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This is a great picking apart of Apples justification but I think the issue that most irks everyone who’s not apologizing for Apple is where did this magic numb

by harryf 6y ago

This is a great picking apart of Apples justification but I think the issue that most irks everyone who’s not apologizing for Apple is where did this magic number 30% come from? Which market forces created it? Here on HN most of us probably feel that product manager at Apple licked their finger, felt the wind and said “Yeah 30% seems about the most we can get away with” And what irks even more is once Apple set the precedent, as their we’re no outcries Google was like “Let’s copy that!”. Let’s hope there was no collusion ...

geerlingguy 6y ago
There is precedent; the rate was actually much higher in previous mobile app stores (e.g. Symbian and ring tone stores). Additionally, there is related precedent in areas like publishing (ebook stores usually charge 30% or more commission). I don't think 30% is outlandish, though I do think it would be nice if Apple reduced that cut, especially if they wanted to consider some form of graduated rate.
- azinman2 6y ago
  Don’t forget that software publishers were an entire industry previously.
MobileVet 6y ago
It is interesting that few people are recognizing that the 30% buys you distribution on a billion devices. Yes, I know, the web is free...and the App Store search is broken so discovery isn’t what it was... but still. Market access is VERY significant and worth something and the incremental cost to Apple has no bearing on what it is worth. As discussed, prior mobile cuts were far more one sided. We payed the carrier 50% and then Qualcomm 20% of what was left. Bottom line, we walked away with 40% and we were happy.
- weixiyen 6y ago
  > It is interesting that few people are recognizing that the 30% buys you distribution on a billion devices. It's interesting that few people don't understand the difference between permission to distribute versus actual distribution. If Apple was doing any distribution for you at all, you wouldn't need to pay Facebook and Google for distribution. Note how this was different in the early days, where simply being on the app store would get downloads. That has not been true for 7-8 years now.
  - deadlocked 6y ago
    > It's interesting that few people don't understand the difference between permission to distribute versus actual distribution. Not sure what distinction you're trying to draw here but in order for Apple to take their 30% cut, someone has to download the app, at which point Apple have de facto distributed it to someone. > If Apple was doing any distribution for you at all, you wouldn't need to pay Facebook and Google for distribution. This makes very little sense to me. Are you saying that if I pay Apple to distribute my app on the App Store then they should also distribute it on every app store? And that if they aren't then they're somehow failing me? > Note how this was different in the early days, where simply being on the app store would get downloads. That has not been true for 7-8 years now. The App Store is a shit-show in terms of discoverability, this is true. I'm not even sure what they can do to improve things at this stage.
- josteink 6y ago
  > the App Store search is broken so discovery isn’t what it was. More often than not, I can't find a named, non-popular app, even when searching for its exact name. The only way I can find it, is if they have a web-page and an direct link to their appstore entry on that web-page. So ironically I have to search Google/DDG on the open web to find the apps I'm looking to install on my iPhone. "Broken" doesn't fully convey just how mismanaged the AppStore is.
antaviana 6y ago
It is explained in Steve Jobs book. Steve wanted a 30% share on all deals where he has distribution. The challenge was to massage the numbers of the deal so he could see his 30% and approve it. Also the 30% is often the budget for the Sales and Marketing operation in a typical organization.
blackearl 6y ago
Steam started selling games on their marketplace around 2005 to 2007, before the Apple app store. They supposedly have a tiered cut, something like 30% off first X million, 25% of next X amount, etc.
thewebcount 6y ago
Actually, there was precedent. Previously, if you wanted to reach a lot of people you had to package your product in physical boxes and get it into brick and mortar stores. The cut that distributors took for that was around 50-60%, and you only had access to them if you were already huge. Having worked with low-end shareware payment processors at the time, they charged between 15 and 30% and most of them are now out of business. I remember people complaining about the 15% cut, too. No matter how fair you make it, people will scream that it's too much. Even when it's free. Just look at how people complain about open source software that they don't pay for and don't contribute to. Nothing is ever fair for some people.
tomComb 6y ago
When Apple announced Apple news it was widely reported (there is no official figure) that they were demanding and getting a 50% cut. Gawd I hope the web can remain competitive with the proprietary platforms!
scarface74 6y ago
The article tells you where the 30% came from. In the days of iTunes, a song was $0.99. Credit card transaction fees were around 2% + $0.25 per transaction. The minimum price for an app was $0.99 as was the minimum in app purchase. I am not saying it should scale as price scales to remain 30%.
- chipotle_coyote 6y ago
  This seems almost certainly correct. The 30% cut for the App Store had a precedent of a 30% cut for media in the iTunes Store. In the past I've jokes that the fees in the App Store were chosen so they could just use the existing infrastructure with as little change as possible -- and while it's a joke, it's not entirely a joke. It's pretty easy to see the execs at Apple looking at that and saying, "Hey, 30% is way cheaper than what physical software stores charge for shelf space, and it's in line with other digital media stores that handle not just payment processing but hosting, downloading, review aggregation, and marketing, so it's a great deal, right?" And, IIRC at the time it was seen as a great deal. It may not be such a good deal now, though, and in-app purchases are really a whole other kettle of fish.
simonh 6y ago
The App Store wasn't the first online store on mobile phones, there were stores for downloading ringtones and wallpapers on some devices and some primitive app stores particularly in Japan. The typical markup on these was 50% at the time, while typical retail markup is 40% for many types of goods. Consensus among pundits was that Apple would charge 50% and 30% was widely reported at the time as being surprisingly low.
- chokma 6y ago
  Not to forget the 50% that telecom providers would demand for premium SMS / MMS (with one "chat" message costing 5€, half of it would get to the network provider). Which also explains why they had little incentive to prevent predatory services like SMS spam telling people to call / message high priced service numbers with subscription keywords.

by harryf 6y ago

geerlingguy 6y ago

There is precedent; the rate was actually much higher in previous mobile app stores (e.g. Symbian and ring tone stores). Additionally, there is related precedent in areas like publishing (ebook stores usually charge 30% or more commission). I don't think 30% is outlandish, though I do think it would be nice if Apple reduced that cut, especially if they wanted to consider some form of graduated rate.

azinman2 6y ago
Don’t forget that software publishers were an entire industry previously.

MobileVet 6y ago

It is interesting that few people are recognizing that the 30% buys you distribution on a billion devices. Yes, I know, the web is free...and the App Store search is broken so discovery isn’t what it was... but still. Market access is VERY significant and worth something and the incremental cost to Apple has no bearing on what it is worth. As discussed, prior mobile cuts were far more one sided. We payed the carrier 50% and then Qualcomm 20% of what was left. Bottom line, we walked away with 40% and we were happy.

weixiyen 6y ago
> It is interesting that few people are recognizing that the 30% buys you distribution on a billion devices. It's interesting that few people don't understand the difference between permission to distribute versus actual distribution. If Apple was doing any distribution for you at all, you wouldn't need to pay Facebook and Google for distribution. Note how this was different in the early days, where simply being on the app store would get downloads. That has not been true for 7-8 years now.
- deadlocked 6y ago
  > It's interesting that few people don't understand the difference between permission to distribute versus actual distribution. Not sure what distinction you're trying to draw here but in order for Apple to take their 30% cut, someone has to download the app, at which point Apple have de facto distributed it to someone. > If Apple was doing any distribution for you at all, you wouldn't need to pay Facebook and Google for distribution. This makes very little sense to me. Are you saying that if I pay Apple to distribute my app on the App Store then they should also distribute it on every app store? And that if they aren't then they're somehow failing me? > Note how this was different in the early days, where simply being on the app store would get downloads. That has not been true for 7-8 years now. The App Store is a shit-show in terms of discoverability, this is true. I'm not even sure what they can do to improve things at this stage.
josteink 6y ago
> the App Store search is broken so discovery isn’t what it was. More often than not, I can't find a named, non-popular app, even when searching for its exact name. The only way I can find it, is if they have a web-page and an direct link to their appstore entry on that web-page. So ironically I have to search Google/DDG on the open web to find the apps I'm looking to install on my iPhone. "Broken" doesn't fully convey just how mismanaged the AppStore is.

antaviana 6y ago

It is explained in Steve Jobs book. Steve wanted a 30% share on all deals where he has distribution. The challenge was to massage the numbers of the deal so he could see his 30% and approve it. Also the 30% is often the budget for the Sales and Marketing operation in a typical organization.

blackearl 6y ago

Steam started selling games on their marketplace around 2005 to 2007, before the Apple app store. They supposedly have a tiered cut, something like 30% off first X million, 25% of next X amount, etc.

thewebcount 6y ago

Actually, there was precedent. Previously, if you wanted to reach a lot of people you had to package your product in physical boxes and get it into brick and mortar stores. The cut that distributors took for that was around 50-60%, and you only had access to them if you were already huge. Having worked with low-end shareware payment processors at the time, they charged between 15 and 30% and most of them are now out of business. I remember people complaining about the 15% cut, too. No matter how fair you make it, people will scream that it's too much. Even when it's free. Just look at how people complain about open source software that they don't pay for and don't contribute to. Nothing is ever fair for some people.

tomComb 6y ago

When Apple announced Apple news it was widely reported (there is no official figure) that they were demanding and getting a 50% cut. Gawd I hope the web can remain competitive with the proprietary platforms!

scarface74 6y ago

The article tells you where the 30% came from. In the days of iTunes, a song was $0.99. Credit card transaction fees were around 2% + $0.25 per transaction. The minimum price for an app was $0.99 as was the minimum in app purchase. I am not saying it should scale as price scales to remain 30%.

chipotle_coyote 6y ago
This seems almost certainly correct. The 30% cut for the App Store had a precedent of a 30% cut for media in the iTunes Store. In the past I've jokes that the fees in the App Store were chosen so they could just use the existing infrastructure with as little change as possible -- and while it's a joke, it's not entirely a joke. It's pretty easy to see the execs at Apple looking at that and saying, "Hey, 30% is way cheaper than what physical software stores charge for shelf space, and it's in line with other digital media stores that handle not just payment processing but hosting, downloading, review aggregation, and marketing, so it's a great deal, right?" And, IIRC at the time it was seen as a great deal. It may not be such a good deal now, though, and in-app purchases are really a whole other kettle of fish.

simonh 6y ago

The App Store wasn't the first online store on mobile phones, there were stores for downloading ringtones and wallpapers on some devices and some primitive app stores particularly in Japan. The typical markup on these was 50% at the time, while typical retail markup is 40% for many types of goods. Consensus among pundits was that Apple would charge 50% and 30% was widely reported at the time as being surprisingly low.

chokma 6y ago
Not to forget the 50% that telecom providers would demand for premium SMS / MMS (with one "chat" message costing 5€, half of it would get to the network provider). Which also explains why they had little incentive to prevent predatory services like SMS spam telling people to call / message high priced service numbers with subscription keywords.