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1. What's the evidence to support a view that Apple and Google would charge 2-5%? Steam charges 30%. Epic takes 12%. Origin/EA takes 30%. Amazon takes an averag

1. What's the evidence to support a view that Apple and Google would charge 2-5%? Steam charges 30%. Epic takes 12%. Origin/EA takes 30%. Amazon takes an average 13% but it scales up to 25%. 2. Nobody gives a shit if this is better for developers, do they? Epic could charge +30% on IAP and use the Apple IAP system which is orders of magnitude better than anything else in the market. Developers set the pricing, and Apple handles security, authentication, refunds, etc. Consumers know it's a consistent experience across the platform. 3. The only benefit anyone seems to be able to come up with here is "choice" and a misguided belief that prices would come down as if by magic. Video game publishers took up to 60% of video game sales in physical stores, but the ARP of a video game has risen since 2008 and the advent of Steam and other online stores. 4. Seems like Apple has built a successful hardware/software play at least partially based on the fact that consumers don't have to do bullshit things like entering credit card details into some third party payment gateway to buy things, or deal with different refund policies from different folks. Consumers have flocked to the platform and now its success is being used as the basis of an attempt to strip it of its competitive advantage. 5. Same thing happened in the UK with sports coverage. The English Premier League was only broadcast on Sky until a few years ago. £29.99 a month got you all the live televised top flight soccer. Now to watch all of the televised soccer in the UK you need Sky Sports, Amazon Prime Video, and BT Sport. And Sky Sports prices have not decreased in real terms. (Oh, and BT's tech infrastructure is hot garbage.) I don't know anyone who loves the experience of having three different services to deal with and paying more money. Nobody is bleating about "choice" now. 6. I object to this on exactly the same terms as I object to Spotify's bitching that IAP margins -- which have been the same since before Spotify launched -- are too thin. They operate a business where they pay sixty cents of every dollar they make to rights holders for fuck's sake. Why are they bitching at Apple telling them that if they want to do a monthly subscription and net £9.99, they need to charge £14.28? Why can Spotify try to tell Apple that the HomePod -- a fucking speaker -- should let Spotify onto the device natively (when you can already connect via Bluetooth)? 7. Nearly every online store has serious arbitrary limitations placed on it by the operator of the store. Many of these are to do with the user experience, but many of them are a means of paying the bills for something they fund (hosting, marketing, app review team, developers working on APIs). It helps them sell phones, but it's intertwined with the user experience. 8. Gruber's point stands: if you think it's OK for Microsoft to prevent Sony from selling a PlayStation game streaming service on the Xbox Store, I don't see why you have an issue with this. It's not the same as Netflix: it's more like an app store within an app store.

donmcronald 6y ago
I’d say the $.60 per dollar to rights holders is a much better deal than $.30 per dollar to Apple for payment processing. There are a lot of people involved in creating a song vs a couple automated API calls to process a monthly payment.
- enos_feedler 6y ago
  I think you are confusing the value you are getting from Apple with the means you are paying for it. Just because the fee is collected through a couple of payment API calls doesn’t mean thats what you are paying for.
- georgespencer 6y ago
  > I'd say the $.60 per dollar to rights holders is a much better deal than $.30 per dollar to Apple for payment processing. You're totally within your rights to think that! (My advice to you: don't start a business literally built on top of Apple's platform!) > a couple automated API calls to process a monthly payment. This sort of oversimplification makes it hard to take your argument seriously. I'm pretty sure you don't believe that, but just in case you do… This article[1] suggests that Apple made $4.2bn from the App Store in the 10 years between 2008 and 2018. Here are some of the things I would put into the cost lines for Apple's app store P&L (the company operates a combined P&L): 1. Multiple data centres dedicated to the app store and routing third-party notifications. That's both hosting of the apps and ongoing cost associated with e.g. push notifications, software updates. Each of these data centres has energy, staff, hardware costs. That is to say: there is both opex and capex here, which means Apple isn't only netting ongoing costs from revenue but also thinking about the cost of the capital invested in infrastructure up front. 2. The card processing charges associated with customers buying the app in the first place, and subsequent in-app purchases. 3. The cost of Apple's App Review Teams (three dedicated offices: Cork, Shanghai, Sunnyvale). That's 300 people.[2] There are costs behind them, too (for example: recruitment, HR, management). 4. Product and engineering costs associated with the team Apple has working on internal systems and services dedicated to app review. 5. An apportionment of costs associated with customers seeking technical support in-store and online due to third-party apps. 6. An apportionment of costs associated with the development and maintenance of services and APIs which Apple develops and makes available to app developers. (For example, sign-on with Apple.) In 2018 the app store had seen 130 billion apps downloaded[3], with an average app size of 38mb[4]. That's 4.94 exabytes of data excluding updates. Microsoft for many years charged Xbox developers for certification of games and patches, in part because of the bandwidth costs of distributing those patches to its customers, but also because providing this sort of service is mired by multiple perilous overheads -- which, I have to say, people on the web tend to misunderstand/ignore/dismiss. Fortnite has nearly 150 million installs on iOS. It's 1.8 gigabytes. That's 270 million gigabytes, and the game is free. 30% of users don't spend a dime in Fortnite. That's 81 million gigabytes of free bandwidth for Epic, before you forget about the fact that Apple promotes the game etc. Neither party is a saint here. Apple and Epic both get a lot of out the app being in the store. But Epic has multiple options to resolving this without trying to rob Apple's platform of a significant part of its USP. [1] https://www.theverge.com/2019/3/20/18273179/apple-icloud-itunes-app-store-music-services-businesses https://www.theverge.com/2019/3/20/18273179/apple-icloud-itu... [2] https://www.cnbc.com/2019/06/21/how-apples-app-review-process-for-the-app-store-works.html https://www.cnbc.com/2019/06/21/how-apples-app-review-proces... [3] https://www.appannie.com/en/insights/market-data/data-behind-10-years-ios-app-store/ https://www.appannie.com/en/insights/market-data/data-behind... [4] https://sweetpricing.com/blog/2017/02/average-app-file-size/ https://sweetpricing.com/blog/2017/02/average-app-file-size/

donmcronald 6y ago

I’d say the $.60 per dollar to rights holders is a much better deal than $.30 per dollar to Apple for payment processing. There are a lot of people involved in creating a song vs a couple automated API calls to process a monthly payment.

enos_feedler 6y ago
I think you are confusing the value you are getting from Apple with the means you are paying for it. Just because the fee is collected through a couple of payment API calls doesn’t mean thats what you are paying for.
georgespencer 6y ago
> I'd say the $.60 per dollar to rights holders is a much better deal than $.30 per dollar to Apple for payment processing. You're totally within your rights to think that! (My advice to you: don't start a business literally built on top of Apple's platform!) > a couple automated API calls to process a monthly payment. This sort of oversimplification makes it hard to take your argument seriously. I'm pretty sure you don't believe that, but just in case you do… This article[1] suggests that Apple made $4.2bn from the App Store in the 10 years between 2008 and 2018. Here are some of the things I would put into the cost lines for Apple's app store P&L (the company operates a combined P&L): 1. Multiple data centres dedicated to the app store and routing third-party notifications. That's both hosting of the apps and ongoing cost associated with e.g. push notifications, software updates. Each of these data centres has energy, staff, hardware costs. That is to say: there is both opex and capex here, which means Apple isn't only netting ongoing costs from revenue but also thinking about the cost of the capital invested in infrastructure up front. 2. The card processing charges associated with customers buying the app in the first place, and subsequent in-app purchases. 3. The cost of Apple's App Review Teams (three dedicated offices: Cork, Shanghai, Sunnyvale). That's 300 people.[2] There are costs behind them, too (for example: recruitment, HR, management). 4. Product and engineering costs associated with the team Apple has working on internal systems and services dedicated to app review. 5. An apportionment of costs associated with customers seeking technical support in-store and online due to third-party apps. 6. An apportionment of costs associated with the development and maintenance of services and APIs which Apple develops and makes available to app developers. (For example, sign-on with Apple.) In 2018 the app store had seen 130 billion apps downloaded[3], with an average app size of 38mb[4]. That's 4.94 exabytes of data excluding updates. Microsoft for many years charged Xbox developers for certification of games and patches, in part because of the bandwidth costs of distributing those patches to its customers, but also because providing this sort of service is mired by multiple perilous overheads -- which, I have to say, people on the web tend to misunderstand/ignore/dismiss. Fortnite has nearly 150 million installs on iOS. It's 1.8 gigabytes. That's 270 million gigabytes, and the game is free. 30% of users don't spend a dime in Fortnite. That's 81 million gigabytes of free bandwidth for Epic, before you forget about the fact that Apple promotes the game etc. Neither party is a saint here. Apple and Epic both get a lot of out the app being in the store. But Epic has multiple options to resolving this without trying to rob Apple's platform of a significant part of its USP. [1] https://www.theverge.com/2019/3/20/18273179/apple-icloud-itunes-app-store-music-services-businesses https://www.theverge.com/2019/3/20/18273179/apple-icloud-itu... [2] https://www.cnbc.com/2019/06/21/how-apples-app-review-process-for-the-app-store-works.html https://www.cnbc.com/2019/06/21/how-apples-app-review-proces... [3] https://www.appannie.com/en/insights/market-data/data-behind-10-years-ios-app-store/ https://www.appannie.com/en/insights/market-data/data-behind... [4] https://sweetpricing.com/blog/2017/02/average-app-file-size/ https://sweetpricing.com/blog/2017/02/average-app-file-size/