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> Do you think any markup of more than 5% is unreasonable? What about Apple's physical products? What about ... every retail store in existence? Retail stores

> Do you think any markup of more than 5% is unreasonable? What about Apple's physical products? What about ... every retail store in existence? Retail stores maintain a physical presence and have actual overhead, as do online retailers that have to maintain warehouses, subsidize free shipping, etc. What is the overhead on an app submission, or an app purchase? Charging 30% overhead for $0.0012 cents of bandwidth, an algorithmic review of your app that only might be supplemented by an actual human review, and a literally free file copy operation comes nowhere close to that. This is a lot closer to payment processor fee territory in terms of the actual work being done by the provider. You would think they would do more for their app developers with such a hefty fee, but they don't, so they need to be regulated. These fees are just theft. In the case of Roblox, you can argue "but what about the platform?" but 5% is still a metric-crap-ton of revenue and is more than enough to keep their platform afloat (especially if they don't have to give 30% upstream to Apple/Google). We've just become accustomed to ridiculous % cuts because monopolies have normalized this practice. In the early 00s, the idea of an app store even taking a cut was viewed as laughable. Then it became normal.

bscphil 5y ago
> In the case of Roblox, you can argue "but what about the platform?" but 5% is still a metric-crap-ton of revenue and is more than enough to keep their platform afloat (especially if they don't have to give 30% upstream to Apple/Google) Afloat? Maybe. Seems doubtful. Anyway, the justification for app stores charging developers is always providing the Platform. Android is a free platform. You can buy an Android phone from a manufacturer of your choice without Google seeing a cent of that money. Their way of making money is to use rents on their application store. What I'm getting at is that they produce a product. A valuable product, given that many people enjoy it. Under standard American assumptions about free markets, this means they're entitled to a reasonable profit, not just enough to "keep their platform afloat". Profit is not theft. Think about a company that sells you a printer at-cost in the hope that it will pay for itself in profits when you buy ink. There's usually third-party ink that will work in the printer, but the business model of the company is that there will be enough people who buy their ink to make cheap printers profitable. There's a, I don't know, 150% markup on the ink. In other words, they have an overall profitable business, where one part of it is a cost leader and another is where they extract rents. Nothing particularly surprising about this. The app store model is exactly the same: most parts of the platform are free (despite very real development costs), and store developers pay a fee of 20-30% which keeps things running. In fact, if the developers reduced the fee but then charged users to use the platform, the overall profits of developers would probably be reduced, as fewer users would use the platform. I'm skeptical, in the end, that the profits earned by companies like Roblox are terribly out of keeping with those owned by retail stores or computer manufacturers. You cannot separate out the parts of the business that are pure profit centers from those that are cost leaders. The fact that the profit on the profit centers seems exorbitant has to be taken in context.

bscphil 5y ago

> In the case of Roblox, you can argue "but what about the platform?" but 5% is still a metric-crap-ton of revenue and is more than enough to keep their platform afloat (especially if they don't have to give 30% upstream to Apple/Google) Afloat? Maybe. Seems doubtful. Anyway, the justification for app stores charging developers is always providing the Platform. Android is a free platform. You can buy an Android phone from a manufacturer of your choice without Google seeing a cent of that money. Their way of making money is to use rents on their application store. What I'm getting at is that they produce a product. A valuable product, given that many people enjoy it. Under standard American assumptions about free markets, this means they're entitled to a reasonable profit, not just enough to "keep their platform afloat". Profit is not theft. Think about a company that sells you a printer at-cost in the hope that it will pay for itself in profits when you buy ink. There's usually third-party ink that will work in the printer, but the business model of the company is that there will be enough people who buy their ink to make cheap printers profitable. There's a, I don't know, 150% markup on the ink. In other words, they have an overall profitable business, where one part of it is a cost leader and another is where they extract rents. Nothing particularly surprising about this. The app store model is exactly the same: most parts of the platform are free (despite very real development costs), and store developers pay a fee of 20-30% which keeps things running. In fact, if the developers reduced the fee but then charged users to use the platform, the overall profits of developers would probably be reduced, as fewer users would use the platform. I'm skeptical, in the end, that the profits earned by companies like Roblox are terribly out of keeping with those owned by retail stores or computer manufacturers. You cannot separate out the parts of the business that are pure profit centers from those that are cost leaders. The fact that the profit on the profit centers seems exorbitant has to be taken in context.