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An Open Letter to Tim Cook Regarding the App Store 70/30 Revenue Split

389 points by dirtae 12y ago

coryl 12y ago
Would be nice, but I can't see any upside for Apple aside from good PR and generosity.
- djcapelis 12y ago
  More independent developers more excited about their platform results in increased app quality and quantity, as well as increased platform migration and retention resulting from a stronger ecosystem. All of which results in increased sales of both apps and hardware which means increased profit. Plus the good PR and generosity you mentioned. I actually think it's harder to find the downside to the proposal than it is to find upside. This is a good letter and a good suggestion.
  - s73v3r 12y ago
    You're acting like they don't already have that.
- bsaul 12y ago
  More devs, more and new kind of apps, higher quality, and have devs rely less on ads for low income apps ( which means less people in google/admob's long tail).
  - s73v3r 12y ago
    They already have most of that. The only thing they don't is less apps relying on ads, and that's more of a function of people not wanting to spend money on apps than anything Apple ever did with the revenue split.
beastburn 12y ago
Economically, this makes absolutely zero sense.
- srhngpr 12y ago
  Just out of curiosity, could you elaborate?
  - ProAm 12y ago
    The first issues I see are: 1) Apple is the most profitable company in the world, deals like this are why. It wouldn't behoove them to take less money than what is available on the table. 2) It would leverage Apple to promote only high grossing, high selling apps. This would change the way developers market and sell their apps. And provide disincentive to work on it more after it reached a threshold (maybe).
    - andy_ppp 12y ago
      In answer to your points you can argue them to mean the opposite too: 1) No skin really off Apple's nose then is there, minimal change on bottom line and a win for small devs, their ecosystem and they look like a cool company who listens. 2) They only do this now anyway, that's why the App store is so shit and has had so few new features (especially around discoverability) since its inception. No incentive to push smaller indy devs apps (and also because Apple wants to maintain a feel of high quality as opposed to long tail). It's not a terrible idea, no reason for Apple not to play nice really as it barely affects them.
      - ProAm 12y ago
        You might be correct, it can be seen from both sides. > No skin really off Apple's nose then is there Ive never known Apple not to care about every penny it can make and keep, I just dont see them giving up on this, but rather push the devs to make software that is better and sells better so the 70% they earn can mean more to everyone's bottom line. Maybe... but I that's not how Ive ever seen Apple operate. The fact that they make developers pay $99/per just to develop apps is indication they dont care about this. > no reason for Apple not to play nice They never play nice, they are cutthroat, just like Amazon. It's how they manage to stay on top. They realized that not only are customers a profit center but also content producers they can make money on both ends.
nostrademons 12y ago
This letter - and the revenue numbers in it - are interesting from a strategy perspective. The conventional wisdom I hear is that Android owns the overall market for smartphones, but if you want to make money as an independent developer, you're better off developing for iOS because iPhone users are more likely to pay for things. There's all sorts of crap in the Android ecosystem, a lot of it is free, but the users are largely the sorts of people who will take what kind of freebies they can get and don't want to pay for a premium product. By contrast, Apple actively encourages their developers to pay attention to fit & polish. Given this, I wonder if relaxing the 30% rev split might actually be in Apple's interests. In order to build that premium ecosystem, they need developers to be able to work full-time on apps. If they strangle that ecosystem, then the only people building iPhone apps will be folks with other day jobs to support them - which means either the quality bar will go down, or their will be many fewer apps in the app store vs. Google Play. Then again, perhaps that's Apple's plan anyway: focus on the few things that many customers want, make sure the apps for those are really good, and it's okay if there's not an app for the rest.
- throwawaymsft 12y ago
  Re: "owning the market", people forget the difference between market share and profit share. Profits are what keep your ecosystem alive and thriving. Raw usage numbers, by themselves, don't. (Sure, usage can lead to profits... so just measure profits!) Yes, Android sells more devices. Apple has 93% of the profits in industry, Samsung has 9%, and everyone else is fighting for that tiny slice and losing money. http://www.macrumors.com/2015/02/09/apple-mobile-profits-q4-2014/ http://www.macrumors.com/2015/02/09/apple-mobile-profits-q4-... The more profitable ecosystem is where developers want to play. Apple doesn't need to change their royalty rates, everyone is clamoring to be in that arena.
  - soperj 12y ago
    I think you have your percentages skewed. 93 + 9 = ... Secondly how much as a percentage does Google make from mobile? Clearly it's not all about the take from people's pockets.
peterjancelis 12y ago
If Apple would do this, they'd have even more incentive to promote the highest grossing apps in their app store. Look at the 30% fee as a marketing cost. Surely you want the owner of your only marketing channel to be well compensated?
- xenadu02 12y ago
  How so? If Apple promotes an app it often becomes a high-grossing app, especially for games. That means you cross into 70/30 territory very quickly and Apple still gets the same cut.
- mcintyre1994 12y ago
  Is Apple necessarily the only marketing channel? Ie is there no way to deep link into the app store? I've seen links to iTunes app pages online - and while last I heard you can't download to your device from that page, will it not open in the app store if you open it on an iOS device? Also on Android Facebook for instance advertise apps a lot with a link to the store, is that not possible on iOS? Or do you have to use an Apple ad network on iOS for all advertising? Sorry for the confused reply, I'm just curious whether they've actually taken steps to force themselves as your only marketing channel or why that would be the case.
  - tjl 12y ago
    Anyone can share an app link. So, you can tweet a link, you can post a link on your own web site (and even use an appropriate app store graphic from Apple) or any way you want to share the link. Plus, you get a set of promo codes you can share to give to reviewers. So, there's many ways one can advertise an app. Now, Apple has started a deal with Pinterest as well so people can pin apps so that's another avenue. Relying on Apple promotion generally means that you'll end up in the long tail. Occasionally, apps break out (then they often get Apple promotion after this happens) like Flappy Bird, but that's uncommon.
- kw71 12y ago
  Maybe it would be better to have a choice about what your marketing channels are. I'm selling software on eBay! For just a little over 10% I get to be super lazy and not develop a marketing website. eBay queues up requests for pre and post sales help for me. And they have me at the top of google results for queries related to my products: anyone facing the problems my software products solve will easily find me with a web search. I am shipping physical media and documents, which is boring work and is a pain. I really like not having to worry about marketing because it leaves me more time for development. My market is not very large, it's a rather specialty niche, and I think that I'm close to reaching the whole universe of interested people through eBay. eBay is probably not going to tell me my software products violate any arbitrary rules or are not fashionable. I have heard so many negs about Apple Store that I want nothing to do with it.
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calcsam 12y ago
This would basically turn Apple from a payment processor (relatively straightforward) into a global tax collector (extremely complex). Think about how you would handle corporate entities. Do you handle pass-through entities like LLCs differently than S-Corps? Now imagine designing a split structure that would make sense for a developer in Vietnam / Mexico / Spain. It would have to be different for each country. $5K for Vietnam? $20K for Mexico? $50K for Spain? Good luck. Oh, what if you have multiple people writing one app? With a 60/40 split between them? Okay, let's say you ignore all the previous points. Just imagine the kind of infrastructure you'd have to build out to verify identity globally, to ensure that people aren't using frontmen -- having their friend register an account and passing the money through their account. No thanks.
- mcherm 12y ago
  None of that is necessary if the tiering is based on the income of the app rather than the income of the app developer.
- xenadu02 12y ago
  I don't think you've thought this through very well. Apple already sets pricing tiers per country, based on exchange rates and other factors. Just apply the same adjustment to the $100k figure. There is no need to be concerned with the entity type. The first $100k per year for all developers accounts gets charged 0%, everything thereafter gets charged the standard rate. If you're building an app with a partner, oh well. The vast majority of people this would help are individual devs. And registering other accounts is pointless; the app belongs to one dev account and that's the account that accrues revenue. There's no way to share it, other than by transferring the app to someone else's account. A simple fix for that is to require 30% after X numbers of transfers for the same app, or just require the 30% cut if you do a transfer. Again, the target for this is individual indie developers working on their own.
0x0 12y ago
So what happens if you've sold the first $100k, can you just re-release the app on a new account to stay on the highest paying tier?
- andrewguenther 12y ago
  Sure, but you lose your position in the rankings, all of your ratings, everything. You also wouldn't be able to update the original any more. I think you would lose a hell of a lot more in revenue that way than a 10% bump in profit split.
- bsaul 12y ago
  I don't think anyone would make this kind of gamble. The 10% you ay gain would most certainly not compensate for the amount of users you'd loose. Plus, it could easily be countered by another article in apple's tos to check at validation.
- qzervaas 12y ago
  You could try, but getting traction on the new app probably wouldn't be worth the hassle. It's not trivial to earn $100k from an app, doing it twice would be extremely difficult.
desireco42 12y ago
I see a lot of idealism in this post. Apple is for profit company that is very aggressive in pursuing it. While I agree with poster rationale and I think tiered pricing would be other way around, lower as you sell more. Anyhow, I don't think it's going to happen, it looks to me that as far as Apple is concerned, he have you/us where it wants and don't want to change anything.
bsaul 12y ago
As an independant iOS dev, that post is so right it shouldn't even be an issue. Not only would it let more devs work full time on their project, but it will also make new niche markets interesting.
dchuk 12y ago
"I think it would be a big win for independent developers targeting Apple platforms, and by extension a big win for Apple, if the App Store revenue split used a tiered rate." It's interesting to see someone give Apple advice on how to make a "big win" financially. They're literally the biggest winners financially of any company in the world right now.
- bsaul 12y ago
  Well, maybe Apple became that successful by also listening to their customers.
  - ceejayoz 12y ago
    Apple's history has a lot of successes stemming from them ignoring stated preferences from customers. Ditching the floppy, a phone without a hardware keyboard, refusing to build netbooks, etc. As the probably apocryphal Henry Ford quote goes, "if I'd asked people what they wanted, they'd have said a faster horse".
    - bsaul 12y ago
      I know those stories, and yet they switched from motorola to intel back in the days, they created a larger screen iphone which proved to be a best seller, and they've recently announced that ios 9 would be a "hardening" release with no major new breakthrough features. I think we shouldn't confuse marketing studies ( which they may not like), with customer feedback.
Glyptodon 12y ago
Maybe Apple views the revenue split as a desirable barrier to entry for the sake of quality control?
- pseudometa 12y ago
  The barrier to entry is the annual $100 developer fee, not the percentage of sales. I honestly wouldn't mind this fee being much much higher if the eliminated a lot of the crummy apps from the store.
  - bottled_poe 12y ago
    Yeah, that and the $1500 computer to write the software.
    - AmVess 12y ago
      $499 Mac Mini is good enough for writing apps.
pseudometa 12y ago
From a aspiring indie developer perspective, I've never worried about the 70/30 split. I've been much more concerned with getting my apps visible to anyone. The app store is so flawed when it comes to discoverability (even as a user it is frustrating to find apps that solve a need) I would give up even more share if people could find my app to begin with.
- chubs 12y ago
  Agreed: The terrible discovery is the worse problem, it leads to a market of hits, with no long tail. Whereas if you open the play store on an android phone, it suggests apps your friends have, and many other 'discoverable' things. It leads to a better long tail, eg supports indies. I know more indies making a living out of android, and i know far more ios developers, being one myself.
  - kamilszybalski 12y ago
    +1, completely agree. Might as well throw complete itunes connect overhaul into this. It's an absolute nightmare working with itunes connect, managing users, working with beta and internal testers.. the whole process is completely disconnected and really demonstrates the launch of a rushed product.
    - madeofpalk 12y ago
      > Might as well throw complete itunes connect overhaul into this. Funny considering the current iTunes connect is a complete overhaul, which only came out recently with iOS 8. The new iTunes Connect acts like someone's first attempt at an Angular app (which it is), with a complete disregard from doing things in a performant way.
      - jfaat 12y ago
        > The new iTunes Connect acts like someone's first attempt at an Angular app Huh, it sure is. Is that surprising to anyone else? Also, while it may be Apple's first attempt as a company I'm sure they managed to find a few devs who had shipped an angular app to work on Connect.
warmfuzzykitten 12y ago
It's a good idea. It would give small developers a chance to get on their feet financially. But the author assumes most of the revenues come from big-selling apps. I don't think we actually know how long a tail the app sales distribution has or what effect it would have on Apple's revenues. And, unfortunately, it wouldn't have any effect on, e.g., Amazon being unable to sell books on Apple products because Amazon's margins are too low to allow them to eat the 30% and jacking up their prices 43% to cover the Apple tax would make them uncompetitive with Apple's book store. Apple's plan, maybe, but damned inconvenient for users.
benologist 12y ago
This would be a great win for the top developers, a little extra rope for the borderline-sustainable developers, and nothing for everybody else. I'd rather they do something to lift the average.
patmcc 12y ago
That 30% isn't for nothing - it's for payment processing, reach, marketing, infrastructure, testing/approval (you may or may not like this, but users probably do like it), app delivery, etc. Like it or not, those things all are more valuable to smaller developers than bigger ones. Microsoft can do a lot of that stuff themselves, if they really want to - Joe the ordinary developer can't. Apple is already being nice to small developers by giving them the same rates as big developers - in any other business, doing 100x the sales of the little guy would get you a better rate, not the same one.
- TillE 12y ago
  And "payment processing" doesn't even tell the whole story; Apple is effectively collecting and passing on sales tax for you, and dealing with all the other bullshit that comes with being a merchant. That's huge, especially for solo developers who just want to make stuff and not actually run a business. 30% may be a little steep, but I'd say it's worth it.
  - mss6989 12y ago
    In some cases, Apple is even taking on the burden imposed by tax laws. In the recent changes to EU VAT, both Apple and Google took on the added cost burden.
    - notsony 12y ago
      FastSpring, eSellerate and other digital commerce sites can do all this for 10% or less...
      - JanezStupar 12y ago
        But do they bring customers?
      - mss6989 12y ago
        To be more specific, Apple and Google are assuming VAT liability for paid apps. If an app is a paid app in the stores, there’s relatively little decision making to be done; a developer can adjust prices based on the VAT in each country in order to maintain current revenues. The transaction between a developer and an app platform is considered a business-to-business transaction and is subject to the existing VAT rules. If an app offers in-app purchases, a developer must consider whether allowing a platform to handle the micro-transactions (thus sacrificing the 30% revenue share) outweighs the time and costs necessary to collect and store sales information (including location) and VAT payments. This can be quite a large undertaking for an indie developer or small development studio. See: http://www.appdevelopersalliance.org/news/eu-value-added-tax-vat-changes-what-you-need-to-know http://www.appdevelopersalliance.org/news/eu-value-added-tax... Webinar: https://pollen.vc/#/vat-seminar/ https://pollen.vc/#/vat-seminar/
1123581321 12y ago
This is the opposite of what I was expecting to read. The developers with the lowest income receive the most benefit from Apple as they presumably do not have a large, existing marketing list to convert to sales and so rely on App Store discovery (what exists of it.) If anyone should pay different rates, it should be the more successful developers who convert to an expensive premium developer account subscription. This is the model used by Ebay, Etsy, Shopify, and a lot of other markets.
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dusing 12y ago
This reasoning seems weak "At $100K in net revenues per year, you may be a successful independent developer. At $70K in net revenues per year, your spouse could be telling you to get a day job. Therefore,..."
- yeukhon 12y ago
  Maybe. Depends where one lives. In silicon valley a developer making $70K probably should look for a day job. In some awesome midwest $70K and a working spouse is very good.
  - dirtae 12y ago
    True. But keep in mind that we're talking about net revenue here, not net profit. That $70K is after Apple's cut, then you need to deduct all of your expenses, like marketing and hosting, on top of that.
- Azkar 12y ago
  I agree. $30K/yr is a lot of money, but it shouldn't put anyone on the street. Sure, it might not allow you to live a glamorous lifestyle in they valley, but you have the freedom to move somewhere a lot cheaper to live if you're a single developer pulling $70K/yr from an iphone app. If you don't want to make that compromise, then you should be looking for a second source of income, or start living within your means.
trevmckendrick 12y ago
I've disclosed my App Store revenues before (http://www.trevormckendrick.com/my-first-year-in-the-app-store/ http://www.trevormckendrick.com/my-first-year-in-the-app-sto... and http://www.trevormckendrick.com/My-2nd-Year-in-the-App-Store/ http://www.trevormckendrick.com/My-2nd-Year-in-the-App-Store...). Apple can absolutely afford to do this financially, but the 70/30 split is practically the only thing that hasn't changed in the App Store since it launched. So why don't they? A few possibilities: - They have a similar split with music labels, so giving more to developers could hurt their music industry relationships - They have more interest in helping the big app companies like Supercell, simply because of the revenues and brands they create - They don't want to give additional incentives to creators of crappy apps who never make much money anyway Whatever Apple's reasons, they haven't changed iTunes music revenue splits in over a decade. So I don't expect them to update developer splits anytime soon either.
- rhino369 12y ago
  Why would someone with a monopoly over the software on millions of devices ever reduce prices?
  - Consultant32452 12y ago
    Because it's not like fuel. Most people have a fairly inelastic demand for fuel. You kinda have to drive to work. You really don't need apps, and no one needs to make the apps. Running sales can increase consumer demand. Increasing the profit margins for developers could increase supply of quality apps, thereby increasing net revenues for Apple on a smaller cut of the pie. I rather like the current system for it's simplicity and while of course I'd like them to charge less I think their cut is reasonable.
  - sparaker 12y ago
    To gain more development support. More developers = more apps = more users = more revenue. It makes sense.
    - enlightenedfool 12y ago
filmgirlcw 12y ago
It's a good thought but I think adding this kind of complexity , even with good intent, is exactly the sort of thing the 70/30 split was created to avoid. There is something nice about just knowing, this is my split. I don't have to worry about it switching and my profit formulas being altered once I hit a certain sales threshold, My take is $.70x, with x being downloads. Period. Beyond that, I'd have to ask what happens when we take this to its logical conclusion: Say you start with an 85% split for the first 10,000 sales or something -- what happens if the split then eventually goes below 70/30, say 65/35 or 60/40 or worse, the more copies you sell? How do people react then. I suppose the counter-argument is that that's how the tax system works -- and that's fair -- but I still don't see developers being happy to have to give up more of their take down the road, just because they have reached "success." I mean, if you're going to go to tiers, then the next argument becomes about what defines one tier from the next. Again, it introduces all kinds of complexities that having a straight 70/30 system avoids. And to me, that simplicity ultimately trumps the other arguments, as sympathetic to indie developers as I might be.
- thesimpsons1022 12y ago
  that tax argument isn't compelling at all. i don't think apple should use big sellers to cover the costs for indies, it makes no sense as a private company. It does make sense in society as a whole with income.
  - filmgirlcw 12y ago
    I actually don't disagree with you at all, I'm just acknowledging the obvious counterpoint to that argument, that's all.
- hackbinary 12y ago
  The point of having tapered rates is well established as being progressive and fair. Governments do this with income tax. The basic premise is that $1 means more to a person with an income of $10,000 per year, compared to a person with an income of $100,000, or a $1,000,000. It therefore follows that developers earning less money are not as able to pay as those earning higher incomes. A flat rate favours bigger developers. If Apple wants to promote diversity, then they should have a progressive system, and lower the barrier to smaller developers. This actually may prove to increase Apple revenues ultimately by helping smaller developers stay in the game over the long term because their business would not have been otherwise viable. Adding income tiers is not that more complex.
balls187 12y ago
> I think it’s safe to say that most independent developers are generating annual revenue in the tens of thousands to low hundreds of thousands of dollars range. I don't believe this is the case at all. From the linked study, most are making substantially less than that.
matheweis 12y ago
A key point that many developers miss is that IF you are marketing your own apps, the split is not 70/30, but 77/23. In explanation, you join the iTunes affiliate program, which gives you a 7% cut on sales in the app store. I really don't understand why this isn't more widely known.
- SwellJoe 12y ago
  If I could sell it directly from my website the cut would be 100/0. I hate the indentured servitude imposed by the Apple App Store, and have opted out of mobile development thus far because of it. It's like shooting off my nose to spite my face, I guess, given the growth of the mobile market, but I truly hate the shape of our industry these days, when it comes to how indie developers are able to connect to their users...yes, it's better than it's ever been, but not because of Apple. It's better because of the open web, and Apple and Google are using their near-monopoly powers to impose the old gatekeeper model long past when it should be relevant.
  - matheweis 12y ago
    Not likely... I actually do sell direct on my site, and even there the cut for the ecommerce provider (fastspring) is 8.9%. Also, I have to manage the distribution chain myself, which is a surprising amount of overhead.
    - SwellJoe 12y ago
      I sell software for servers directly on my site, as well. I do pay merchant service fees (which I'm also somewhat grumpy about how high they are), but the total amount of "fees" I pay is remarkably lower than 30%. If I factor in colocation costs, server costs, etc. I end up with ~11% total. (But, we're also supporting Open Source projects with a million+ users, so we have a lot higher infrastructure costs than we would if we only had to serve our few thousand paying customers.) Even if I add advertising costs (because some people allege the app stores provide a customer base), it's still less than 20%. But, I could distribute dozens of times the amount of software I'm selling with the same hardware and colo (if the market wanted to buy dozens of times the amount of our software currently sold). So, it's true that there are costs no matter how you sell your software to customers. And, I might be willing to pay more for things that would make my customers lives easier. But, 30% is...it's just outrageous, to me. Apple and Google are among the richest companies in the world. Their margins on running these stores is obscene.
ares2012 12y ago
I remember the days when app revenue splits were 30/70 (driven by mobile carriers) so I find it hard to complain about Apple's revenue split policy. While onerous, it at least makes it possible to be profitable.
bnolsen 12y ago
The short of it is: Apple wants their record breaking profits and they get those profits by telling you little guys "to hell with you". People keep buying Apple, people keep developing for Apple. They're massively profitable. Tell me what they're doing wrong and why they should cut you a break?
jblow 12y ago
Proposal made without any thought as to how scummy app developers are going to game the system. First thing that happens is opening a new development account per app in an attempt to squeak under the $100k as much as possible.
greggman 12y ago
I kind of have the opposite opinion. It should start at 30% and go down with success. Apple is providing a service (yea there's no alternatives on iOS but still)... for 30% they take care off all your payments from all countries, they take care of refunds, dealing with credit card companies, and for the most part dealing with customers in general. They also provide the market, the installation system, the update/upgrade system. Having tried to write some of those myself and the servers to maintain them I can tell you I don't personally want to run them. Compare to Steam. Steam is also 30% on a platform you can do it all yourself if you want. Sure they provide the most exposure but similarly they also provide most of the other services that make it worthwhile. Assuming you could do that do you really want to do all that yourself? Think about it. If you did it yourself you'd need to run a server to put your software on. Keep it secure, updating it constantly with security patches. Make a relationship with a payment processor. Handle refunds yourself. Figure out an upgrade system. Figure out how to deal with failed installations. I'm sure others could name many more things you'd have to do. 30% doesn't seem unreasonable to me given it would take more more than 30% of my time (and therefore money) to do this myself. At least that's my perspective.
- tomp 12y ago
  All the services they provide don't justify the cost (30% of sales!) in any way. The only reason Apple is able to charge a fee so high is because they are the monopoly provider of apps for the most popular (or the richest) mobile platform.
  - sokoloff 12y ago
    Why should Apple justify the cost? They only need to provide the benefit (access to the overwhelming majority of iOS users) and let developers opt in or not.
    - enjo 12y ago
      and let developers opt in or not. Your option is to leave a massive mobile phone platform or opt-in. It's really not much of a choice. As long as people keep giving Apple their money, developers will suffer. The situation is better (but not great) on Android where third party app stores are at least possible.
jtwebman 12y ago
When you are the king you get to decide. It is still a way better split then say ads on YouTube videos. I just don't see them changing this.
geobmx540 12y ago
"I think it’s safe to say that most independent developers are generating annual revenue in the tens of thousands to low hundreds of thousands of dollars range." Most?!
jamesrom 12y ago
People forget that Apple pay for hosting and downloads. The cost of hosting the 0% rate apps (99.3% of all apps[1]) would not be a small cost at all. [1]: http://metakite.com/blog/2015/01/the-shape-of-the-app-store/ http://metakite.com/blog/2015/01/the-shape-of-the-app-store/
- SwellJoe 12y ago
  I don't forget that they pay for it, I just think it's so tiny as to not matter in this discussion. Downloads are such an infinitesimally small cost, relatively speaking. I don't have comparable download numbers to the Apple store, but I do help maintain software that has 3+ million downloads a year (and it's a quite large download, too, compared to mobile apps, at 15MB). The cost of hosting those downloads and the bandwidth for them wouldn't even really be a blip on our radar in terms of costs of running our business and projects. Bandwidth is cheap these days. Hardware is cheap these days. And, it takes almost no hardware to serve file downloads. We've had people offer to provide mirrors for us for free, but we don't take them up on it (though we can't stop people, either, being Open Source) because we'd rather have the data about downloads than the tiny savings in bandwidth and hardware. What's a few hundred terabytes a year of transfer and storage for apps to an organization like Apple, that also serves out millions of HD movies? It is closer to "nothing" than it is to "something".
wesnerm2 12y ago
The proposal is flawed from a financial perspective to Apple. Credit card fees are higher as a percentage of the price, the lower the price. Apple pays close to 30% to credit card companies for a one dollar transaction, whereas a hundred dollar transaction costs just a few percentage points. (I think this is due to a fixed per-transaction fee added to a percentage-based fee.) This is why retailers often place transaction minimums for credit-card purchases. It's to Apple's benefit to consolidate multiple app and music purchases into one transaction to reduce the total percentage paid out. They do this by offering iTunes gift cards for sale at stores and by consolidating multiple purchases from the same day or two into one transaction.
- glurgh 12y ago
  Apple does not pay 30% on dollar transactions - they don't pay stripe-like processing fees. They are a high-volume seller with a great deal of negotiating leverage and financial savvy, they've been selling $1 digital goods since 2003. They probably pay some sort of per-transaction fee and percentage fees but it wouldn't add up to 30%. Take a look at the range of fees here - http://www.cardfellow.com/blog/credit-card-processing-fees/ http://www.cardfellow.com/blog/credit-card-processing-fees/
yeukhon 12y ago
If you think about it, Apple is like government. They "tax" you. An independent app developer is basically running a startup as the developer has to cover marketing, production development, customer support, finance reporting, and even human resource management (hey he/she has to sleep and get away from the computer!). Very curious: what kind of benefits do small app developers get from Apple? The difference is you don't really "elect" how Apple decide what to do, unless you start a mass campaign and challenge Apple's authority. AWS and Google are always cutting their cloud price to attract customer. But as app developer you probably should let Apple know exactly what works and what doesn't work for you. I read all the comments below like how App Store's discovery sucks (+1). I think Apple is obligated to improve how apps are discovered, used, and marketed.
mingabunga 12y ago
Devs probably wouldn't find the split so bad if the general fee charged for apps was higher. It must be pretty hard to make a living on 99 cent apps unless you're wildly successful.
jrochkind1 12y ago
I understand where he's coming from, but in almost any analagous case I can think of, the tiers go the opposite way -- you pay less percentage on a $million in revenues than you do on $1000. When you have only $1000 in revenues, you're actually paying very little for what Apple is providing. When you have a million, you're paying an awful lot, and are probably wondering if you can find a way to keep more of it.
TomGullen 12y ago
I'm afraid this post just comes off as hugely naive. They are a corporation, they will milk you and everyone else for as much as they can get in every way possible.
findjashua 12y ago
completely agree, they should follow a tax bracket model.
bobbles 12y ago
People would game the shit out of a system like this. Oh, our 'freemium' game just hit the 10% threshold. Better re-release it under a new dev account as shitquest-2 and rake in the moolah!
- toastking 12y ago
  It probably wouldn't be too hard for Apple to check this though. Just make sure the account isn't under the name or address of someone who already has a developer account.
siglesias 12y ago
Developers won't actually absorb the full discount. A decrease in the fee will force a drop in prices (if that's possible) as developers attempt to find new customers with their newfound margin. If you have a more price-elastic customer base, those customers will reap most of the value of the shift as many will come to enjoy their lower prices. Secondly, wouldn't this create the perverse incentive for developers of multiple apps to release apps under multiple accounts--some might call them shell accounts--in order to minimize their app taxes?
- TheCowboy 12y ago
  Mind explaining your perspective on why a decrease in this fee will result in a 1-to-1 drop in prices? As far as point two, given that Apple is the 'benevolent dictator' of this app store, releasing apps under multiple accounts is a risky venture since developers and companies run the risk of getting banned completely. The overheard of wasting the time to actually do that also has to be small enough to make the potential gain worth while. Apps also seem to benefit from network effects, so it could hurt developers to spread their popularity for the same app across different apps in a discreet enough way that Apple wouldn't notice.
pbreit 12y ago
30% is practically standard for zero-marginal-cost, digital goods.
newobj 12y ago
Will I get downvoted if I propose a meta conversation on the horribly weasly rhetorical device of the "open letter"? I suppose etymologically, this used to actually mean something, but I don't remember anymore. Now all it signals to me is that someone wrote a blog post, prefixed it with "Dear <High Clout Person Of Interest>" to essentially work up some minor amounts of linkbait. Double reader rage points if it's signed "Love, <Author>"
lnanek2 12y ago
Honestly, Apple reached the point a long time ago where they are trying to set the bar higher to make an app, not lower. They even flat out said, "no more fart apps". So I think they consider themselves to be at the app saturation point. More apps will not help them, only higher quality apps will. Helping indie developers generally won't encourage high quality apps. The current situation is indie developers make apps, most completely disappear, and very few make it to the top of the charts. The rest of the apps on the charts are there because a big company dropped 70k ad spend to put it there or because it was cross promoted from other apps or already had a high place. Encouraging small time development is encouraging a part of the app store hardly any users see anyway.
blahedo 12y ago
I don't really have any dog in this fight, but I found this comment completely bizarre: > At $70K in net revenues per year, your spouse could be telling you to get a day job. For real? $70K income is pretty darn good pay and more than enough to support a family even if nobody else is working outside the home. In the US the median household income is only $53K. I can't decide if this misstep weakens the author's actual argument or not, but either way it simply drips with elitism and privilege and probably serves to undermine the presentation.
- bsimpson 12y ago
  I think he picked 100k because it makes the math easy, but there's a big difference between the cost of living in (for instance) San Francisco and Nashville. What I pay to rent a room in San Francisco could pay my cousin's mortgage in TN 3 times over. In SF, $70K is less than new grads make. I can definitely see someone having the conversation about taking a "real" job for a 50% increase in pay.
- s73v3r 12y ago
  Whether that $70k is enough to support a family largely depends on where you live. Midwest? Yeah, it's great. San Francisco or NYC? Not really. Further, given that we're software developers, the median income for everyone in the nation is completely irrelevant. It only matters what the median income for software developers is.
  - blahedo 12y ago
    I disagree. It only matters what you're willing to be happy with, and what is "enough". The fact that literally millions of families live on way less than that amount is, at least, a proof-of-concept of the sufficiency of the money. As for the actual number: San Francisco and New York may be expensive, but median household income is still only in the 60-80K range [0][1], and with fully half the population living on less than the median, I'm going to stand by my claim that $70K is possible to support a family on, even before considering the earning potential of the spouse who wants more money coming in. [0] http://www.deptofnumbers.com/income/california/san-francisco/ http://www.deptofnumbers.com/income/california/san-francisco... [1] http://www.deptofnumbers.com/income/new-york/new-york/ http://www.deptofnumbers.com/income/new-york/new-york/
spiritomb 12y ago
yeh, this system is so dysfunctional . . that app devs are clamoring to make more apps than ever before. no incentive to change a thing, and that's the straight dope.
drawkbox 12y ago
To this day I still have not understood why 70/30 became such a rock. Android, Amazon and Windows could play with this number to attract more developers. Samsung started with a ramp up but it happened in 6 months or so 0%, 10%, 20% then 30% at the launch of their store. I thought for sure when Microsoft came in later they would also go 25% or even 20%. Everyone followed right behind Apple in line rather than challenged that number through competition. Almost seems like price fixing. I think the tiered system would be a great way to help but I worry Apple may not care as much about indie titles or smaller apps since they already gain less total. It could be an awesome gift from Apple to developers though. In games IP royalties are usually 17%, with 30% on that and maybe 5% is using Unreal or other sales based cost. Over 50% cut off the top. At that level the 30% starts to look massive. If you have a publisher then another 20-30%. What's the point at that level with that budget. You can say Apple primarily squeezed the publishers out which is good but the rent is too damn high.
- deleted 12y ago
  [deleted]
rahimnathwani 12y ago
This same argument could be made for supermarkets. If Costco or Tesco wants a healthy ecosystem of groceries, they should sell my newly-launched coffee brand at cost (i.e. I keep 100% of the revenue) whilst selling established brands at a mark-up over wholesale cost. However, in reality, the reverse is the case. Supermarkets must stock major products (e.g. Coke) and, if you have a less popular product with many substitutes, _you_ will _pay_ the supermarket for shelf space, just to get your brand known.
alttab 12y ago
Interesting perspective, however bargaining with Apple like a peasant to his king about the tax regime seems like such a powerless way to approach the problem. Apple's Appstore is flawed in many ways. All Appstores leave something to be desired. I'll take all the long breath out of my philosophy[1], but it boils down to an inherit weakness in the business model of pushing downloads for cash flow. Many of the most successful apps have completely decoupled their revenue from downloads, or the 70/30 split. The "Big Players" like King.com and the rest sell in game items that cost $100! Do you think they care about the 70/30 split? Then you have other utility apps. Like "Fixify" for $1 that let's me see the title of my Spotify Music on my Pebble. Seems like Spotify should just do it, but they don't. This dude got my dollar. That app had to be like 200 lines of Java, most of which was probably boilerplate. If you are concerned about 70% or 80%, or 85%, you are thinking too small. If Tim had balls he could say "fine, here is 95%" and then somehow prove it didn't change the economics of the Appstore. TLDR - If you are worried about the split, you are "gripping the bat wrong." [1] http://www.connersc.com/blog/lets-face-it-folks-ios-is-not-a-strategy/ http://www.connersc.com/blog/lets-face-it-folks-ios-is-not-a...
- 21echoes 12y ago
  > it boils down to an inherit weakness in the business model of pushing downloads for cash flow. Many of the most successful apps have completely decoupled their revenue from downloads, or the 70/30 split. The "Big Players" like King.com and the rest sell in game items that cost $100! Do you think they care about the 70/30 split? Apple charges a 70/30 split on in-app purchases as well.
  - alttab 12y ago
    Sure, but those items are designed to be consumable, and purchased over and over.
  - lucaspiller 12y ago
    The company I work for has a mobile payment platform which sells a lot of adult content. Why people pay £3 for a 30 second video I have no idea, but of that £3 the merchant only gets £1.50 (if they are lucky) after the operator has taken their cut. The thing is, it costs them practically nothing to sell that content, so even though they only get 50% it's still a win for them - that £1.50 is pure profit.
s73v3r 12y ago
Seems someone doesn't recall the bad old days of cell phone software, where there was still a 70/30 split; only YOU got the 30.
malkia 12y ago
I'm afraid that loopholes are bound to be found this way (my first thought while reading this) - possibly I'm wrong...
s73v3r 12y ago
If anything is done to improve the App Store, it should be on the fronts of discovery, as others have pointed out, and being able to connect with customers. I know several longtime developers who'd love to distribute their software on the Mac App Store, but they wouldn't be able to do stuff like offer discounts to their existing customers for upgrades to the new version.
thoman23 12y ago
"Hopefully you agree that a thriving ecosystem of independent developers is an important competitive advantage for Apple." If Apple cared about a thriving ecosystem of independent developers, they would make it easy for developers on non-Apple hardware to build and test iOS apps. For the Windows/Linux-based developer who is just interested in kicking the tires on iOS development, the walled Apple ecosystem is very unfriendly to experimentation. I know I focused early on Android development for mobile apps because of the lower barrier to entry.
ksec 12y ago
"Looking at the numbers reported by independent developers, I think it’s safe to say that Apple’s 30% cut of App Store revenues can have a big impact on their success or failure." But what if, Apple hugely improve App Store's app discoverability, searching, tagging and sharing? Therefore opening up a bigger potential market? ( And hence making more money )
dreamdu5t 12y ago
LoL! I'm sure one of the most successful companies of the last century needs your advice. Oh yeah... the company that has 90%+ of mobile profits needs you telling Tim Cook how to run Apple.
- PSeitz 12y ago
  I actually image that's how apple thinks
Plough_Jogger 12y ago
Looking at the UI / landing page for this app, I don't know if the most pressing issue for this team is related to their revenue share with Apple.
bonn1 12y ago
Worrying about the 70/30 share is premature optimization—first build an app and get downloads on a large scale without buying installs, good luck man.
clarky07 12y ago
All the comments here saying the services Apple provides are worth the 30% are missing the point. The point isn't that it's unfair or that they aren't providing value, it's that the ecosystem would be better off if it was easier for indies to make money. Indie devs are good for Apple, and many of them are quitting because it's not financially viable. They aren't going to Android, they are getting 9-5's Sure improving discovery would also help, this isn't the only thing that can be changed. It is just one thing that could be changed.
- s73v3r 12y ago
  The 30% cut is not what is stopping them from making money. It's the sad fact that their apps are not that popular.
  - clarky07 12y ago
    I beg to differ. Unread is a good example. Making 42k on 1 app in a year is pretty popular. 42k isn't really enough though. Maybe 60k (which is what it would be without the 30%) isn't enough either, but it's much closer. http://blog.jaredsinclair.com/post/93118460565/a-candid-look-at-unreads-first-year http://blog.jaredsinclair.com/post/93118460565/a-candid-look... Personally I'll pass 100k paid out to apple this year. That is the difference between me making slightly below market rates for the last few years to being able to hire another developer or designer.
z3t4 12y ago
You also need to take into account that most of the western countries have 20% or more in VAT taxes. So the split is more like 90/10. And they have to pay the credit card companies and for the bandwidth. I don't think Apple makes any money from the app store ...
- bboreham 12y ago
  Tax comes off before Apple take their 30%. So on a £10 spend, the government get £2, Apple get £2.40 and the developer gets £5.60.
rebootthesystem 12y ago
Discoverability and the closed nature of the ecosystem asre problems. If I create a web version of an app I own the relationship with my customers, not Apple. I can charge, monetize in a dozen different ways and even manage enterprise relationships as I see fit. This is what we are doing witheducational software. I got sick and tired of having Apple as gatekeepers. Bug fixes are a nightmare because you are on their schedule, not yours. You can't deploy fixes or new features overnight or over a weekend. Your customers suffer because Apple is in the middle wanting to micro manage it all. So we've shifted our strategy to web based apps done wih Python, jQuery, etc. and, you know, it feels good. The 30% isn't the issue, Apple is the issue.
chj 12y ago
apple has a real cost in maintaining the review team, which to me is more of a burden than help, we have beta testers, they are far more responsive.
happywolf 12y ago
Will I be labelled a troll if I say after reading this, the first thing come to my mind is to fix the US income tax system instead of Apple's?
itschaffey 12y ago
I think discoverability is a much bigger problem with the App Store than the 70/30 revenue split. Whilst the revenue split is too high, I would much rather see improvements in the discoverability of apps created by indie developers/ entrepreneurs than the constant flooding of apps from big developer studios. Of course, the app needs to be good enough that when it is discovered, people actually want to use. Perhaps a vetting/ recommendation system should be implemented to highlight apps that would not have been found before.
bakhy 12y ago
Free market triumphs again ;) It seems obvious that the only way to prevent Apple lining its pockets with cash earned by other developers' hard work (not to say that they don't deserve some on their own - they certainly do) would be to: regulate the app stores! Neo-libertarian downvotes away!
username3 12y ago
Apple doesn't take 30% when apps are bought using iTunes gift cards that are sometimes discounted 20% by retailers. If retailers split the last 10% with Apple, that's only 5%. Developers can get a piece of that 30% by selling gift cards.
jorjordandan 12y ago
Hey guys, Fake Tim Cook here. Just thought I'd chime in. Here at Apple we pride ourselves on our developer friendly ecosystem. Apple has led the way in creating more value for developers. Plus, we have a monopoly on the developing for iOS, so it looks like you pretty much have to do whatever we say. Between you and me, we could change the split to 50/50 and it wouldn't really hurt us any. It may not seem like a lot of money is at stake to you guys, but we didn't build a collosal mountain of cash by participating in race-to-the-bottom economics. Our pricing scheme was built to get developers to our platform. It was probably too generous, but we can't go back now, until we finish going thermonuclear on android. Pretty soon we will have enough money to buy Earth. The new earth will be the best earth yet, redesigned from the literal ground up. Till then, we have to deal with pesky problems like robot, er android, or whatever. Anyways, keep cranking out those golden apps. My benevolent smile be upon you, Fake Time Cook

389 points by dirtae 12y ago

coryl 12y ago

Would be nice, but I can't see any upside for Apple aside from good PR and generosity.

djcapelis 12y ago
More independent developers more excited about their platform results in increased app quality and quantity, as well as increased platform migration and retention resulting from a stronger ecosystem. All of which results in increased sales of both apps and hardware which means increased profit. Plus the good PR and generosity you mentioned. I actually think it's harder to find the downside to the proposal than it is to find upside. This is a good letter and a good suggestion.
- s73v3r 12y ago
  You're acting like they don't already have that.
bsaul 12y ago
More devs, more and new kind of apps, higher quality, and have devs rely less on ads for low income apps ( which means less people in google/admob's long tail).
- s73v3r 12y ago
  They already have most of that. The only thing they don't is less apps relying on ads, and that's more of a function of people not wanting to spend money on apps than anything Apple ever did with the revenue split.

beastburn 12y ago

Economically, this makes absolutely zero sense.

srhngpr 12y ago
Just out of curiosity, could you elaborate?
- ProAm 12y ago
  The first issues I see are: 1) Apple is the most profitable company in the world, deals like this are why. It wouldn't behoove them to take less money than what is available on the table. 2) It would leverage Apple to promote only high grossing, high selling apps. This would change the way developers market and sell their apps. And provide disincentive to work on it more after it reached a threshold (maybe).
  - andy_ppp 12y ago
    In answer to your points you can argue them to mean the opposite too: 1) No skin really off Apple's nose then is there, minimal change on bottom line and a win for small devs, their ecosystem and they look like a cool company who listens. 2) They only do this now anyway, that's why the App store is so shit and has had so few new features (especially around discoverability) since its inception. No incentive to push smaller indy devs apps (and also because Apple wants to maintain a feel of high quality as opposed to long tail). It's not a terrible idea, no reason for Apple not to play nice really as it barely affects them.
    - ProAm 12y ago
      You might be correct, it can be seen from both sides. > No skin really off Apple's nose then is there Ive never known Apple not to care about every penny it can make and keep, I just dont see them giving up on this, but rather push the devs to make software that is better and sells better so the 70% they earn can mean more to everyone's bottom line. Maybe... but I that's not how Ive ever seen Apple operate. The fact that they make developers pay $99/per just to develop apps is indication they dont care about this. > no reason for Apple not to play nice They never play nice, they are cutthroat, just like Amazon. It's how they manage to stay on top. They realized that not only are customers a profit center but also content producers they can make money on both ends.

nostrademons 12y ago

This letter - and the revenue numbers in it - are interesting from a strategy perspective. The conventional wisdom I hear is that Android owns the overall market for smartphones, but if you want to make money as an independent developer, you're better off developing for iOS because iPhone users are more likely to pay for things. There's all sorts of crap in the Android ecosystem, a lot of it is free, but the users are largely the sorts of people who will take what kind of freebies they can get and don't want to pay for a premium product. By contrast, Apple actively encourages their developers to pay attention to fit & polish. Given this, I wonder if relaxing the 30% rev split might actually be in Apple's interests. In order to build that premium ecosystem, they need developers to be able to work full-time on apps. If they strangle that ecosystem, then the only people building iPhone apps will be folks with other day jobs to support them - which means either the quality bar will go down, or their will be many fewer apps in the app store vs. Google Play. Then again, perhaps that's Apple's plan anyway: focus on the few things that many customers want, make sure the apps for those are really good, and it's okay if there's not an app for the rest.

throwawaymsft 12y ago
Re: "owning the market", people forget the difference between market share and profit share. Profits are what keep your ecosystem alive and thriving. Raw usage numbers, by themselves, don't. (Sure, usage can lead to profits... so just measure profits!) Yes, Android sells more devices. Apple has 93% of the profits in industry, Samsung has 9%, and everyone else is fighting for that tiny slice and losing money. http://www.macrumors.com/2015/02/09/apple-mobile-profits-q4-2014/ http://www.macrumors.com/2015/02/09/apple-mobile-profits-q4-... The more profitable ecosystem is where developers want to play. Apple doesn't need to change their royalty rates, everyone is clamoring to be in that arena.
- soperj 12y ago
  I think you have your percentages skewed. 93 + 9 = ... Secondly how much as a percentage does Google make from mobile? Clearly it's not all about the take from people's pockets.

peterjancelis 12y ago

If Apple would do this, they'd have even more incentive to promote the highest grossing apps in their app store. Look at the 30% fee as a marketing cost. Surely you want the owner of your only marketing channel to be well compensated?

xenadu02 12y ago
How so? If Apple promotes an app it often becomes a high-grossing app, especially for games. That means you cross into 70/30 territory very quickly and Apple still gets the same cut.
mcintyre1994 12y ago
Is Apple necessarily the only marketing channel? Ie is there no way to deep link into the app store? I've seen links to iTunes app pages online - and while last I heard you can't download to your device from that page, will it not open in the app store if you open it on an iOS device? Also on Android Facebook for instance advertise apps a lot with a link to the store, is that not possible on iOS? Or do you have to use an Apple ad network on iOS for all advertising? Sorry for the confused reply, I'm just curious whether they've actually taken steps to force themselves as your only marketing channel or why that would be the case.
- tjl 12y ago
  Anyone can share an app link. So, you can tweet a link, you can post a link on your own web site (and even use an appropriate app store graphic from Apple) or any way you want to share the link. Plus, you get a set of promo codes you can share to give to reviewers. So, there's many ways one can advertise an app. Now, Apple has started a deal with Pinterest as well so people can pin apps so that's another avenue. Relying on Apple promotion generally means that you'll end up in the long tail. Occasionally, apps break out (then they often get Apple promotion after this happens) like Flappy Bird, but that's uncommon.
kw71 12y ago
Maybe it would be better to have a choice about what your marketing channels are. I'm selling software on eBay! For just a little over 10% I get to be super lazy and not develop a marketing website. eBay queues up requests for pre and post sales help for me. And they have me at the top of google results for queries related to my products: anyone facing the problems my software products solve will easily find me with a web search. I am shipping physical media and documents, which is boring work and is a pain. I really like not having to worry about marketing because it leaves me more time for development. My market is not very large, it's a rather specialty niche, and I think that I'm close to reaching the whole universe of interested people through eBay. eBay is probably not going to tell me my software products violate any arbitrary rules or are not fashionable. I have heard so many negs about Apple Store that I want nothing to do with it.

deleted 12y ago

[deleted]

calcsam 12y ago

This would basically turn Apple from a payment processor (relatively straightforward) into a global tax collector (extremely complex). Think about how you would handle corporate entities. Do you handle pass-through entities like LLCs differently than S-Corps? Now imagine designing a split structure that would make sense for a developer in Vietnam / Mexico / Spain. It would have to be different for each country. $5K for Vietnam? $20K for Mexico? $50K for Spain? Good luck. Oh, what if you have multiple people writing one app? With a 60/40 split between them? Okay, let's say you ignore all the previous points. Just imagine the kind of infrastructure you'd have to build out to verify identity globally, to ensure that people aren't using frontmen -- having their friend register an account and passing the money through their account. No thanks.

mcherm 12y ago
None of that is necessary if the tiering is based on the income of the app rather than the income of the app developer.
xenadu02 12y ago
I don't think you've thought this through very well. Apple already sets pricing tiers per country, based on exchange rates and other factors. Just apply the same adjustment to the $100k figure. There is no need to be concerned with the entity type. The first $100k per year for all developers accounts gets charged 0%, everything thereafter gets charged the standard rate. If you're building an app with a partner, oh well. The vast majority of people this would help are individual devs. And registering other accounts is pointless; the app belongs to one dev account and that's the account that accrues revenue. There's no way to share it, other than by transferring the app to someone else's account. A simple fix for that is to require 30% after X numbers of transfers for the same app, or just require the 30% cut if you do a transfer. Again, the target for this is individual indie developers working on their own.

0x0 12y ago

So what happens if you've sold the first $100k, can you just re-release the app on a new account to stay on the highest paying tier?

andrewguenther 12y ago
Sure, but you lose your position in the rankings, all of your ratings, everything. You also wouldn't be able to update the original any more. I think you would lose a hell of a lot more in revenue that way than a 10% bump in profit split.
bsaul 12y ago
I don't think anyone would make this kind of gamble. The 10% you ay gain would most certainly not compensate for the amount of users you'd loose. Plus, it could easily be countered by another article in apple's tos to check at validation.
qzervaas 12y ago
You could try, but getting traction on the new app probably wouldn't be worth the hassle. It's not trivial to earn $100k from an app, doing it twice would be extremely difficult.

desireco42 12y ago

I see a lot of idealism in this post. Apple is for profit company that is very aggressive in pursuing it. While I agree with poster rationale and I think tiered pricing would be other way around, lower as you sell more. Anyhow, I don't think it's going to happen, it looks to me that as far as Apple is concerned, he have you/us where it wants and don't want to change anything.

bsaul 12y ago

As an independant iOS dev, that post is so right it shouldn't even be an issue. Not only would it let more devs work full time on their project, but it will also make new niche markets interesting.

dchuk 12y ago

"I think it would be a big win for independent developers targeting Apple platforms, and by extension a big win for Apple, if the App Store revenue split used a tiered rate." It's interesting to see someone give Apple advice on how to make a "big win" financially. They're literally the biggest winners financially of any company in the world right now.

bsaul 12y ago
Well, maybe Apple became that successful by also listening to their customers.
- ceejayoz 12y ago
  Apple's history has a lot of successes stemming from them ignoring stated preferences from customers. Ditching the floppy, a phone without a hardware keyboard, refusing to build netbooks, etc. As the probably apocryphal Henry Ford quote goes, "if I'd asked people what they wanted, they'd have said a faster horse".
  - bsaul 12y ago
    I know those stories, and yet they switched from motorola to intel back in the days, they created a larger screen iphone which proved to be a best seller, and they've recently announced that ios 9 would be a "hardening" release with no major new breakthrough features. I think we shouldn't confuse marketing studies ( which they may not like), with customer feedback.

Glyptodon 12y ago

Maybe Apple views the revenue split as a desirable barrier to entry for the sake of quality control?

pseudometa 12y ago
The barrier to entry is the annual $100 developer fee, not the percentage of sales. I honestly wouldn't mind this fee being much much higher if the eliminated a lot of the crummy apps from the store.
- bottled_poe 12y ago
  Yeah, that and the $1500 computer to write the software.
  - AmVess 12y ago
    $499 Mac Mini is good enough for writing apps.

pseudometa 12y ago

From a aspiring indie developer perspective, I've never worried about the 70/30 split. I've been much more concerned with getting my apps visible to anyone. The app store is so flawed when it comes to discoverability (even as a user it is frustrating to find apps that solve a need) I would give up even more share if people could find my app to begin with.

chubs 12y ago
Agreed: The terrible discovery is the worse problem, it leads to a market of hits, with no long tail. Whereas if you open the play store on an android phone, it suggests apps your friends have, and many other 'discoverable' things. It leads to a better long tail, eg supports indies. I know more indies making a living out of android, and i know far more ios developers, being one myself.
- kamilszybalski 12y ago
  +1, completely agree. Might as well throw complete itunes connect overhaul into this. It's an absolute nightmare working with itunes connect, managing users, working with beta and internal testers.. the whole process is completely disconnected and really demonstrates the launch of a rushed product.
  - madeofpalk 12y ago
    > Might as well throw complete itunes connect overhaul into this. Funny considering the current iTunes connect is a complete overhaul, which only came out recently with iOS 8. The new iTunes Connect acts like someone's first attempt at an Angular app (which it is), with a complete disregard from doing things in a performant way.
    - jfaat 12y ago
      > The new iTunes Connect acts like someone's first attempt at an Angular app Huh, it sure is. Is that surprising to anyone else? Also, while it may be Apple's first attempt as a company I'm sure they managed to find a few devs who had shipped an angular app to work on Connect.

warmfuzzykitten 12y ago

It's a good idea. It would give small developers a chance to get on their feet financially. But the author assumes most of the revenues come from big-selling apps. I don't think we actually know how long a tail the app sales distribution has or what effect it would have on Apple's revenues. And, unfortunately, it wouldn't have any effect on, e.g., Amazon being unable to sell books on Apple products because Amazon's margins are too low to allow them to eat the 30% and jacking up their prices 43% to cover the Apple tax would make them uncompetitive with Apple's book store. Apple's plan, maybe, but damned inconvenient for users.

benologist 12y ago

This would be a great win for the top developers, a little extra rope for the borderline-sustainable developers, and nothing for everybody else. I'd rather they do something to lift the average.

patmcc 12y ago

That 30% isn't for nothing - it's for payment processing, reach, marketing, infrastructure, testing/approval (you may or may not like this, but users probably do like it), app delivery, etc. Like it or not, those things all are more valuable to smaller developers than bigger ones. Microsoft can do a lot of that stuff themselves, if they really want to - Joe the ordinary developer can't. Apple is already being nice to small developers by giving them the same rates as big developers - in any other business, doing 100x the sales of the little guy would get you a better rate, not the same one.

TillE 12y ago
And "payment processing" doesn't even tell the whole story; Apple is effectively collecting and passing on sales tax for you, and dealing with all the other bullshit that comes with being a merchant. That's huge, especially for solo developers who just want to make stuff and not actually run a business. 30% may be a little steep, but I'd say it's worth it.
- mss6989 12y ago
  In some cases, Apple is even taking on the burden imposed by tax laws. In the recent changes to EU VAT, both Apple and Google took on the added cost burden.
  - notsony 12y ago
    FastSpring, eSellerate and other digital commerce sites can do all this for 10% or less...
    - JanezStupar 12y ago
      But do they bring customers?
    - mss6989 12y ago
      To be more specific, Apple and Google are assuming VAT liability for paid apps. If an app is a paid app in the stores, there’s relatively little decision making to be done; a developer can adjust prices based on the VAT in each country in order to maintain current revenues. The transaction between a developer and an app platform is considered a business-to-business transaction and is subject to the existing VAT rules. If an app offers in-app purchases, a developer must consider whether allowing a platform to handle the micro-transactions (thus sacrificing the 30% revenue share) outweighs the time and costs necessary to collect and store sales information (including location) and VAT payments. This can be quite a large undertaking for an indie developer or small development studio. See: http://www.appdevelopersalliance.org/news/eu-value-added-tax-vat-changes-what-you-need-to-know http://www.appdevelopersalliance.org/news/eu-value-added-tax... Webinar: https://pollen.vc/#/vat-seminar/ https://pollen.vc/#/vat-seminar/

1123581321 12y ago

This is the opposite of what I was expecting to read. The developers with the lowest income receive the most benefit from Apple as they presumably do not have a large, existing marketing list to convert to sales and so rely on App Store discovery (what exists of it.) If anyone should pay different rates, it should be the more successful developers who convert to an expensive premium developer account subscription. This is the model used by Ebay, Etsy, Shopify, and a lot of other markets.

deleted 12y ago

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dusing 12y ago

This reasoning seems weak "At $100K in net revenues per year, you may be a successful independent developer. At $70K in net revenues per year, your spouse could be telling you to get a day job. Therefore,..."

yeukhon 12y ago
Maybe. Depends where one lives. In silicon valley a developer making $70K probably should look for a day job. In some awesome midwest $70K and a working spouse is very good.
- dirtae 12y ago
  True. But keep in mind that we're talking about net revenue here, not net profit. That $70K is after Apple's cut, then you need to deduct all of your expenses, like marketing and hosting, on top of that.
Azkar 12y ago
I agree. $30K/yr is a lot of money, but it shouldn't put anyone on the street. Sure, it might not allow you to live a glamorous lifestyle in they valley, but you have the freedom to move somewhere a lot cheaper to live if you're a single developer pulling $70K/yr from an iphone app. If you don't want to make that compromise, then you should be looking for a second source of income, or start living within your means.

trevmckendrick 12y ago

I've disclosed my App Store revenues before (http://www.trevormckendrick.com/my-first-year-in-the-app-store/ http://www.trevormckendrick.com/my-first-year-in-the-app-sto... and http://www.trevormckendrick.com/My-2nd-Year-in-the-App-Store/ http://www.trevormckendrick.com/My-2nd-Year-in-the-App-Store...). Apple can absolutely afford to do this financially, but the 70/30 split is practically the only thing that hasn't changed in the App Store since it launched. So why don't they? A few possibilities: - They have a similar split with music labels, so giving more to developers could hurt their music industry relationships - They have more interest in helping the big app companies like Supercell, simply because of the revenues and brands they create - They don't want to give additional incentives to creators of crappy apps who never make much money anyway Whatever Apple's reasons, they haven't changed iTunes music revenue splits in over a decade. So I don't expect them to update developer splits anytime soon either.

rhino369 12y ago
Why would someone with a monopoly over the software on millions of devices ever reduce prices?
- Consultant32452 12y ago
  Because it's not like fuel. Most people have a fairly inelastic demand for fuel. You kinda have to drive to work. You really don't need apps, and no one needs to make the apps. Running sales can increase consumer demand. Increasing the profit margins for developers could increase supply of quality apps, thereby increasing net revenues for Apple on a smaller cut of the pie. I rather like the current system for it's simplicity and while of course I'd like them to charge less I think their cut is reasonable.
- sparaker 12y ago
  To gain more development support. More developers = more apps = more users = more revenue. It makes sense.
  - enlightenedfool 12y ago

filmgirlcw 12y ago

It's a good thought but I think adding this kind of complexity , even with good intent, is exactly the sort of thing the 70/30 split was created to avoid. There is something nice about just knowing, this is my split. I don't have to worry about it switching and my profit formulas being altered once I hit a certain sales threshold, My take is $.70x, with x being downloads. Period. Beyond that, I'd have to ask what happens when we take this to its logical conclusion: Say you start with an 85% split for the first 10,000 sales or something -- what happens if the split then eventually goes below 70/30, say 65/35 or 60/40 or worse, the more copies you sell? How do people react then. I suppose the counter-argument is that that's how the tax system works -- and that's fair -- but I still don't see developers being happy to have to give up more of their take down the road, just because they have reached "success." I mean, if you're going to go to tiers, then the next argument becomes about what defines one tier from the next. Again, it introduces all kinds of complexities that having a straight 70/30 system avoids. And to me, that simplicity ultimately trumps the other arguments, as sympathetic to indie developers as I might be.

thesimpsons1022 12y ago
that tax argument isn't compelling at all. i don't think apple should use big sellers to cover the costs for indies, it makes no sense as a private company. It does make sense in society as a whole with income.
- filmgirlcw 12y ago
  I actually don't disagree with you at all, I'm just acknowledging the obvious counterpoint to that argument, that's all.
hackbinary 12y ago
The point of having tapered rates is well established as being progressive and fair. Governments do this with income tax. The basic premise is that $1 means more to a person with an income of $10,000 per year, compared to a person with an income of $100,000, or a $1,000,000. It therefore follows that developers earning less money are not as able to pay as those earning higher incomes. A flat rate favours bigger developers. If Apple wants to promote diversity, then they should have a progressive system, and lower the barrier to smaller developers. This actually may prove to increase Apple revenues ultimately by helping smaller developers stay in the game over the long term because their business would not have been otherwise viable. Adding income tiers is not that more complex.

balls187 12y ago

> I think it’s safe to say that most independent developers are generating annual revenue in the tens of thousands to low hundreds of thousands of dollars range. I don't believe this is the case at all. From the linked study, most are making substantially less than that.

matheweis 12y ago

A key point that many developers miss is that IF you are marketing your own apps, the split is not 70/30, but 77/23. In explanation, you join the iTunes affiliate program, which gives you a 7% cut on sales in the app store. I really don't understand why this isn't more widely known.

SwellJoe 12y ago
If I could sell it directly from my website the cut would be 100/0. I hate the indentured servitude imposed by the Apple App Store, and have opted out of mobile development thus far because of it. It's like shooting off my nose to spite my face, I guess, given the growth of the mobile market, but I truly hate the shape of our industry these days, when it comes to how indie developers are able to connect to their users...yes, it's better than it's ever been, but not because of Apple. It's better because of the open web, and Apple and Google are using their near-monopoly powers to impose the old gatekeeper model long past when it should be relevant.
- matheweis 12y ago
  Not likely... I actually do sell direct on my site, and even there the cut for the ecommerce provider (fastspring) is 8.9%. Also, I have to manage the distribution chain myself, which is a surprising amount of overhead.
  - SwellJoe 12y ago
    I sell software for servers directly on my site, as well. I do pay merchant service fees (which I'm also somewhat grumpy about how high they are), but the total amount of "fees" I pay is remarkably lower than 30%. If I factor in colocation costs, server costs, etc. I end up with ~11% total. (But, we're also supporting Open Source projects with a million+ users, so we have a lot higher infrastructure costs than we would if we only had to serve our few thousand paying customers.) Even if I add advertising costs (because some people allege the app stores provide a customer base), it's still less than 20%. But, I could distribute dozens of times the amount of software I'm selling with the same hardware and colo (if the market wanted to buy dozens of times the amount of our software currently sold). So, it's true that there are costs no matter how you sell your software to customers. And, I might be willing to pay more for things that would make my customers lives easier. But, 30% is...it's just outrageous, to me. Apple and Google are among the richest companies in the world. Their margins on running these stores is obscene.

ares2012 12y ago

I remember the days when app revenue splits were 30/70 (driven by mobile carriers) so I find it hard to complain about Apple's revenue split policy. While onerous, it at least makes it possible to be profitable.

bnolsen 12y ago

The short of it is: Apple wants their record breaking profits and they get those profits by telling you little guys "to hell with you". People keep buying Apple, people keep developing for Apple. They're massively profitable. Tell me what they're doing wrong and why they should cut you a break?

jblow 12y ago

Proposal made without any thought as to how scummy app developers are going to game the system. First thing that happens is opening a new development account per app in an attempt to squeak under the $100k as much as possible.

greggman 12y ago

I kind of have the opposite opinion. It should start at 30% and go down with success. Apple is providing a service (yea there's no alternatives on iOS but still)... for 30% they take care off all your payments from all countries, they take care of refunds, dealing with credit card companies, and for the most part dealing with customers in general. They also provide the market, the installation system, the update/upgrade system. Having tried to write some of those myself and the servers to maintain them I can tell you I don't personally want to run them. Compare to Steam. Steam is also 30% on a platform you can do it all yourself if you want. Sure they provide the most exposure but similarly they also provide most of the other services that make it worthwhile. Assuming you could do that do you really want to do all that yourself? Think about it. If you did it yourself you'd need to run a server to put your software on. Keep it secure, updating it constantly with security patches. Make a relationship with a payment processor. Handle refunds yourself. Figure out an upgrade system. Figure out how to deal with failed installations. I'm sure others could name many more things you'd have to do. 30% doesn't seem unreasonable to me given it would take more more than 30% of my time (and therefore money) to do this myself. At least that's my perspective.

tomp 12y ago
All the services they provide don't justify the cost (30% of sales!) in any way. The only reason Apple is able to charge a fee so high is because they are the monopoly provider of apps for the most popular (or the richest) mobile platform.
- sokoloff 12y ago
  Why should Apple justify the cost? They only need to provide the benefit (access to the overwhelming majority of iOS users) and let developers opt in or not.
  - enjo 12y ago
    and let developers opt in or not. Your option is to leave a massive mobile phone platform or opt-in. It's really not much of a choice. As long as people keep giving Apple their money, developers will suffer. The situation is better (but not great) on Android where third party app stores are at least possible.

jtwebman 12y ago

When you are the king you get to decide. It is still a way better split then say ads on YouTube videos. I just don't see them changing this.

geobmx540 12y ago

"I think it’s safe to say that most independent developers are generating annual revenue in the tens of thousands to low hundreds of thousands of dollars range." Most?!

jamesrom 12y ago

People forget that Apple pay for hosting and downloads. The cost of hosting the 0% rate apps (99.3% of all apps[1]) would not be a small cost at all. [1]: http://metakite.com/blog/2015/01/the-shape-of-the-app-store/ http://metakite.com/blog/2015/01/the-shape-of-the-app-store/

SwellJoe 12y ago
I don't forget that they pay for it, I just think it's so tiny as to not matter in this discussion. Downloads are such an infinitesimally small cost, relatively speaking. I don't have comparable download numbers to the Apple store, but I do help maintain software that has 3+ million downloads a year (and it's a quite large download, too, compared to mobile apps, at 15MB). The cost of hosting those downloads and the bandwidth for them wouldn't even really be a blip on our radar in terms of costs of running our business and projects. Bandwidth is cheap these days. Hardware is cheap these days. And, it takes almost no hardware to serve file downloads. We've had people offer to provide mirrors for us for free, but we don't take them up on it (though we can't stop people, either, being Open Source) because we'd rather have the data about downloads than the tiny savings in bandwidth and hardware. What's a few hundred terabytes a year of transfer and storage for apps to an organization like Apple, that also serves out millions of HD movies? It is closer to "nothing" than it is to "something".

wesnerm2 12y ago

The proposal is flawed from a financial perspective to Apple. Credit card fees are higher as a percentage of the price, the lower the price. Apple pays close to 30% to credit card companies for a one dollar transaction, whereas a hundred dollar transaction costs just a few percentage points. (I think this is due to a fixed per-transaction fee added to a percentage-based fee.) This is why retailers often place transaction minimums for credit-card purchases. It's to Apple's benefit to consolidate multiple app and music purchases into one transaction to reduce the total percentage paid out. They do this by offering iTunes gift cards for sale at stores and by consolidating multiple purchases from the same day or two into one transaction.

glurgh 12y ago
Apple does not pay 30% on dollar transactions - they don't pay stripe-like processing fees. They are a high-volume seller with a great deal of negotiating leverage and financial savvy, they've been selling $1 digital goods since 2003. They probably pay some sort of per-transaction fee and percentage fees but it wouldn't add up to 30%. Take a look at the range of fees here - http://www.cardfellow.com/blog/credit-card-processing-fees/ http://www.cardfellow.com/blog/credit-card-processing-fees/

yeukhon 12y ago

If you think about it, Apple is like government. They "tax" you. An independent app developer is basically running a startup as the developer has to cover marketing, production development, customer support, finance reporting, and even human resource management (hey he/she has to sleep and get away from the computer!). Very curious: what kind of benefits do small app developers get from Apple? The difference is you don't really "elect" how Apple decide what to do, unless you start a mass campaign and challenge Apple's authority. AWS and Google are always cutting their cloud price to attract customer. But as app developer you probably should let Apple know exactly what works and what doesn't work for you. I read all the comments below like how App Store's discovery sucks (+1). I think Apple is obligated to improve how apps are discovered, used, and marketed.

mingabunga 12y ago

Devs probably wouldn't find the split so bad if the general fee charged for apps was higher. It must be pretty hard to make a living on 99 cent apps unless you're wildly successful.

jrochkind1 12y ago

I understand where he's coming from, but in almost any analagous case I can think of, the tiers go the opposite way -- you pay less percentage on a $million in revenues than you do on $1000. When you have only $1000 in revenues, you're actually paying very little for what Apple is providing. When you have a million, you're paying an awful lot, and are probably wondering if you can find a way to keep more of it.

TomGullen 12y ago

I'm afraid this post just comes off as hugely naive. They are a corporation, they will milk you and everyone else for as much as they can get in every way possible.

findjashua 12y ago

completely agree, they should follow a tax bracket model.

bobbles 12y ago

People would game the shit out of a system like this. Oh, our 'freemium' game just hit the 10% threshold. Better re-release it under a new dev account as shitquest-2 and rake in the moolah!

toastking 12y ago
It probably wouldn't be too hard for Apple to check this though. Just make sure the account isn't under the name or address of someone who already has a developer account.

siglesias 12y ago

Developers won't actually absorb the full discount. A decrease in the fee will force a drop in prices (if that's possible) as developers attempt to find new customers with their newfound margin. If you have a more price-elastic customer base, those customers will reap most of the value of the shift as many will come to enjoy their lower prices. Secondly, wouldn't this create the perverse incentive for developers of multiple apps to release apps under multiple accounts--some might call them shell accounts--in order to minimize their app taxes?

TheCowboy 12y ago
Mind explaining your perspective on why a decrease in this fee will result in a 1-to-1 drop in prices? As far as point two, given that Apple is the 'benevolent dictator' of this app store, releasing apps under multiple accounts is a risky venture since developers and companies run the risk of getting banned completely. The overheard of wasting the time to actually do that also has to be small enough to make the potential gain worth while. Apps also seem to benefit from network effects, so it could hurt developers to spread their popularity for the same app across different apps in a discreet enough way that Apple wouldn't notice.

pbreit 12y ago

30% is practically standard for zero-marginal-cost, digital goods.

newobj 12y ago

Will I get downvoted if I propose a meta conversation on the horribly weasly rhetorical device of the "open letter"? I suppose etymologically, this used to actually mean something, but I don't remember anymore. Now all it signals to me is that someone wrote a blog post, prefixed it with "Dear <High Clout Person Of Interest>" to essentially work up some minor amounts of linkbait. Double reader rage points if it's signed "Love, <Author>"

lnanek2 12y ago

Honestly, Apple reached the point a long time ago where they are trying to set the bar higher to make an app, not lower. They even flat out said, "no more fart apps". So I think they consider themselves to be at the app saturation point. More apps will not help them, only higher quality apps will. Helping indie developers generally won't encourage high quality apps. The current situation is indie developers make apps, most completely disappear, and very few make it to the top of the charts. The rest of the apps on the charts are there because a big company dropped 70k ad spend to put it there or because it was cross promoted from other apps or already had a high place. Encouraging small time development is encouraging a part of the app store hardly any users see anyway.

blahedo 12y ago

I don't really have any dog in this fight, but I found this comment completely bizarre: > At $70K in net revenues per year, your spouse could be telling you to get a day job. For real? $70K income is pretty darn good pay and more than enough to support a family even if nobody else is working outside the home. In the US the median household income is only $53K. I can't decide if this misstep weakens the author's actual argument or not, but either way it simply drips with elitism and privilege and probably serves to undermine the presentation.

bsimpson 12y ago
I think he picked 100k because it makes the math easy, but there's a big difference between the cost of living in (for instance) San Francisco and Nashville. What I pay to rent a room in San Francisco could pay my cousin's mortgage in TN 3 times over. In SF, $70K is less than new grads make. I can definitely see someone having the conversation about taking a "real" job for a 50% increase in pay.
s73v3r 12y ago
Whether that $70k is enough to support a family largely depends on where you live. Midwest? Yeah, it's great. San Francisco or NYC? Not really. Further, given that we're software developers, the median income for everyone in the nation is completely irrelevant. It only matters what the median income for software developers is.
- blahedo 12y ago
  I disagree. It only matters what you're willing to be happy with, and what is "enough". The fact that literally millions of families live on way less than that amount is, at least, a proof-of-concept of the sufficiency of the money. As for the actual number: San Francisco and New York may be expensive, but median household income is still only in the 60-80K range [0][1], and with fully half the population living on less than the median, I'm going to stand by my claim that $70K is possible to support a family on, even before considering the earning potential of the spouse who wants more money coming in. [0] http://www.deptofnumbers.com/income/california/san-francisco/ http://www.deptofnumbers.com/income/california/san-francisco... [1] http://www.deptofnumbers.com/income/new-york/new-york/ http://www.deptofnumbers.com/income/new-york/new-york/

spiritomb 12y ago

yeh, this system is so dysfunctional . . that app devs are clamoring to make more apps than ever before. no incentive to change a thing, and that's the straight dope.

drawkbox 12y ago

To this day I still have not understood why 70/30 became such a rock. Android, Amazon and Windows could play with this number to attract more developers. Samsung started with a ramp up but it happened in 6 months or so 0%, 10%, 20% then 30% at the launch of their store. I thought for sure when Microsoft came in later they would also go 25% or even 20%. Everyone followed right behind Apple in line rather than challenged that number through competition. Almost seems like price fixing. I think the tiered system would be a great way to help but I worry Apple may not care as much about indie titles or smaller apps since they already gain less total. It could be an awesome gift from Apple to developers though. In games IP royalties are usually 17%, with 30% on that and maybe 5% is using Unreal or other sales based cost. Over 50% cut off the top. At that level the 30% starts to look massive. If you have a publisher then another 20-30%. What's the point at that level with that budget. You can say Apple primarily squeezed the publishers out which is good but the rent is too damn high.

deleted 12y ago
[deleted]

rahimnathwani 12y ago

This same argument could be made for supermarkets. If Costco or Tesco wants a healthy ecosystem of groceries, they should sell my newly-launched coffee brand at cost (i.e. I keep 100% of the revenue) whilst selling established brands at a mark-up over wholesale cost. However, in reality, the reverse is the case. Supermarkets must stock major products (e.g. Coke) and, if you have a less popular product with many substitutes, _you_ will _pay_ the supermarket for shelf space, just to get your brand known.

alttab 12y ago

Interesting perspective, however bargaining with Apple like a peasant to his king about the tax regime seems like such a powerless way to approach the problem. Apple's Appstore is flawed in many ways. All Appstores leave something to be desired. I'll take all the long breath out of my philosophy[1], but it boils down to an inherit weakness in the business model of pushing downloads for cash flow. Many of the most successful apps have completely decoupled their revenue from downloads, or the 70/30 split. The "Big Players" like King.com and the rest sell in game items that cost $100! Do you think they care about the 70/30 split? Then you have other utility apps. Like "Fixify" for $1 that let's me see the title of my Spotify Music on my Pebble. Seems like Spotify should just do it, but they don't. This dude got my dollar. That app had to be like 200 lines of Java, most of which was probably boilerplate. If you are concerned about 70% or 80%, or 85%, you are thinking too small. If Tim had balls he could say "fine, here is 95%" and then somehow prove it didn't change the economics of the Appstore. TLDR - If you are worried about the split, you are "gripping the bat wrong." [1] http://www.connersc.com/blog/lets-face-it-folks-ios-is-not-a-strategy/ http://www.connersc.com/blog/lets-face-it-folks-ios-is-not-a...

21echoes 12y ago
> it boils down to an inherit weakness in the business model of pushing downloads for cash flow. Many of the most successful apps have completely decoupled their revenue from downloads, or the 70/30 split. The "Big Players" like King.com and the rest sell in game items that cost $100! Do you think they care about the 70/30 split? Apple charges a 70/30 split on in-app purchases as well.
- alttab 12y ago
  Sure, but those items are designed to be consumable, and purchased over and over.
- lucaspiller 12y ago
  The company I work for has a mobile payment platform which sells a lot of adult content. Why people pay £3 for a 30 second video I have no idea, but of that £3 the merchant only gets £1.50 (if they are lucky) after the operator has taken their cut. The thing is, it costs them practically nothing to sell that content, so even though they only get 50% it's still a win for them - that £1.50 is pure profit.

s73v3r 12y ago

Seems someone doesn't recall the bad old days of cell phone software, where there was still a 70/30 split; only YOU got the 30.

malkia 12y ago

I'm afraid that loopholes are bound to be found this way (my first thought while reading this) - possibly I'm wrong...

s73v3r 12y ago

If anything is done to improve the App Store, it should be on the fronts of discovery, as others have pointed out, and being able to connect with customers. I know several longtime developers who'd love to distribute their software on the Mac App Store, but they wouldn't be able to do stuff like offer discounts to their existing customers for upgrades to the new version.

thoman23 12y ago

"Hopefully you agree that a thriving ecosystem of independent developers is an important competitive advantage for Apple." If Apple cared about a thriving ecosystem of independent developers, they would make it easy for developers on non-Apple hardware to build and test iOS apps. For the Windows/Linux-based developer who is just interested in kicking the tires on iOS development, the walled Apple ecosystem is very unfriendly to experimentation. I know I focused early on Android development for mobile apps because of the lower barrier to entry.

ksec 12y ago

"Looking at the numbers reported by independent developers, I think it’s safe to say that Apple’s 30% cut of App Store revenues can have a big impact on their success or failure." But what if, Apple hugely improve App Store's app discoverability, searching, tagging and sharing? Therefore opening up a bigger potential market? ( And hence making more money )

dreamdu5t 12y ago

LoL! I'm sure one of the most successful companies of the last century needs your advice. Oh yeah... the company that has 90%+ of mobile profits needs you telling Tim Cook how to run Apple.

PSeitz 12y ago
I actually image that's how apple thinks

Plough_Jogger 12y ago

Looking at the UI / landing page for this app, I don't know if the most pressing issue for this team is related to their revenue share with Apple.

bonn1 12y ago

Worrying about the 70/30 share is premature optimization—first build an app and get downloads on a large scale without buying installs, good luck man.

clarky07 12y ago

All the comments here saying the services Apple provides are worth the 30% are missing the point. The point isn't that it's unfair or that they aren't providing value, it's that the ecosystem would be better off if it was easier for indies to make money. Indie devs are good for Apple, and many of them are quitting because it's not financially viable. They aren't going to Android, they are getting 9-5's Sure improving discovery would also help, this isn't the only thing that can be changed. It is just one thing that could be changed.

s73v3r 12y ago
The 30% cut is not what is stopping them from making money. It's the sad fact that their apps are not that popular.
- clarky07 12y ago
  I beg to differ. Unread is a good example. Making 42k on 1 app in a year is pretty popular. 42k isn't really enough though. Maybe 60k (which is what it would be without the 30%) isn't enough either, but it's much closer. http://blog.jaredsinclair.com/post/93118460565/a-candid-look-at-unreads-first-year http://blog.jaredsinclair.com/post/93118460565/a-candid-look... Personally I'll pass 100k paid out to apple this year. That is the difference between me making slightly below market rates for the last few years to being able to hire another developer or designer.

z3t4 12y ago

You also need to take into account that most of the western countries have 20% or more in VAT taxes. So the split is more like 90/10. And they have to pay the credit card companies and for the bandwidth. I don't think Apple makes any money from the app store ...

bboreham 12y ago
Tax comes off before Apple take their 30%. So on a £10 spend, the government get £2, Apple get £2.40 and the developer gets £5.60.

rebootthesystem 12y ago

Discoverability and the closed nature of the ecosystem asre problems. If I create a web version of an app I own the relationship with my customers, not Apple. I can charge, monetize in a dozen different ways and even manage enterprise relationships as I see fit. This is what we are doing witheducational software. I got sick and tired of having Apple as gatekeepers. Bug fixes are a nightmare because you are on their schedule, not yours. You can't deploy fixes or new features overnight or over a weekend. Your customers suffer because Apple is in the middle wanting to micro manage it all. So we've shifted our strategy to web based apps done wih Python, jQuery, etc. and, you know, it feels good. The 30% isn't the issue, Apple is the issue.

chj 12y ago

apple has a real cost in maintaining the review team, which to me is more of a burden than help, we have beta testers, they are far more responsive.

happywolf 12y ago

Will I be labelled a troll if I say after reading this, the first thing come to my mind is to fix the US income tax system instead of Apple's?

itschaffey 12y ago

I think discoverability is a much bigger problem with the App Store than the 70/30 revenue split. Whilst the revenue split is too high, I would much rather see improvements in the discoverability of apps created by indie developers/ entrepreneurs than the constant flooding of apps from big developer studios. Of course, the app needs to be good enough that when it is discovered, people actually want to use. Perhaps a vetting/ recommendation system should be implemented to highlight apps that would not have been found before.

bakhy 12y ago

Free market triumphs again ;) It seems obvious that the only way to prevent Apple lining its pockets with cash earned by other developers' hard work (not to say that they don't deserve some on their own - they certainly do) would be to: regulate the app stores! Neo-libertarian downvotes away!

username3 12y ago

Apple doesn't take 30% when apps are bought using iTunes gift cards that are sometimes discounted 20% by retailers. If retailers split the last 10% with Apple, that's only 5%. Developers can get a piece of that 30% by selling gift cards.

jorjordandan 12y ago

Hey guys, Fake Tim Cook here. Just thought I'd chime in. Here at Apple we pride ourselves on our developer friendly ecosystem. Apple has led the way in creating more value for developers. Plus, we have a monopoly on the developing for iOS, so it looks like you pretty much have to do whatever we say. Between you and me, we could change the split to 50/50 and it wouldn't really hurt us any. It may not seem like a lot of money is at stake to you guys, but we didn't build a collosal mountain of cash by participating in race-to-the-bottom economics. Our pricing scheme was built to get developers to our platform. It was probably too generous, but we can't go back now, until we finish going thermonuclear on android. Pretty soon we will have enough money to buy Earth. The new earth will be the best earth yet, redesigned from the literal ground up. Till then, we have to deal with pesky problems like robot, er android, or whatever. Anyways, keep cranking out those golden apps. My benevolent smile be upon you, Fake Time Cook