7 ms·

Apple: if we get you subscribers, we deserve a cut

36 points by baxter 16y ago

c2 16y ago
The flip side of course is that these apps make the iPhone/iPad more appealing to more people. I can see Apple shooting themselves in the foot with their predatory practices against app publishers. Losing a big chunk of your margin while developing apps for free for Apple's products is only going to be sustainable for so long. And more likely then not, it will drive away the big players first where each percent means more.
- Samuel_Michon 16y ago
  A supermarket that sells magazines will appeal more than a supermarket that doesn't. That doesn't mean it owes its success to the magazine publishers. I very much doubt that the availability of magazine and newspaper apps like The Daily will be a primary reason for customers to buy an iPad.
  - OpieCunningham 16y ago
    Magazines in a supermarket are slotted, so the publisher is paying the supermarket to stock the magazine.
    - Samuel_Michon 16y ago
      In a supermarket, shelf space is limited. Online retailers like Apple and Amazon have virtually unlimited shelf space. That's one of the reasons why distributing paid content online is so much cheaper than in print. Compared to print, Apple's 30% take for payment processing, marketing and distribution is a great deal. That's how News Corp can offer a daily newspaper via the App Store for only $1 a week, for which you would normally pay $1 a day.
kalak451 16y ago
Hmmm....and if my app gets someone to buy your iPad, what do I get?
- brisance 16y ago
  You get heavy promotion. Look at how Angry Birds and all the other games did by being featured on "New and Noteworthy" or "Staff Picks" or "Top Grossing Apps". It's a two-way street; don't make it sound like Apple is taking advantage of your efforts.
  - kalak451 16y ago
    I guess my point is that it really does work both ways, the iPad existing may help me sell things, and me selling those things helps sell iPads. So how about both sides just focus on taking money from the customers instead of each other.
  - enjo 16y ago
    That works for a hugely small subset of apps. Each (well written) app creates a lot of value for iOs, most of those won't get anything at all from Apple. So again, why isn't the inverse true? If I'm building something that helps sell an iOs device, why shouldn't I get a cut? Of course I shouldn't, but that's the problem in Apples logic here.
    - neutronicus 16y ago
      > Each (well written) app creates a lot of value for iOS We all, being programmers, like to assume this, but I don't think it's really true. I think the bulk of the value for both Apple and iOS users comes from a pretty small core of apps (Mail, Maps, Browser, Music, YouTube, Publisher subscriptions). > If I'm building something that helps sell an iOs device, why shouldn't I get a cut? I don't think Apple agrees that you're "helping sell the iOS device". I think Apple correctly assumes that most people who buy iOS devices do so in ignorance of your app. They can take it or leave it, and if they're not going to get a cut, what possible reason do they have to take it?
JoeAltmaier 16y ago
So arrogant - "We get you subscribers"! How did they do that? They didn't create the ad, they didn't put it in the app, they did diddly-squat in fact. You (the app developer) did the work, take the risk, and now cannot even get paid properly - you have to essentially make iPhone your sole outlet, or charge 30% premium everywhere else.
- josefresco 16y ago
  They created the very ecosystem in which your app exists. I'd say that's a pretty important aspect of the whole app development model.
  - CWuestefeld 16y ago
    First, this argument isn't over the share that's due for the purchase of the App itself. Second, they may have created the ecosystem, but they also created and maintain the walls surrounding it. It sounds like Apple is trying to have their cake and eat it too. Third, Apple is providing a repository, marketing, searchability, etc., for the app itself. They're not doing anything to "earn" the income from the content. I'll be the first to say that prices aren't based on the underlying cost of a product, but ethically this still seems like a racket.
  - nomurrcy 16y ago
    So microsoft would be within their rights to take a 30% cut of all cash flows from subscriptions made using internet explorer? What about 30% of all sales of Windows Software? Where does the ownership of the OS author end and the ownership of the 3rd party developer begin? What if Apple insisted upon 50%?
    - sethg 16y ago
      IIRC, each video-game console manufacturer charges royalties to all games that are compatible with its hardware.
  - hvs 16y ago
    Does Microsoft deserve a cut of every application written for Windows?
galuggus 16y ago
the only company that will kill apple is apple
- mortenjorck 16y ago
  Hyperbole, yes, but there's truth to it. Apple simply is in a position to make these demands right now; the test will be whether they scale back their demands once the market has matured to the point where they no longer have that leverage.
pixdamix 16y ago
"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app." "Apple's announcement went on to emphasize that publishers are not limited to using the App Store for subscriptions; they're allowed to use their own websites to sell subs." So purchase can be made in Safari in order to bypass the AppleVAT ?
- deleted 16y ago
  [deleted]
- mrud 16y ago
  safari is not inside the app
  - donohoe 16y ago
    In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app
- notahacker 16y ago
  > Oh, and the subscriptions offered within iOS apps must be the same price or less as the company's other offerings No. If Apple isn't forced into a climbdown, those vendors not making a >30% margin on digital subscriptions will either be forced to raise prices across the board or dump the iPhone app.
- enjo 16y ago
  Essentially what they're saying, as far as I can tell, is that I can't offer in app-purchases without going through Apple. So something like Rhapsody, for instance, CAN build an app giving you access to your existing collection. They can NOT, however, provide for the ability to sign-up new customers without giving Apple a cut. My bet is that punting out to Safari from your app won't cut it. It has to be initiated completely from outside your application.
alexobenauer 16y ago
To round the issue out from their side, not that I agree, from their point of view, it's "If we bring you subscribers via our devices, we deserve a cut"
- nomurrcy 16y ago
  Once you have purchased a phone from Apple - doesn't it cease to be their device? Doesn't this all seem a little wrong?
  - neworbit 16y ago
    Only if you jailbreak it
jscore 16y ago
(Disclaimer: I don't work for Apple or own any of their stock, just a happy dev in their ecosystem) I completely agree with this model. Apple's marketing muscle is HUGE. I'm perfectly OK with splitting one-time or recurring revenue with them if they help bring me customers.
aforty 16y ago
Just based on that one line argument in the subject, I can't say I disagree.
waterlesscloud 16y ago
By this logic, the customer's ISP also deserves a cut.
- ceejayoz 16y ago
  They do, from the customer.
nomurrcy 16y ago
Full disclosure: I generally like apple products and have used NeXT / apple products for a long time. I don't see how Apple's stance here is defensible or honest. They using their position as a large platform provider to steal from 3rd party developers. To me this is akin to me writing a program for OSX that allows users to sign up for a subscription service, and apple taking a 30% cut of my cash flows just because I targeted their platform. They have been paid for their device by the consumer, they don't own all the software running on the device. They provide an OS, 3rd party developers provide the applications. Most iOS programs receive absolutely no advertising from apple. In these cases how has apple contributed anything - how as Apple brought them customers. What if I run an ad-words campaign and drive my own app sales? If Apple were to make deals with developers for cuts of cash flow in exchange for advertising on the store, that would seem more honest. To me this seems anti competitive and just plain dishonest. Apple is at risk of becoming the troll under the bridge here.
- nopal 16y ago
  The cut is high, but Apple does do more with iOS than they do in your hypothetical. Apple has created a ecosystem in which it is very easy for consumers to purchase subscriptions. They're further enhancing the usefulness of this system by blocking applications that do not allow consumers to easily purchase subscriptions in a uniform way (e.g. in-app). And they're requiring app developers to pay 30% for the benefits they receive by exposing your app to the users of this ecosystem. The rate may be high, or it may not be. We will see by how many developers pull their apps from the AppStore.
  - chc 16y ago
    I might agree if Apple didn't force developers to make the price in Apple's ecosystem the same as the lowest price available elsewhere. If you want to take 30% of my money for the service of "exposing" my app (which I think that means "not banning" in the context of a walled garden), I need to charge 50% more just to maintain my profit margin.
- trotsky 16y ago
  Philosophically this doesn't seem much different from a case where Apple requires a 30% cut on all commerce done through OSX, Mozilla demanding 30% of a MBP sale through firefox, or MS demanding 30% of that WinXP iTunes sale. I wouldn't expect it to escape the review of various competition authorities.
ezy 16y ago
Obviously, any app store-only app will not care about this other than reduced margins for subscriptions -- they weren't making money any other way. But folks who sell through other channels than ipad will .. just leave. I wonder if that's the goal. But then again: it's like the ebook purchase thing -- Amazon and BN have been strangely silent -- maybe they decided to relent, maybe they're going to get a special deal, or maybe they'll pull their apps just before the ipad2 launches. :-)
nhangen 16y ago
As an indie developer, this excites me. Sure, I can understand how the big guys might see it differently, but now I don't have to build an entire distribution network should I decide I'd like to develop subscription based content. I read many digital PDF's (like Hacker Monthly) and though I enjoy downloading and reading the PDF on my iMac, I would be delighted to pay 99 cents to have each issue delivered to my iPad on a monthly basis. And as a developer, it's added value.
kbutler 16y ago
In related news, the US Interstate Highway system will now require a 30% cut of the purchase price of every vehicle purchased in the United States. "Our philosophy is simple—when US Highways bring a new driver to the car company, US Highways earn a 30 percent share." The US Postal Service considered a similar regulation, but found that customers would simply divert shipments to competitors UPS, DHL, and Fedex, and is instead filing suit against those companies for unfair trade practices, and lobbying congress for a retroactive grant of a business method patent on package delivery with corresponding extension of patent duration to life of the organization plus 70 years. kb
- wmeredith 16y ago
  Apples and Oranges, my friend. The highway and the USPS are funded by tax dollars. The App Store is a culmination of Steve Jobs and co busting their collective asses for decades on their own time without any mandatory help from you. Now they're going to charge you an arm and a leg for the privilege of using it. If you don't like it, you're free to take a stand with your dollars and go elsewhere.
  - invertd 16y ago
    Using Apple products is not mandatory, of course...but the real question is whether a 30% cut is a fair number or the methodology itself is fair to being with?
  - kbutler 16y ago
    Oh, that's why I didn't have to pay for my iPhone, then.
    - wmeredith 16y ago
      You're precisely correct, You did not have to pay for your iPhone. You chose to.
      - kbutler 16y ago
        Yes, I chose to pay for the phone. Apple chose to sell the phone at a price they felt adequate compensation for their "decades" of work. Apple is currently seeking to leverage their monopoly[1] on the iOS platform by extracting additional rent[2] from content providers. Their probability of success directly correlates with their pricing power. Is this rent-seeking good for Apple customers? Unlikely. Is it legal? Depends on how the FTC views Apple's pricing power. kb [1]In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. (http://en.wikipedia.org/wiki/Monopoly http://en.wikipedia.org/wiki/Monopoly) [2]http://en.wikipedia.org/wiki/Economic_rent http://en.wikipedia.org/wiki/Economic_rent
trotsky 16y ago
Does the upcoming launch of Apple's NFC system and general purpose payments platform suggest that the same rules will be coming for ecommerce and general transactions? Sounds like bad news for people like Square or PayPal.
christo16 16y ago
It's more than just providing a subscriber base, it's the infastructure to process recurring payments, while making it stupid simple for the customer. Whether this is worth 30% is debatable, as some of us know it's not trivial/cheap to do on your own.
sethg 16y ago
Apple is trying to prevent the following maneuver: ¶ FooPub Inc. publishes FooMag through the App Store, at a price of $1/year. ¶ Each issue of FooMag contains some small amount of content and a link: “To read more, go to foopub.example.com and subscribe to FooMag Deluxe for $20/year!” ¶ Users download FooMag Deluxe through FooPub’s own servers, bypassing the App Store completely. ¶ Scads of people discover FooMag through the App Store, subscribe to it (giving Apple 30¢ out of each $1 subscription), and a significant fraction of them upgrade to the deluxe version (giving Apple nothing).
- georgemcbay 16y ago
  Is discovery via the App Store really that common? As a previous iPhone user and current Android user I don't think I ever discovered a single app for either platform via the App Store itself. I always went looking for something on the App Store (or now on the Android Market) after hearing of it elsewhere. I suppose I may be in the minority there and I can't say for sure I'm not, but I'd be pretty surprised if I were.
  - sethg 16y ago
    If an app publisher wants to avoid all the App-Store-related restrictions, can they just put their app on the Web and let people download and install it through the browser? I don’t have any iStuff so I don’t know the practicalities.
    - georgemcbay 16y ago
      No, they can't do that. On iOS it is the App Store or nothing when it comes to native apps. (Of course, if users jailbreak their phones they have more freedom to install apps, but I assume we're just talking about the standard OS here). On Android the publisher can bypass the store by distributing their own APK files. Some carriers (glancing towards AT&T) lock this down in some phones, but by default Android is happy to install new apps from anywhere as long as the user agrees to a dialog warning them of the dangers of running random code they download from the net. This is one of many reasons I'm currently an Android user and self-described "Apple hater".
BigZaphod 16y ago
I'm a huge Apple fan, but I admit there's something about this which doesn't feel entirely... right, and that's concerning. That said, however, there's decent and non-evil reasons for them to think like this - at least in terms of subscriptions, IMO. One issue is that subscription-based apps are almost always free in the app store. Apple loses money on free apps that don't include iAds. If the subscription fee itself is also outside of Apple's control, they're hosting your app, getting you "shelf space", driving people to your app, etc. and they get nothing in return. With such an app, the content is basically replaced every month (or week or day or whatever) which makes the process a bit like a scheduled purchase of a new version of an app - hence the 30% cut. On the surface, I disagree that Apple should get 30% forever for a subscription - especially if the publisher is providing all the infrastructure necessary to deliver that content. What if, though, the subscription system allowed publishers to upload the content once to Apple, and Apple hosts and distributes it to the apps and users? Now the 30% starts looking a bit more reasonable. If indeed it works this way (or will eventually work this way), you could be a very small shop and still manage to support thousands or, indeed, millions of subscriptions with virtually no support infrastructure of your own. That's certainly worth 30% IMO. The flip side, though, is if you already have your own content delivery mechanisims in place, Apple taking 30% each billing cycle seems unfair. IMO, they should offer the subscription products in two flavors - one where they host and distribute your content, and another where you are doing that work. In the second version, Apple could easily take 30% of, say, the first billing cycle and take diminishing amounts for as long as the subscription remains in effect - perhaps even going all the way down to something like 2% just to cover the payment processing. That would seem a lot more fair to me than taking 30% forever. Sadly, though, I haven't yet seen anything that suggests that either of these situations are even true. For all I know, Apple might not be offering any distribution or hosting services and might not even have an API to allow apps to easily take delivery of subscription content, and if that's the case, taking 30% forever seems excessive.
- CoffeeDregs 16y ago
  * there's decent and non-evil reasons Funny, I just e-mailed some friends about how Apple was starting to get a bit of the stink of Evil about them. As I read your comment, I was struck by how Apple does everything in a very one-size-fits-all fashion (Mac -> no window menu; iPhone -> home screen is a list of apps; subscriptions -> one revenue model). There's a rich set of monetization schemes out there and Apple might offer a range of monetization models. Apple could use an affiliate fee style model where App maker pays Apple $X for each subscription+. Then Apple could just use the eCPM or expected revenue to rank search results (App gets a lot of subscribers and pays a healthy CPA, they get ranked higher). App makers would then need to figure out how much $$$ to pay Apple for an install. This could also apply to free apps [...but we've seen the harm that causes elsewhere]. Then Apple could add simple hosting/management fees for hosting an app's content. + I've been fairly heavily involved in the affiliate/CPA space, so know the kind of unpleasantness the model can bring, but am fairly confident that Apple could work around it. [ed: formatting]
brisance 16y ago
I think this whole thing is overblown. When I trade stock, options or pretty much anything, I get charged commissions. So by the same reckoning e*trade, Schwab, Ameritrade, <insert brokerage here> are thieves and have been "stealing" from investors/traders for centuries.

36 points by baxter 16y ago

c2 16y ago

The flip side of course is that these apps make the iPhone/iPad more appealing to more people. I can see Apple shooting themselves in the foot with their predatory practices against app publishers. Losing a big chunk of your margin while developing apps for free for Apple's products is only going to be sustainable for so long. And more likely then not, it will drive away the big players first where each percent means more.

Samuel_Michon 16y ago
A supermarket that sells magazines will appeal more than a supermarket that doesn't. That doesn't mean it owes its success to the magazine publishers. I very much doubt that the availability of magazine and newspaper apps like The Daily will be a primary reason for customers to buy an iPad.
- OpieCunningham 16y ago
  Magazines in a supermarket are slotted, so the publisher is paying the supermarket to stock the magazine.
  - Samuel_Michon 16y ago
    In a supermarket, shelf space is limited. Online retailers like Apple and Amazon have virtually unlimited shelf space. That's one of the reasons why distributing paid content online is so much cheaper than in print. Compared to print, Apple's 30% take for payment processing, marketing and distribution is a great deal. That's how News Corp can offer a daily newspaper via the App Store for only $1 a week, for which you would normally pay $1 a day.

kalak451 16y ago

Hmmm....and if my app gets someone to buy your iPad, what do I get?

brisance 16y ago
You get heavy promotion. Look at how Angry Birds and all the other games did by being featured on "New and Noteworthy" or "Staff Picks" or "Top Grossing Apps". It's a two-way street; don't make it sound like Apple is taking advantage of your efforts.
- kalak451 16y ago
  I guess my point is that it really does work both ways, the iPad existing may help me sell things, and me selling those things helps sell iPads. So how about both sides just focus on taking money from the customers instead of each other.
- enjo 16y ago
  That works for a hugely small subset of apps. Each (well written) app creates a lot of value for iOs, most of those won't get anything at all from Apple. So again, why isn't the inverse true? If I'm building something that helps sell an iOs device, why shouldn't I get a cut? Of course I shouldn't, but that's the problem in Apples logic here.
  - neutronicus 16y ago
    > Each (well written) app creates a lot of value for iOS We all, being programmers, like to assume this, but I don't think it's really true. I think the bulk of the value for both Apple and iOS users comes from a pretty small core of apps (Mail, Maps, Browser, Music, YouTube, Publisher subscriptions). > If I'm building something that helps sell an iOs device, why shouldn't I get a cut? I don't think Apple agrees that you're "helping sell the iOS device". I think Apple correctly assumes that most people who buy iOS devices do so in ignorance of your app. They can take it or leave it, and if they're not going to get a cut, what possible reason do they have to take it?

JoeAltmaier 16y ago

So arrogant - "We get you subscribers"! How did they do that? They didn't create the ad, they didn't put it in the app, they did diddly-squat in fact. You (the app developer) did the work, take the risk, and now cannot even get paid properly - you have to essentially make iPhone your sole outlet, or charge 30% premium everywhere else.

josefresco 16y ago
They created the very ecosystem in which your app exists. I'd say that's a pretty important aspect of the whole app development model.
- CWuestefeld 16y ago
  First, this argument isn't over the share that's due for the purchase of the App itself. Second, they may have created the ecosystem, but they also created and maintain the walls surrounding it. It sounds like Apple is trying to have their cake and eat it too. Third, Apple is providing a repository, marketing, searchability, etc., for the app itself. They're not doing anything to "earn" the income from the content. I'll be the first to say that prices aren't based on the underlying cost of a product, but ethically this still seems like a racket.
- nomurrcy 16y ago
  So microsoft would be within their rights to take a 30% cut of all cash flows from subscriptions made using internet explorer? What about 30% of all sales of Windows Software? Where does the ownership of the OS author end and the ownership of the 3rd party developer begin? What if Apple insisted upon 50%?
  - sethg 16y ago
    IIRC, each video-game console manufacturer charges royalties to all games that are compatible with its hardware.
- hvs 16y ago
  Does Microsoft deserve a cut of every application written for Windows?

galuggus 16y ago

the only company that will kill apple is apple

mortenjorck 16y ago
Hyperbole, yes, but there's truth to it. Apple simply is in a position to make these demands right now; the test will be whether they scale back their demands once the market has matured to the point where they no longer have that leverage.

pixdamix 16y ago

"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app." "Apple's announcement went on to emphasize that publishers are not limited to using the App Store for subscriptions; they're allowed to use their own websites to sell subs." So purchase can be made in Safari in order to bypass the AppleVAT ?

deleted 16y ago
[deleted]
mrud 16y ago
safari is not inside the app
- donohoe 16y ago
  In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app
notahacker 16y ago
> Oh, and the subscriptions offered within iOS apps must be the same price or less as the company's other offerings No. If Apple isn't forced into a climbdown, those vendors not making a >30% margin on digital subscriptions will either be forced to raise prices across the board or dump the iPhone app.
enjo 16y ago
Essentially what they're saying, as far as I can tell, is that I can't offer in app-purchases without going through Apple. So something like Rhapsody, for instance, CAN build an app giving you access to your existing collection. They can NOT, however, provide for the ability to sign-up new customers without giving Apple a cut. My bet is that punting out to Safari from your app won't cut it. It has to be initiated completely from outside your application.

alexobenauer 16y ago

To round the issue out from their side, not that I agree, from their point of view, it's "If we bring you subscribers via our devices, we deserve a cut"

nomurrcy 16y ago
Once you have purchased a phone from Apple - doesn't it cease to be their device? Doesn't this all seem a little wrong?
- neworbit 16y ago
  Only if you jailbreak it

jscore 16y ago

(Disclaimer: I don't work for Apple or own any of their stock, just a happy dev in their ecosystem) I completely agree with this model. Apple's marketing muscle is HUGE. I'm perfectly OK with splitting one-time or recurring revenue with them if they help bring me customers.

aforty 16y ago

Just based on that one line argument in the subject, I can't say I disagree.

waterlesscloud 16y ago

By this logic, the customer's ISP also deserves a cut.

ceejayoz 16y ago
They do, from the customer.

nomurrcy 16y ago

Full disclosure: I generally like apple products and have used NeXT / apple products for a long time. I don't see how Apple's stance here is defensible or honest. They using their position as a large platform provider to steal from 3rd party developers. To me this is akin to me writing a program for OSX that allows users to sign up for a subscription service, and apple taking a 30% cut of my cash flows just because I targeted their platform. They have been paid for their device by the consumer, they don't own all the software running on the device. They provide an OS, 3rd party developers provide the applications. Most iOS programs receive absolutely no advertising from apple. In these cases how has apple contributed anything - how as Apple brought them customers. What if I run an ad-words campaign and drive my own app sales? If Apple were to make deals with developers for cuts of cash flow in exchange for advertising on the store, that would seem more honest. To me this seems anti competitive and just plain dishonest. Apple is at risk of becoming the troll under the bridge here.

nopal 16y ago
The cut is high, but Apple does do more with iOS than they do in your hypothetical. Apple has created a ecosystem in which it is very easy for consumers to purchase subscriptions. They're further enhancing the usefulness of this system by blocking applications that do not allow consumers to easily purchase subscriptions in a uniform way (e.g. in-app). And they're requiring app developers to pay 30% for the benefits they receive by exposing your app to the users of this ecosystem. The rate may be high, or it may not be. We will see by how many developers pull their apps from the AppStore.
- chc 16y ago
  I might agree if Apple didn't force developers to make the price in Apple's ecosystem the same as the lowest price available elsewhere. If you want to take 30% of my money for the service of "exposing" my app (which I think that means "not banning" in the context of a walled garden), I need to charge 50% more just to maintain my profit margin.
trotsky 16y ago
Philosophically this doesn't seem much different from a case where Apple requires a 30% cut on all commerce done through OSX, Mozilla demanding 30% of a MBP sale through firefox, or MS demanding 30% of that WinXP iTunes sale. I wouldn't expect it to escape the review of various competition authorities.

ezy 16y ago

Obviously, any app store-only app will not care about this other than reduced margins for subscriptions -- they weren't making money any other way. But folks who sell through other channels than ipad will .. just leave. I wonder if that's the goal. But then again: it's like the ebook purchase thing -- Amazon and BN have been strangely silent -- maybe they decided to relent, maybe they're going to get a special deal, or maybe they'll pull their apps just before the ipad2 launches. :-)

nhangen 16y ago

As an indie developer, this excites me. Sure, I can understand how the big guys might see it differently, but now I don't have to build an entire distribution network should I decide I'd like to develop subscription based content. I read many digital PDF's (like Hacker Monthly) and though I enjoy downloading and reading the PDF on my iMac, I would be delighted to pay 99 cents to have each issue delivered to my iPad on a monthly basis. And as a developer, it's added value.

kbutler 16y ago

In related news, the US Interstate Highway system will now require a 30% cut of the purchase price of every vehicle purchased in the United States. "Our philosophy is simple—when US Highways bring a new driver to the car company, US Highways earn a 30 percent share." The US Postal Service considered a similar regulation, but found that customers would simply divert shipments to competitors UPS, DHL, and Fedex, and is instead filing suit against those companies for unfair trade practices, and lobbying congress for a retroactive grant of a business method patent on package delivery with corresponding extension of patent duration to life of the organization plus 70 years. kb

wmeredith 16y ago
Apples and Oranges, my friend. The highway and the USPS are funded by tax dollars. The App Store is a culmination of Steve Jobs and co busting their collective asses for decades on their own time without any mandatory help from you. Now they're going to charge you an arm and a leg for the privilege of using it. If you don't like it, you're free to take a stand with your dollars and go elsewhere.
- invertd 16y ago
  Using Apple products is not mandatory, of course...but the real question is whether a 30% cut is a fair number or the methodology itself is fair to being with?
- kbutler 16y ago
  Oh, that's why I didn't have to pay for my iPhone, then.
  - wmeredith 16y ago
    You're precisely correct, You did not have to pay for your iPhone. You chose to.
    - kbutler 16y ago
      Yes, I chose to pay for the phone. Apple chose to sell the phone at a price they felt adequate compensation for their "decades" of work. Apple is currently seeking to leverage their monopoly[1] on the iOS platform by extracting additional rent[2] from content providers. Their probability of success directly correlates with their pricing power. Is this rent-seeking good for Apple customers? Unlikely. Is it legal? Depends on how the FTC views Apple's pricing power. kb [1]In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. (http://en.wikipedia.org/wiki/Monopoly http://en.wikipedia.org/wiki/Monopoly) [2]http://en.wikipedia.org/wiki/Economic_rent http://en.wikipedia.org/wiki/Economic_rent

trotsky 16y ago

Does the upcoming launch of Apple's NFC system and general purpose payments platform suggest that the same rules will be coming for ecommerce and general transactions? Sounds like bad news for people like Square or PayPal.

christo16 16y ago

It's more than just providing a subscriber base, it's the infastructure to process recurring payments, while making it stupid simple for the customer. Whether this is worth 30% is debatable, as some of us know it's not trivial/cheap to do on your own.

sethg 16y ago

Apple is trying to prevent the following maneuver: ¶ FooPub Inc. publishes FooMag through the App Store, at a price of $1/year. ¶ Each issue of FooMag contains some small amount of content and a link: “To read more, go to foopub.example.com and subscribe to FooMag Deluxe for $20/year!” ¶ Users download FooMag Deluxe through FooPub’s own servers, bypassing the App Store completely. ¶ Scads of people discover FooMag through the App Store, subscribe to it (giving Apple 30¢ out of each $1 subscription), and a significant fraction of them upgrade to the deluxe version (giving Apple nothing).

georgemcbay 16y ago
Is discovery via the App Store really that common? As a previous iPhone user and current Android user I don't think I ever discovered a single app for either platform via the App Store itself. I always went looking for something on the App Store (or now on the Android Market) after hearing of it elsewhere. I suppose I may be in the minority there and I can't say for sure I'm not, but I'd be pretty surprised if I were.
- sethg 16y ago
  If an app publisher wants to avoid all the App-Store-related restrictions, can they just put their app on the Web and let people download and install it through the browser? I don’t have any iStuff so I don’t know the practicalities.
  - georgemcbay 16y ago
    No, they can't do that. On iOS it is the App Store or nothing when it comes to native apps. (Of course, if users jailbreak their phones they have more freedom to install apps, but I assume we're just talking about the standard OS here). On Android the publisher can bypass the store by distributing their own APK files. Some carriers (glancing towards AT&T) lock this down in some phones, but by default Android is happy to install new apps from anywhere as long as the user agrees to a dialog warning them of the dangers of running random code they download from the net. This is one of many reasons I'm currently an Android user and self-described "Apple hater".

BigZaphod 16y ago

I'm a huge Apple fan, but I admit there's something about this which doesn't feel entirely... right, and that's concerning. That said, however, there's decent and non-evil reasons for them to think like this - at least in terms of subscriptions, IMO. One issue is that subscription-based apps are almost always free in the app store. Apple loses money on free apps that don't include iAds. If the subscription fee itself is also outside of Apple's control, they're hosting your app, getting you "shelf space", driving people to your app, etc. and they get nothing in return. With such an app, the content is basically replaced every month (or week or day or whatever) which makes the process a bit like a scheduled purchase of a new version of an app - hence the 30% cut. On the surface, I disagree that Apple should get 30% forever for a subscription - especially if the publisher is providing all the infrastructure necessary to deliver that content. What if, though, the subscription system allowed publishers to upload the content once to Apple, and Apple hosts and distributes it to the apps and users? Now the 30% starts looking a bit more reasonable. If indeed it works this way (or will eventually work this way), you could be a very small shop and still manage to support thousands or, indeed, millions of subscriptions with virtually no support infrastructure of your own. That's certainly worth 30% IMO. The flip side, though, is if you already have your own content delivery mechanisims in place, Apple taking 30% each billing cycle seems unfair. IMO, they should offer the subscription products in two flavors - one where they host and distribute your content, and another where you are doing that work. In the second version, Apple could easily take 30% of, say, the first billing cycle and take diminishing amounts for as long as the subscription remains in effect - perhaps even going all the way down to something like 2% just to cover the payment processing. That would seem a lot more fair to me than taking 30% forever. Sadly, though, I haven't yet seen anything that suggests that either of these situations are even true. For all I know, Apple might not be offering any distribution or hosting services and might not even have an API to allow apps to easily take delivery of subscription content, and if that's the case, taking 30% forever seems excessive.

CoffeeDregs 16y ago
* there's decent and non-evil reasons Funny, I just e-mailed some friends about how Apple was starting to get a bit of the stink of Evil about them. As I read your comment, I was struck by how Apple does everything in a very one-size-fits-all fashion (Mac -> no window menu; iPhone -> home screen is a list of apps; subscriptions -> one revenue model). There's a rich set of monetization schemes out there and Apple might offer a range of monetization models. Apple could use an affiliate fee style model where App maker pays Apple $X for each subscription+. Then Apple could just use the eCPM or expected revenue to rank search results (App gets a lot of subscribers and pays a healthy CPA, they get ranked higher). App makers would then need to figure out how much $$$ to pay Apple for an install. This could also apply to free apps [...but we've seen the harm that causes elsewhere]. Then Apple could add simple hosting/management fees for hosting an app's content. + I've been fairly heavily involved in the affiliate/CPA space, so know the kind of unpleasantness the model can bring, but am fairly confident that Apple could work around it. [ed: formatting]

brisance 16y ago

I think this whole thing is overblown. When I trade stock, options or pretty much anything, I get charged commissions. So by the same reckoning e*trade, Schwab, Ameritrade, <insert brokerage here> are thieves and have been "stealing" from investors/traders for centuries.