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> No developer in their right mind would let Apple take a cut of anything. No developer in their right mind would let Apple take a 30% cut of anything. Most d

> No developer in their right mind would let Apple take a cut of anything. No developer in their right mind would let Apple take a 30% cut of anything. Most developers would pay Apple a 3% cut in order to use Apple's built in-payment mechanism, and not force their users to leave the app and type their credit card information into a browser. 30% is exploitive, and not at all proportional to the value provided. People pay it because they have to, not because it's fair.

MR4D 5y ago
Visa charges you 3% but doesn’t have an online store that I can find your app on, and don’t run security checks against your app to check for malicious apps, etc. So I think we can agree that a realistic number for Apple is definitely above 3% for the service they provide. We can argue about 30%, and that’s a good discussion, but 3% is no way comparable.
- thekyle 5y ago
  I think most credit card processors charge something like 30 cents + 2.9%. On large purchases that's about 3%, but on smaller transactions (like those usually used in mobile apps) that 30 cents dominates and could end up being about 30%. So from that perspective Apple's 30% cut could be a good deal in some cases.
  - GeneralTspoon 5y ago
    It's not a "good deal" in any case.... The minimum purchase price on iOS is $0.99, so at worst you'd be paying basically the same rate (~30%). But most payment processors offer separate pricing for micro-transactions (e.g. Paypal is 5% + $0.05 IIRC). Which works out at around 10% for a $0.99 transaction. And actually - Adyen offer much better pricing than the "Stripe rate" of $0.30 + 2.9% in the first place.
    - anonymouse008 5y ago
      A few years ago when making a micro transaction app, PayPal only allowed one type of fee structure — either the 5% or the 2.9%. Meaning you couldn’t segregate low tickets from high tickets and get the most optimal fee - your whole merchant account was one fee or the other. ‘Twas quite a PITA
      - GeneralTspoon 5y ago
        Yeah this is still the case AFAIK - very annoying. I believe their recommended workaround was to have 2 separate merchant accounts with different fee structures and group your products accordingly.
  - deleted 5y ago
    [deleted]
- deergomoo 5y ago
  The 12% that Epic and now Microsoft charge seems about right IMO
  - Someone 5y ago
    Based on what arguments? If Apple’s cut were 12% and Epic and Microsoft now charged 6%, would you claim “The 12% that Apple charges seems about right IMO”?
    - reader_mode 5y ago
      Yep, if someone is able to maintain above market level profits for so long it's usually a sign of monopolistic pricing. That's not necessarily bad, but in Apples case it's just double dipping on their monopolistic position and is clearly a drain on the market with no benefit. They have the same incentives to invest in R&D and support the ecosystem on the insane HW margins alone, I'd be willing to bet their dev budget doesn't change at all if this change in rate was made.
      - Someone 5y ago
        But how do you know 12% is about right, and not 10%, 2%, … Also, Apple will claim they have a better product that warrants higher margins. Data from independent parties shows that they attract more users willing to pay for apps, and developers aren’t leaving en masse for Android.
        reader_mode 5y ago
        >Also, Apple will claim they have a better product that warrants higher margins. And this argument is fine in the hardware market because they have competition, it's efficiency monopoly - that's why I said it's not always bad. However their app store controlls access to 50% of US market (even more by revenue) simply because it comes as the only option and the consumers can't unbundle it. If they had competition on the platform (different stores/distribution methods) - you wouldn't have to say what % is right, the market would decide the value added by their app store/payment methods.
- vishnugupta 5y ago
  For some even 3% could be too high let alone 30%. For instance, Kindle iOS app doesn’t let you purchase books. It’s a read-only version, so to speak.
  - dehrmann 5y ago
    Most credit card processors charge around 3%, so it's rarely an issue. The number I usually throw out that Apple could charge and no one would be mad over is 5%. It's more than a credit card processor, but not that much, and it would likely help conversion rates enough that app developers would be happy.
- robertlagrant 5y ago
  They also don't curate a language and IDE for you to make your stuff with as well, nor offer logins or ways to find past transactions.
  - pessimizer 5y ago
    > curate a language and IDE for you to make your stuff with as well That's an odd way to put it. Approximately 0.001% of developers would complain if instead they were allowed to use the language and IDE they prefer.
    - robertlagrant 5y ago
      They can use their IDE, at least. And given every phone platform I know of has restricted language support, I can't imagine it's a simple problem to solve.
- lossolo 5y ago
  Apple had 72.3 billion revenue from App Store in 2020. I can assure you that I can provide you with online store that I can find your app on, and run security checks against your app to check for malicious apps, etc. for 2.1 billion $ per year (3%).
  - anonymouse008 5y ago
    Ah yes, and I’ll have that feature done in 2 weeks, max! How hard could it be?
    - pessimizer 5y ago
      The excuse is hardship? Are you saying that Apple's app store profit margin is low, or comparing $2.1 billion to 2 weeks?
    - lossolo 5y ago
      I never said it would be done in two weeks but I think you underestimate what can be achieved with 2.1 billion dollars per year. For 200-250$ mil you will have ~1000 software engineers/project managers/other staff and you are left with 1.9 billion, costs for infrastructure + bandwidth not more than 400 mil, you are left with 1.5 billion.
dijit 5y ago
I’m going to repeat the same thing I always repeat in these threads because it feels like people are out of touch with closed platforms. To “play” on Xbox or PlayStation, they take a 30% cut. Steam also takes a 30% cut. It’s pretty standard, certainly not “exploitative” (at least not on apples part, if not others), though obviously as a game developer I’d prefer it be much less.
- treesprite82 5y ago
  Microsoft store on PC is a 12% cut. Documents revealed during this case show that the same is (or was) planned for Xbox store: https://storage.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.551.7.pdf https://storage.courtlistener.com/recap/gov.uscourts.cand.36... For Steam there are many viable alternatives, which allows for user/developer choice and fair competition in the long run. Epic Store is about half as popular now (31.3m vs 62.6m daily active users), but it's growing fast. I don't think what Steam is offering is worth the 30% cut, and I imagine we'll either see them reduce that cut or get overtaken by Epic in another few years. I don't like what the other stores are doing, but to me it's a smaller concern on game consoles/stores than on every application for general purpose computers and smartphones. I'd fight the fight on the latter first. I also disagree with the implication that something is "certainly not exploitative" because of it being an industry standard - in fact I'd say that can be a contributing factor to it being exploitative in many cases (price fixing/oligopolies). To me it's exploitative if the only reason they're getting away with charging so much is because they're hindering competition in that particular area (e.g: can't change app store without buying a whole new phone).
  - notafraudster 5y ago
    I mostly think that your points here, while correct, miss the forest for the trees. 1. Steam's cut isn't 30%; it's 30% on keys sold through Steam and 0% on keys generated to be sold elsewhere. Most games sell about 1/3rd of their Steam copies via external keys on sites like Humble, GreenManGaming, Nuuvem, WinGameStore, directly on their websites, etc. Valve's implied cut would be from 15-20% for most of these games. Of course, publishers and developers voluntarily give up some of the cut Valve doesn't take to those intermediaries, which is another knock against the claim that Valve is an exploiter. It seems hard to argue that in a world where a game is sold for $60 and GreenManGaming takes $6, passes on a $12 discount to the consumer, Valve takes $0, and the publisher takes $42, that Valve is the one exploiting the publisher, despite giving the publisher free keys. Why does Valve do this? To maximize lock-in in their ecosystem and make money on in-app purchases. They have selfish interests at mind, but those manifest through giving away some of their cut on purchases. 2. Valve also has a fee reduction program that's the exact opposite of Apple/Google. Apple/Google charges 15% up to $1 million revenue and then charge you the full amount. Valve charges progressively less after $1 million revenue (down as low as 20%). I think this reflects closed/open systems; Valve is worried about publishers like EA (who left Steam and then came back hat in hand because their own service was an expensive and technically poor failure), Ubisoft (who left Steam and are currently bilking Epic for upfront cash while pushing their own UPlay service), Bethesda/MS (who flirt with Beth.net/Microsoft Games Store but both ultimately returned to Steam in the end), Activision (have abandoned Steam for Battle.net). So they want to make it easier for big publishers to come back to them. Whereas Apple wants to maximize revenue off big clients and maximize the PR benefits of helping small businesses. But the point is that Apple, Google, and Valve alike actually do have flexibility in the % they take. 3. Finally, I think the Epic active user numbers are really not super useful. The vast majority of those Epic users are simply Fortnite players (and it's actually a little unclear whether Epic is counting non-PC Fortnite players who sign it under Epic accounts). Having acquired Rocket League, they now can use Rocket League players in the same way. Having acquired Fall Guys, they will likely do the same there in the coming years. The actual number of users of the Epic Games Store are not trivial, it'd definitely be a strong second having overtaken GOG and Itch and other competitors. But they're likely in the single digit millions. This in part reflects that the Epic Games Store is not very good. The client does not support basic features, nor does the store interface. Their onboarding process is entirely manual, which they characterize as giving them a "curated" game library but actually it means there's just not that much variety on the store and almost nothing at the low end. They have sales where they eat huge losses to give users discounts, but these are not appreciably better than the kinds of sales that occur on Steam and in the broader ecosystem. Crucially, to your point that Steam might be over "overtaken" by Epic is that it's not clear there's any competition at all. Every game that released on Epic and not Steam did so because Epic signed exclusivity contracts with the game (typically 12 month exclusivity contracts). It's predictable that all of these exclusives, bar one -- World War Z, have released on Steam within a month or so of their exclusivity expiring. Most seem to report doing better on Steam. Most developers that release on Epic and Steam, without a formal exclusivity deal, are developers who signed "free game" deals with Epic where Epic bulk-pays developers upfront in exchange for allowing every Epic user to redeem the game for free. Epic reports a relatively low conversion rate from free game redeemers to buyers. All of this suggests that the Epic Game Store, while putting up impressive numbers, isn't really peeling off developers or users because of its lowers cut. I could imagine a world where Valve/Steam are materially hurt if Epic greatly extends their exclusivity contracts, losing billions of dollars specifically to destroy Steam. But I don't see Epic organically overtaking Steam. My main point here is that the complexities of what's being offered and what's being charged here are obscured when we just say "You ate one third of my pizza! But I wanted that pizza!"
tarsinge 5y ago
What was the cut when software was published physically and sold in a store? 30% is not a lot for being in a store.
- jedberg 5y ago
  Depends on how you look at it. I used to work in a store that sold software in the 90s. The publisher would sell us the game wholesale and we'd charge retail. So they would sell it to us for $22.50 and set the retail price at $29. So in that sense it was a 22% cut, because we only kept 22% of the sale price. But in most cases the publisher didn't make the game. They were a middleman who took a game from a studio and sold it to us. I have no idea what their cut was between them and the actual maker of the game, but I'll bet it was more than 8%. So in that regard, the app store is a really good deal because it lets developers publish directly to consumers without a middleman.
  - grishka 5y ago
    Except physical distribution is expensive by its nature. It involves producing and moving around physical objects — that's material and labor per copy. App store, on the other hand, is a digital distributor. Making a digital copy is so cheap it could as well be free. And even then, not all app developers publish on the app store because they want or need its distribution services. There are many developers who would happily arrange the distribution of their apps themselves, with their own infrastructure they already have anyway, but they have to publish on the app store because that's the only way onto millions of iOS devices. I'll say it again: it should not be legal for a hardware manufacturer to retain any kind of control over hardware after it's been sold.
    - jedberg 5y ago
      I agree with you completely. I think Apple should, at the very least, allow side loading. I was just answering the question about what the cut used to be in the packaged software world.
    - pessimizer 5y ago

MR4D 5y ago

Visa charges you 3% but doesn’t have an online store that I can find your app on, and don’t run security checks against your app to check for malicious apps, etc. So I think we can agree that a realistic number for Apple is definitely above 3% for the service they provide. We can argue about 30%, and that’s a good discussion, but 3% is no way comparable.

thekyle 5y ago
I think most credit card processors charge something like 30 cents + 2.9%. On large purchases that's about 3%, but on smaller transactions (like those usually used in mobile apps) that 30 cents dominates and could end up being about 30%. So from that perspective Apple's 30% cut could be a good deal in some cases.
- GeneralTspoon 5y ago
  It's not a "good deal" in any case.... The minimum purchase price on iOS is $0.99, so at worst you'd be paying basically the same rate (~30%). But most payment processors offer separate pricing for micro-transactions (e.g. Paypal is 5% + $0.05 IIRC). Which works out at around 10% for a $0.99 transaction. And actually - Adyen offer much better pricing than the "Stripe rate" of $0.30 + 2.9% in the first place.
  - anonymouse008 5y ago
    A few years ago when making a micro transaction app, PayPal only allowed one type of fee structure — either the 5% or the 2.9%. Meaning you couldn’t segregate low tickets from high tickets and get the most optimal fee - your whole merchant account was one fee or the other. ‘Twas quite a PITA
    - GeneralTspoon 5y ago
      Yeah this is still the case AFAIK - very annoying. I believe their recommended workaround was to have 2 separate merchant accounts with different fee structures and group your products accordingly.
- deleted 5y ago
  [deleted]
deergomoo 5y ago
The 12% that Epic and now Microsoft charge seems about right IMO
- Someone 5y ago
  Based on what arguments? If Apple’s cut were 12% and Epic and Microsoft now charged 6%, would you claim “The 12% that Apple charges seems about right IMO”?
  - reader_mode 5y ago
    Yep, if someone is able to maintain above market level profits for so long it's usually a sign of monopolistic pricing. That's not necessarily bad, but in Apples case it's just double dipping on their monopolistic position and is clearly a drain on the market with no benefit. They have the same incentives to invest in R&D and support the ecosystem on the insane HW margins alone, I'd be willing to bet their dev budget doesn't change at all if this change in rate was made.
    - Someone 5y ago
      But how do you know 12% is about right, and not 10%, 2%, … Also, Apple will claim they have a better product that warrants higher margins. Data from independent parties shows that they attract more users willing to pay for apps, and developers aren’t leaving en masse for Android.
      - reader_mode 5y ago
        >Also, Apple will claim they have a better product that warrants higher margins. And this argument is fine in the hardware market because they have competition, it's efficiency monopoly - that's why I said it's not always bad. However their app store controlls access to 50% of US market (even more by revenue) simply because it comes as the only option and the consumers can't unbundle it. If they had competition on the platform (different stores/distribution methods) - you wouldn't have to say what % is right, the market would decide the value added by their app store/payment methods.
vishnugupta 5y ago
For some even 3% could be too high let alone 30%. For instance, Kindle iOS app doesn’t let you purchase books. It’s a read-only version, so to speak.
- dehrmann 5y ago
  Most credit card processors charge around 3%, so it's rarely an issue. The number I usually throw out that Apple could charge and no one would be mad over is 5%. It's more than a credit card processor, but not that much, and it would likely help conversion rates enough that app developers would be happy.
robertlagrant 5y ago
They also don't curate a language and IDE for you to make your stuff with as well, nor offer logins or ways to find past transactions.
- pessimizer 5y ago
  > curate a language and IDE for you to make your stuff with as well That's an odd way to put it. Approximately 0.001% of developers would complain if instead they were allowed to use the language and IDE they prefer.
  - robertlagrant 5y ago
    They can use their IDE, at least. And given every phone platform I know of has restricted language support, I can't imagine it's a simple problem to solve.
lossolo 5y ago
Apple had 72.3 billion revenue from App Store in 2020. I can assure you that I can provide you with online store that I can find your app on, and run security checks against your app to check for malicious apps, etc. for 2.1 billion $ per year (3%).
- anonymouse008 5y ago
  Ah yes, and I’ll have that feature done in 2 weeks, max! How hard could it be?
  - pessimizer 5y ago
    The excuse is hardship? Are you saying that Apple's app store profit margin is low, or comparing $2.1 billion to 2 weeks?
  - lossolo 5y ago
    I never said it would be done in two weeks but I think you underestimate what can be achieved with 2.1 billion dollars per year. For 200-250$ mil you will have ~1000 software engineers/project managers/other staff and you are left with 1.9 billion, costs for infrastructure + bandwidth not more than 400 mil, you are left with 1.5 billion.

dijit 5y ago

I’m going to repeat the same thing I always repeat in these threads because it feels like people are out of touch with closed platforms. To “play” on Xbox or PlayStation, they take a 30% cut. Steam also takes a 30% cut. It’s pretty standard, certainly not “exploitative” (at least not on apples part, if not others), though obviously as a game developer I’d prefer it be much less.

treesprite82 5y ago
Microsoft store on PC is a 12% cut. Documents revealed during this case show that the same is (or was) planned for Xbox store: https://storage.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.551.7.pdf https://storage.courtlistener.com/recap/gov.uscourts.cand.36... For Steam there are many viable alternatives, which allows for user/developer choice and fair competition in the long run. Epic Store is about half as popular now (31.3m vs 62.6m daily active users), but it's growing fast. I don't think what Steam is offering is worth the 30% cut, and I imagine we'll either see them reduce that cut or get overtaken by Epic in another few years. I don't like what the other stores are doing, but to me it's a smaller concern on game consoles/stores than on every application for general purpose computers and smartphones. I'd fight the fight on the latter first. I also disagree with the implication that something is "certainly not exploitative" because of it being an industry standard - in fact I'd say that can be a contributing factor to it being exploitative in many cases (price fixing/oligopolies). To me it's exploitative if the only reason they're getting away with charging so much is because they're hindering competition in that particular area (e.g: can't change app store without buying a whole new phone).
- notafraudster 5y ago
  I mostly think that your points here, while correct, miss the forest for the trees. 1. Steam's cut isn't 30%; it's 30% on keys sold through Steam and 0% on keys generated to be sold elsewhere. Most games sell about 1/3rd of their Steam copies via external keys on sites like Humble, GreenManGaming, Nuuvem, WinGameStore, directly on their websites, etc. Valve's implied cut would be from 15-20% for most of these games. Of course, publishers and developers voluntarily give up some of the cut Valve doesn't take to those intermediaries, which is another knock against the claim that Valve is an exploiter. It seems hard to argue that in a world where a game is sold for $60 and GreenManGaming takes $6, passes on a $12 discount to the consumer, Valve takes $0, and the publisher takes $42, that Valve is the one exploiting the publisher, despite giving the publisher free keys. Why does Valve do this? To maximize lock-in in their ecosystem and make money on in-app purchases. They have selfish interests at mind, but those manifest through giving away some of their cut on purchases. 2. Valve also has a fee reduction program that's the exact opposite of Apple/Google. Apple/Google charges 15% up to $1 million revenue and then charge you the full amount. Valve charges progressively less after $1 million revenue (down as low as 20%). I think this reflects closed/open systems; Valve is worried about publishers like EA (who left Steam and then came back hat in hand because their own service was an expensive and technically poor failure), Ubisoft (who left Steam and are currently bilking Epic for upfront cash while pushing their own UPlay service), Bethesda/MS (who flirt with Beth.net/Microsoft Games Store but both ultimately returned to Steam in the end), Activision (have abandoned Steam for Battle.net). So they want to make it easier for big publishers to come back to them. Whereas Apple wants to maximize revenue off big clients and maximize the PR benefits of helping small businesses. But the point is that Apple, Google, and Valve alike actually do have flexibility in the % they take. 3. Finally, I think the Epic active user numbers are really not super useful. The vast majority of those Epic users are simply Fortnite players (and it's actually a little unclear whether Epic is counting non-PC Fortnite players who sign it under Epic accounts). Having acquired Rocket League, they now can use Rocket League players in the same way. Having acquired Fall Guys, they will likely do the same there in the coming years. The actual number of users of the Epic Games Store are not trivial, it'd definitely be a strong second having overtaken GOG and Itch and other competitors. But they're likely in the single digit millions. This in part reflects that the Epic Games Store is not very good. The client does not support basic features, nor does the store interface. Their onboarding process is entirely manual, which they characterize as giving them a "curated" game library but actually it means there's just not that much variety on the store and almost nothing at the low end. They have sales where they eat huge losses to give users discounts, but these are not appreciably better than the kinds of sales that occur on Steam and in the broader ecosystem. Crucially, to your point that Steam might be over "overtaken" by Epic is that it's not clear there's any competition at all. Every game that released on Epic and not Steam did so because Epic signed exclusivity contracts with the game (typically 12 month exclusivity contracts). It's predictable that all of these exclusives, bar one -- World War Z, have released on Steam within a month or so of their exclusivity expiring. Most seem to report doing better on Steam. Most developers that release on Epic and Steam, without a formal exclusivity deal, are developers who signed "free game" deals with Epic where Epic bulk-pays developers upfront in exchange for allowing every Epic user to redeem the game for free. Epic reports a relatively low conversion rate from free game redeemers to buyers. All of this suggests that the Epic Game Store, while putting up impressive numbers, isn't really peeling off developers or users because of its lowers cut. I could imagine a world where Valve/Steam are materially hurt if Epic greatly extends their exclusivity contracts, losing billions of dollars specifically to destroy Steam. But I don't see Epic organically overtaking Steam. My main point here is that the complexities of what's being offered and what's being charged here are obscured when we just say "You ate one third of my pizza! But I wanted that pizza!"

tarsinge 5y ago

What was the cut when software was published physically and sold in a store? 30% is not a lot for being in a store.

jedberg 5y ago
Depends on how you look at it. I used to work in a store that sold software in the 90s. The publisher would sell us the game wholesale and we'd charge retail. So they would sell it to us for $22.50 and set the retail price at $29. So in that sense it was a 22% cut, because we only kept 22% of the sale price. But in most cases the publisher didn't make the game. They were a middleman who took a game from a studio and sold it to us. I have no idea what their cut was between them and the actual maker of the game, but I'll bet it was more than 8%. So in that regard, the app store is a really good deal because it lets developers publish directly to consumers without a middleman.
- grishka 5y ago
  Except physical distribution is expensive by its nature. It involves producing and moving around physical objects — that's material and labor per copy. App store, on the other hand, is a digital distributor. Making a digital copy is so cheap it could as well be free. And even then, not all app developers publish on the app store because they want or need its distribution services. There are many developers who would happily arrange the distribution of their apps themselves, with their own infrastructure they already have anyway, but they have to publish on the app store because that's the only way onto millions of iOS devices. I'll say it again: it should not be legal for a hardware manufacturer to retain any kind of control over hardware after it's been sold.
  - jedberg 5y ago
    I agree with you completely. I think Apple should, at the very least, allow side loading. I was just answering the question about what the cut used to be in the packaged software world.
  - pessimizer 5y ago