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interesting how bigger players are able to negotiate discounts/preference when arguably they are more suited to not need the discount - whereas 15% could be the

interesting how bigger players are able to negotiate discounts/preference when arguably they are more suited to not need the discount - whereas 15% could be the difference between bankruptcy and breakeven or ramen profitability for a small startup/business.

BiteCode_dev 6y ago
In a system where money is power, and the economy encourages its concentration, you always end up with such unbalances. The invisible hand cannot help here: demand will ask for cheaper prices (the 99% have a big stack of cash as a group, but a small one individually, so they seek savings), which the economy of scale will only make happen for the bigger players. At some point, fair competition is not possible anymore. Not to mention the ability to negotiate is driven by who you can afford to hire, who you know, how sustainable you are, etc.
- Fiveplus 6y ago
  >ability to negotiate is driven by who you can afford to hire, who you know, how sustainable you are This is a good point, often subtly overlooked when discussing similar topics.
- WalterBright 6y ago
  You mention economy of scale - that's why quantity discounts exist. It definitely is the invisible hand at work.
- acituan 6y ago
  > In a system where money is power, and the economy encourages its concentration, you always end up with such unbalances. Is money really the only power? For all I know these companies depend on consumers’ attention and consumption. Not only that, the people who run them depend on continuous growth of those to keep their positions. To the extent consumer interests can organize (which includes democratic, legal, informational organization and organizing consumption behavior) there are always ways out. > The invisible hand cannot help here Maybe invisible hand was never there to help. Maybe that is the origin of such a defeatist perspective. Companies are not gods, markets are not forces of nature. They are more like semi-useful entities and processes that can also parasitize our stone age psychology for their own ends. It is on to us to realize our own part in that equation.
  - coldtea 6y ago
    >Is money really the only power? For all I know these companies depend on consumers’ attention and consumption. Which doesn't translate to any great power for smaller developers, who don't command much of consumers attention anyway. Try getting Amazon Prime, or Spotify out of the App Store and there will be a riot. Some smaller app few care about? Not so much... >Not only that, the people who run them depend on continuous growth of those to keep their positions. The people who run them will get their bonuses and golden parachutes even if they burn the companies to the ground. And after that they can retire or easily find other positions in different companies soon enough. It's lesser employees that depend on growth to keep their jobs...
    - acituan 6y ago
      > Try getting Amazon Prime, or Spotify out of the App Store and there will be a riot. Some smaller app few care about? Not so much... Which was my point. Their power doesn’t come from their money but the fact that their products are found useful by all those who would riot. I’m not saying it is necessarily fair, but it is not like that they are rent seeking in the app store, their apps are found widely valuable. If anything, app store was the rent seeker and now it is conceding due proceeds. Tough luck for the small developers who can’t band together for a lawsuit or a mass app-strike against that discrimination. > The people who run them will get their bonuses and golden parachutes even if they burn the companies to the ground. And after that they can retire or easily find other positions in different companies soon enough. Again, the point was the power is not in the money itself, it is in the growth obligation. And you are wrong that growth is only a lesser employee concern, if anything having more captial means the opportunity cost of not growing the capital is much higher, so they are even more bound by the normativity of growth. Not necessarily growth of their immediate company, but any other investment instrument that eventually ties to the economy at large.
      - coldtea 6y ago
        >Which was my point. Their power doesn’t come from their money but the fact that their products are found useful by all those who would riot. That translates to money pooured though. Without huge VC investments there wouldn't be any Netflix or Amazon. And their huge followers mean more money, more resilience to Apple's demands (they don't depend on it 100%) etc. Whereas for a smaller developer house not of these are true.
edoceo 6y ago
The ancient rule of "them that gots is them that gets".
tinyhouse 6y ago
The worse case of this is with medical billing in the US. Health insurance companies get discounts while individuals do not...
- philwelch 6y ago
  Sure they do. I’ve negotiated discounts on medical bills a few times.
  - dazhbog 6y ago
    From 1000% markup to 500% markup?
    - philwelch 6y ago
      I’ve gotten the exact same price the insurance company pays pretty consistently, and sometimes even less.
      - ensignavenger 6y ago
        I've attempted to negotiate medical bills and gotten no where in the past, so that's another anecdote.
        camhart 6y ago
        Did you have insurance? If you do not, they're a lot more willing to negotiate.
        philwelch 6y ago
        Yeah, to clarify, all of my successes were before Obamacare.
  - lotsofpulp 6y ago
    It’s not the same to discount a bill (that you legally owe) compared to an insurance company having pre negotiated prices. If a healthcare provider decides to lower the amount they claim you owe because they believe it will cost them more to pursue you more than they will receive, that’s different than agreeing to a price before the services or products are exchanged.
philwelch 6y ago
The question is, what do you bring to the table? Maybe the App Store runs on AWS and Amazon gives Apple a discount on AWS so Apple reciprocates for Amazon’s apps. I don’t think their working relationship is all roses or anything—they were feuding a few years back—but agreements like this are negotiated because they leave everyone who agrees to them better off in some way. It could even be as simple as your app being so important that people won’t buy the phone if it can’t run it. Ultimately it doesn’t matter because for a new startup, you’re more focused on creating value from scratch than on optimizing your margins.
- penagwin 6y ago
  Interestingly you also can't purchase kindle ebooks on Apple devices at all, which I beleive is to skip the apple tax.
  - philwelch 6y ago
    Yeah, that’s one of the ways that it’s not all roses between them. Amazon has played hardball with Apple too, sometimes refusing to sell their products.
- jakelazaroff 6y ago
  I alone don't bring much to the table. But multiply it by thousands of developer and that "not much" starts to add up. Apple should want to encourage a vibrant app ecosystem, no? Who knows how many cool or useful apps just never get made because the developers can't deal with the App Store.
  - philwelch 6y ago
    Yeah, if it turns out that a standard rate of 25% would work out better for them than 30%, they should lower the rate to 25%. Is the current app ecosystem not vibrant enough? I think they’re doing fine as it is but it’s very literally not my business :)
  - simonh 6y ago
    Oh come on, the App Store is overflowing with Apps. The amount of options on there is overwhelming. If anything there’s too much competition and too many apps, driving down the prices companies can charge for premium products due to oversupply. And don’t tell me that’s Apples fault as well, because the 30% on low prices makes businesses unsustainable. Which is it, does the 30% discourage companies from participating, or does the App Store 30% and all enable too much competition for premium apps. It can’t be both.
supernova87a 6y ago
Celebrities get free gift bags full of stuff they could easily afford, in order to promote their brand. Frequent flier programs give out more bonuses to people who fly a lot and are probably rich, to incentivize them to fly more. Companies give price breaks to huge volume buyers. Is this behavior, in concept at least, not familiar?
CubsFan1060 6y ago
Isn't this pretty average business? Amazon (and the others) are bringing more business and get a discount. AWS does this. So does monoprice (volume pricing). My local landscaping place does this (contractors buying more tons of rock get a better price). Home depot has "contractor pricing" when you buy multiples of things.
- clusterfish 6y ago
  The examples you give are driven by competition forcing the suppliers to share their economies of scale. Those deals are available to everyone and the pricing is also upfront. This Apple-Amazon situation on the other hand is a secret deal between two monopolistic powers, that's why it's coming up in hearings on anticompetitive behaviour. Such a deal is not available to everyone equally, it's not at all similar to Monoline / homedepot pricing.
- ryanisnan 6y ago
  I think it definitely is pretty standard. What's not standard is, when you are buying physical goods like that, you have competition. You can source better rates. With Apple, you have no competition. It is accept the pricing model, or leave.
  - CubsFan1060 6y ago
    You leave as in going to Lowes? Or going to Android?
    - ryanisnan 6y ago
      Talking about mobile devices, you can't simply "go to Android". What you are purchasing when you pay Apple's fees are access to a userbase (among other things like the ecosystem). If you switch to Android, you are no longer buying the same product. Talking about things like bricks, it would be more like if Home Depot was the only brick seller, and if you didn't like their brick terms, you could leave and buy instead 2x4s elsewhere.
amelius 6y ago
It's the economic version of "those who need love/affection the most are the least likely to receive it".
wmf 6y ago
Bigger players don't necessarily have bigger margins.
lotsofpulp 6y ago
Would you give the same prices to someone who is buying a lot from you versus someone who is buying a little? I’ve never seen a seller (of product or services) not give volume discounts. If they didn’t, they would be out of businesses quickly, as I’m sure other sellers would be more than happy to discount.
beervirus 6y ago
Welcome to earth. You get what you can take, not what you "deserve."
- JeremyBanks 6y ago
  The Amazon deal appears to buttress lawmakers’ claims that not all apps are treated equally, a contention Cook rejected during the hearing. “That is not correct,” Cook said when asked if some developers are treated differently. “We treat every developer the same.”
  - gotostatement 6y ago
    "We treat everyone the same. Everyone is equally allowed to use their position as a trillion dollar business to negotiate a deal."
    - ryanisnan 6y ago
      I think this is in essence the problem. Well put.
    - Spivak 6y ago
      I mean you don't have to be a trillion dollar business. Your ability to negotiate a deal is mostly how valuable you are to Apple, or at least how valuable you're perceived. If Apple doesn't need your business you're gonna be stuck paying full price.
- ByteJockey 6y ago
  Isn't the old line that you deserve whatever you can convince people to give you?
WalterBright 6y ago
Quantity discounts are normal. The reason is pretty simple - your costs to deliver a quantity product is lower than an individual one.
readams 6y ago
For content distributors whose margins are far less than 15%, it's a death sentence that means only Apple is allowed to distribute content.
- scarface74 6y ago
  There is an existence proof that isn’t true. All of the streaming providers have apps for the AppleTV - even those that don’t allow in app subscriptions.
  - readams 6y ago
    And that seems like an equal competitive footing to you?
    - scarface74 6y ago
      What other competition do you want? Any app gets a placement on the AppleTV once it is installed and any app can but is not required to integrate with the TV app. Netflix doesn’t integrate with the TV app completely (Netflix’s choice) but when you search for a TV show or movie, if the app is installed , Apple tells you when it’s available for free with one of your third party subscriptions instead of steering you to buy it from them. I can say “watch DareDevil on Netflix” from the AppleTV and it launches Netflix. If I do it on my phone there is an “open in” button and it lets me choose Netflix.
learnstats2 6y ago
It's monopolistic behaviour on both sides. Apple gets away with charging a flat rate of 30% on the App Store because there are no reasonable alternatives (Apple has worked hard to ensure that there are none) Amazon gets away with negotiating this down because there is no reasonable alternative. In my opinion this provides evidence that the App Store cut should be regulated.

BiteCode_dev 6y ago

In a system where money is power, and the economy encourages its concentration, you always end up with such unbalances. The invisible hand cannot help here: demand will ask for cheaper prices (the 99% have a big stack of cash as a group, but a small one individually, so they seek savings), which the economy of scale will only make happen for the bigger players. At some point, fair competition is not possible anymore. Not to mention the ability to negotiate is driven by who you can afford to hire, who you know, how sustainable you are, etc.

Fiveplus 6y ago
>ability to negotiate is driven by who you can afford to hire, who you know, how sustainable you are This is a good point, often subtly overlooked when discussing similar topics.
WalterBright 6y ago
You mention economy of scale - that's why quantity discounts exist. It definitely is the invisible hand at work.
acituan 6y ago
> In a system where money is power, and the economy encourages its concentration, you always end up with such unbalances. Is money really the only power? For all I know these companies depend on consumers’ attention and consumption. Not only that, the people who run them depend on continuous growth of those to keep their positions. To the extent consumer interests can organize (which includes democratic, legal, informational organization and organizing consumption behavior) there are always ways out. > The invisible hand cannot help here Maybe invisible hand was never there to help. Maybe that is the origin of such a defeatist perspective. Companies are not gods, markets are not forces of nature. They are more like semi-useful entities and processes that can also parasitize our stone age psychology for their own ends. It is on to us to realize our own part in that equation.
- coldtea 6y ago
  >Is money really the only power? For all I know these companies depend on consumers’ attention and consumption. Which doesn't translate to any great power for smaller developers, who don't command much of consumers attention anyway. Try getting Amazon Prime, or Spotify out of the App Store and there will be a riot. Some smaller app few care about? Not so much... >Not only that, the people who run them depend on continuous growth of those to keep their positions. The people who run them will get their bonuses and golden parachutes even if they burn the companies to the ground. And after that they can retire or easily find other positions in different companies soon enough. It's lesser employees that depend on growth to keep their jobs...
  - acituan 6y ago
    > Try getting Amazon Prime, or Spotify out of the App Store and there will be a riot. Some smaller app few care about? Not so much... Which was my point. Their power doesn’t come from their money but the fact that their products are found useful by all those who would riot. I’m not saying it is necessarily fair, but it is not like that they are rent seeking in the app store, their apps are found widely valuable. If anything, app store was the rent seeker and now it is conceding due proceeds. Tough luck for the small developers who can’t band together for a lawsuit or a mass app-strike against that discrimination. > The people who run them will get their bonuses and golden parachutes even if they burn the companies to the ground. And after that they can retire or easily find other positions in different companies soon enough. Again, the point was the power is not in the money itself, it is in the growth obligation. And you are wrong that growth is only a lesser employee concern, if anything having more captial means the opportunity cost of not growing the capital is much higher, so they are even more bound by the normativity of growth. Not necessarily growth of their immediate company, but any other investment instrument that eventually ties to the economy at large.
    - coldtea 6y ago
      >Which was my point. Their power doesn’t come from their money but the fact that their products are found useful by all those who would riot. That translates to money pooured though. Without huge VC investments there wouldn't be any Netflix or Amazon. And their huge followers mean more money, more resilience to Apple's demands (they don't depend on it 100%) etc. Whereas for a smaller developer house not of these are true.

edoceo 6y ago

The ancient rule of "them that gots is them that gets".

tinyhouse 6y ago

The worse case of this is with medical billing in the US. Health insurance companies get discounts while individuals do not...

philwelch 6y ago
Sure they do. I’ve negotiated discounts on medical bills a few times.
- dazhbog 6y ago
  From 1000% markup to 500% markup?
  - philwelch 6y ago
    I’ve gotten the exact same price the insurance company pays pretty consistently, and sometimes even less.
    - ensignavenger 6y ago
      I've attempted to negotiate medical bills and gotten no where in the past, so that's another anecdote.
      - camhart 6y ago
        Did you have insurance? If you do not, they're a lot more willing to negotiate.
      - philwelch 6y ago
        Yeah, to clarify, all of my successes were before Obamacare.
- lotsofpulp 6y ago
  It’s not the same to discount a bill (that you legally owe) compared to an insurance company having pre negotiated prices. If a healthcare provider decides to lower the amount they claim you owe because they believe it will cost them more to pursue you more than they will receive, that’s different than agreeing to a price before the services or products are exchanged.

philwelch 6y ago

The question is, what do you bring to the table? Maybe the App Store runs on AWS and Amazon gives Apple a discount on AWS so Apple reciprocates for Amazon’s apps. I don’t think their working relationship is all roses or anything—they were feuding a few years back—but agreements like this are negotiated because they leave everyone who agrees to them better off in some way. It could even be as simple as your app being so important that people won’t buy the phone if it can’t run it. Ultimately it doesn’t matter because for a new startup, you’re more focused on creating value from scratch than on optimizing your margins.

penagwin 6y ago
Interestingly you also can't purchase kindle ebooks on Apple devices at all, which I beleive is to skip the apple tax.
- philwelch 6y ago
  Yeah, that’s one of the ways that it’s not all roses between them. Amazon has played hardball with Apple too, sometimes refusing to sell their products.
jakelazaroff 6y ago
I alone don't bring much to the table. But multiply it by thousands of developer and that "not much" starts to add up. Apple should want to encourage a vibrant app ecosystem, no? Who knows how many cool or useful apps just never get made because the developers can't deal with the App Store.
- philwelch 6y ago
  Yeah, if it turns out that a standard rate of 25% would work out better for them than 30%, they should lower the rate to 25%. Is the current app ecosystem not vibrant enough? I think they’re doing fine as it is but it’s very literally not my business :)
- simonh 6y ago
  Oh come on, the App Store is overflowing with Apps. The amount of options on there is overwhelming. If anything there’s too much competition and too many apps, driving down the prices companies can charge for premium products due to oversupply. And don’t tell me that’s Apples fault as well, because the 30% on low prices makes businesses unsustainable. Which is it, does the 30% discourage companies from participating, or does the App Store 30% and all enable too much competition for premium apps. It can’t be both.

supernova87a 6y ago

Celebrities get free gift bags full of stuff they could easily afford, in order to promote their brand. Frequent flier programs give out more bonuses to people who fly a lot and are probably rich, to incentivize them to fly more. Companies give price breaks to huge volume buyers. Is this behavior, in concept at least, not familiar?

CubsFan1060 6y ago

Isn't this pretty average business? Amazon (and the others) are bringing more business and get a discount. AWS does this. So does monoprice (volume pricing). My local landscaping place does this (contractors buying more tons of rock get a better price). Home depot has "contractor pricing" when you buy multiples of things.

clusterfish 6y ago
The examples you give are driven by competition forcing the suppliers to share their economies of scale. Those deals are available to everyone and the pricing is also upfront. This Apple-Amazon situation on the other hand is a secret deal between two monopolistic powers, that's why it's coming up in hearings on anticompetitive behaviour. Such a deal is not available to everyone equally, it's not at all similar to Monoline / homedepot pricing.
ryanisnan 6y ago
I think it definitely is pretty standard. What's not standard is, when you are buying physical goods like that, you have competition. You can source better rates. With Apple, you have no competition. It is accept the pricing model, or leave.
- CubsFan1060 6y ago
  You leave as in going to Lowes? Or going to Android?
  - ryanisnan 6y ago
    Talking about mobile devices, you can't simply "go to Android". What you are purchasing when you pay Apple's fees are access to a userbase (among other things like the ecosystem). If you switch to Android, you are no longer buying the same product. Talking about things like bricks, it would be more like if Home Depot was the only brick seller, and if you didn't like their brick terms, you could leave and buy instead 2x4s elsewhere.

amelius 6y ago

It's the economic version of "those who need love/affection the most are the least likely to receive it".

wmf 6y ago

Bigger players don't necessarily have bigger margins.

lotsofpulp 6y ago

Would you give the same prices to someone who is buying a lot from you versus someone who is buying a little? I’ve never seen a seller (of product or services) not give volume discounts. If they didn’t, they would be out of businesses quickly, as I’m sure other sellers would be more than happy to discount.

beervirus 6y ago

Welcome to earth. You get what you can take, not what you "deserve."

JeremyBanks 6y ago
The Amazon deal appears to buttress lawmakers’ claims that not all apps are treated equally, a contention Cook rejected during the hearing. “That is not correct,” Cook said when asked if some developers are treated differently. “We treat every developer the same.”
- gotostatement 6y ago
  "We treat everyone the same. Everyone is equally allowed to use their position as a trillion dollar business to negotiate a deal."
  - ryanisnan 6y ago
    I think this is in essence the problem. Well put.
  - Spivak 6y ago
    I mean you don't have to be a trillion dollar business. Your ability to negotiate a deal is mostly how valuable you are to Apple, or at least how valuable you're perceived. If Apple doesn't need your business you're gonna be stuck paying full price.
ByteJockey 6y ago
Isn't the old line that you deserve whatever you can convince people to give you?

WalterBright 6y ago

Quantity discounts are normal. The reason is pretty simple - your costs to deliver a quantity product is lower than an individual one.

readams 6y ago

For content distributors whose margins are far less than 15%, it's a death sentence that means only Apple is allowed to distribute content.

scarface74 6y ago
There is an existence proof that isn’t true. All of the streaming providers have apps for the AppleTV - even those that don’t allow in app subscriptions.
- readams 6y ago
  And that seems like an equal competitive footing to you?
  - scarface74 6y ago
    What other competition do you want? Any app gets a placement on the AppleTV once it is installed and any app can but is not required to integrate with the TV app. Netflix doesn’t integrate with the TV app completely (Netflix’s choice) but when you search for a TV show or movie, if the app is installed , Apple tells you when it’s available for free with one of your third party subscriptions instead of steering you to buy it from them. I can say “watch DareDevil on Netflix” from the AppleTV and it launches Netflix. If I do it on my phone there is an “open in” button and it lets me choose Netflix.

learnstats2 6y ago

It's monopolistic behaviour on both sides. Apple gets away with charging a flat rate of 30% on the App Store because there are no reasonable alternatives (Apple has worked hard to ensure that there are none) Amazon gets away with negotiating this down because there is no reasonable alternative. In my opinion this provides evidence that the App Store cut should be regulated.