of course. same things happens to any service or good not provided by the App Store that needs an App. Under this premisse why not charge Amazon for the sells of goods? So its totally arbitrary. The App Store sells and serves nothing but Apps or Subscriptions, nothing else. Things get distorted when they try to charge for things that they don’t deliver! Besides the app for the sake of comparisons at most they could charge within reason for the sale of the subscription, which is not the same thing as 30% of the monthly subscription, that is a shared revenue. 4 months of revenue if a customer stays for 12 months and that is totally on the service. So aberrant things are starting to creep up on the App Store, one example i gave previously. If Apple was not charging 30% of the subscription I’m pretty sure some things would not even pass as a subscription because when you actually look at the app ... you could clearly see that hardly it could be turned into a subscription. Not all apps are portals to services, and definitely they aren’t content as far as your comparisons with Boradcasters and Cable TV goes.

How? Developers often charge the same for apps on the Mac app store and their own website, there is no evidence they're willing to lower prices for using their own store; they simply pocket the extra 30%.

Pocket? Why? Is Apple pocketing the 30%? Is it returning it yo customers? Devs businesses are no less serious then Apple, probably customers would get better apps, better service or other apps from the dev ... who knows. Apple provides a service ... it should be paid for the services and goods it provides that was never in question.

Finally I invite you to do the math. I’ve read that the App Store generated $50 billion in revenue. There are about 2 million apps in the App Store as I’ve read. Don’t forget that 30% of the 50 billion stay in Apple. How many devs would you think make over a million in revenue last year and how many stayed bellow ... just with payments through the App Store? Is a million a lot? start Paying salaries, marketing so on and so forth ...

You know how much it costs the technical infrastructure host In the cloud a web app of say 3MB including bandwidth for a company say with half a million revenue? 1000 euros. That takes 10% of the time of a dev op so ... thrown in 25000 euros year including man power managing the host and updates ... That is 5% of the Half a million revenue and believe me the cloud provider still has a profit.

The actual cost is in the sales ... aka convincing the customer to buy. So it is in marketing and the actual building the technical infrastructure of the service (not in the App Store) and app (3MB in the host) that a customer would like to buy. Its is not in anything that the App Store does for the dev. So you indeed devs sharing 30% of their little revenue (according to Apple values) to get access to that market not the ability for the App Store to sell your app, just like that. This of course believing that it has 2million active apps.

Concluding it’s a great tool for customers to buy whatever, manage their apps, billing etc. But has a seller of devs Apps and Services, it’s not really that good. 50B sounds impressive, especially with 30% cut, good for Apple, but do the math on what it means for your company, product or service. Because the cost of sales is entirely on you, yo are giving 30% of your revenue mainly for cataloguing, payment system, digital storage and transit of apps. Things that are externally cheap, cheap, cheap to do your own. Furthermore the actual cost of sales is not in included. That is not why you put products in a Store. Take that for a business principle. It’s about the ability of the store to sell your app that truly counts, so have a deep look at it. The core value of the App Store behind the 30% is driven by policy not ability IMHO. Meaning ... it’s the only way to sell to iOS users within the ecosystem. Which represents in some regions 50% of the potential market for your app, depending on the app of course.
 
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