Apple's 30%

http://reinventedsoftware.com/blog/2015/08/10/30percent/

by milen • 11 years ago

36 53 11 years ago

reinventedsoftware.com

hartator• 11 years ago

http://webcache.googleusercontent.com/search?q=cache:tFnDscE...

t0mbstone• 11 years ago

Thanks!

Retric• 11 years ago

Last I checked the App store was not a significant revenue source for Apple. My guess is the review process is expensive and most apps are a net negative from Apples perspective.

One way around this would be if apple reserved a portion of sales, but with the number of 'free' apps out there this would probably not work. And for near breakeven apps it would probably result in similar numbers. (EX: 100% of the first 10k, 10% after that.)

heimatau2• 11 years ago

I'm not sure when the last time you checked but $10 billion [1] in revenue is significant. That's only 2013.

[1] https://www.apple.com/pr/library/2014/01/07App-Store-Sales-T...

wise_young_man• 11 years ago

Plus the fact that if there was no App store Apple wouldn't have as high of hardware sales so it has intrinsic value just being there.

jonknee2• 11 years ago

That's the 100% of revenue, Apple's take would be $3B. Still not insignificant...

plorkyeran• 11 years ago

That's the iOS App Store, not the Mac App Store. The app store on iOS is significantly different in that you can't choose to just sell apps directly.

vcarl• 11 years ago

The Unreal development kit has an interesting pricing method. The first $50k you make is completely royalty free, and after that Unreal takes a 25% cut. Now that I think about it, Apple's approach seems incredibly lazy considering its size and the size of the market. I guess there's enough demand for apps that developers are willing to put up with shitty terms.

I can't link directly to the answer, but it's the last FAQ, 'Can you explain the UDK commercial license terms'. https://www.unrealengine.com/previous-versions/udk-licensing...

api• 11 years ago

For Apple the review process is more about offering a clean user experience for their users to sell more phones/tablets/macs.

Kenji2• 11 years ago

Apple take 30% because they can take 30%. You are paying it. You haven't switched to developing for another platform like Android or PC. They can do it because you, along with all the other app developers, are masochistic enough to put up with this walled garden. Somehow I cannot muster up sympathy.

heimatau2• 11 years ago

Developers don't need to switch. They can just host and authenticate their software internally. Spotify passes on the savings to their consumers [1] with a model like that.

[1] http://www.cultofmac.com/328554/spotify-wants-its-listeners-...

s73v3r4• 11 years ago

That doesn't make any sense, considering Android also has the same 30%, but makes less.

Kenji2• 11 years ago

You are right. I stand corrected. Still, he is free to chose other ways of distribution that cost him less.

chasing2• 11 years ago

I feel the author's pain and 30% does seem ridiculously high given the service Apple provides. And given that it's these same developers that make Apple's hardware as popular as it is by providing awesome apps and services. And I do not like the monopolistic nature of the App Store -- that it's integrated into Mac OS X in a way that other software sales platforms could never compete with.

But.

If 30% is too expensive -- if the added benefits of promotion through the App Store and other services don't make up for the loss -- why is it even a question? Don't sell through the Mac App Store. The presumption is that it's more profitable not to. So don't.

newobj• 11 years ago

"given the service apple provides"

- put your app or iap 1 click away from an already loaded credit card; seems highly valuable to me.

chasing2• 11 years ago

Then the App Store is for you!

It may, nevertheless, be too expensive for many people. The article author, for example.

replicatorblog3• 11 years ago

FWIW, I used to work in hardware and sold products to Walmart, Target, CVS, Kroger, the Apple Store and had stuff on the shelves of ~20,000 retail locations in the US.

30% is a bargain. In physical retail we'd pay 50% pretty consistently. We were also at the mercy of the retailer to send things back to us if they didn't sell, without paying. So they would buy 20,000 units, sell 5,000, and a few months later send us back the remainder and call it even.

If we wanted promotion in their stores, circulars, or websites we had to pay for the privilege.

Considering Apple puts you in the pocket of hundreds of millions of people, puts you a password or fingerprint away from their credit card, and provides the opportunity for massive exposure in their store, it feels like a super fair deal.

I'm more troubled by the fact that they essentially have driven the price of discrete software to zero, but fortunately there are more and more ways to monetize via SaaS, IAP, Hardware, etc.

jonknee2• 11 years ago

Your point makes more sense for the iOS App Store, but this was desktop software and the Mac App Store is a different animal. It's nowhere near as successful, even "top" apps are't selling many copies. The sandboxing also means your apps can do less than apps that aren't in the store. You also can't do demos or paid upgrades. Same 30% tax though.

There have been many similar rants:

http://www.panic.com/blog/coda-2-5-and-the-mac-app-store/

http://sixcolors.com/post/2014/10/bbedit-at-max-q/

http://blog.helftone.com/mac-app-store-the-subtle-exodus/

http://www.macstories.net/news/textexpander-4-first-casualty...

https://www.omnigroup.com/blog/update-no-upgrade-pricing-for...

Etc

mikeash12• 11 years ago

In retail, you pay 50% because that's something like what it actually costs to sell stuff to people in a physical store.

The cost of selling software is almost zero. Unlike retail's cut of your selling price, Apple's cut is completely arbitrary and rather unjustified.

If you sell software directly to users, the cost can be something like 3%, depending on which payment processor you want to use.

What additional service does Apple provide for that additional 27% cut? The buying experience is easier, but this doesn't seem to translate into additional sales. You mention "massive exposure," but there's pretty much universal agreement among developers in the Apple world that the App Store's "marketing" bump is pretty much zero unless you're extremely lucky and get featured.

But hey, if it's worth it, then you should be able to let developers choose and they'll still go for it. On iOS, there is no choice. If you want to sell, it's either Apple's 30% or nothing. On the Mac, there is a choice (for now) and the trend now seems to be to choose not to use the App Store there.

justwannasing2• 11 years ago

Anyone who thinks the cost of selling software is remotely near zero should be ignored. Ads need to be produced and thought up and salesmen need to be paid and packaging still must be done and and someone has to be in charge of all that, along with all the people beneath him.

rgbrgb• 11 years ago

It's definitely not 0 to build, maintain, and curate the App Store. Not even "almost zero".

> The buying experience is easier, but this doesn't seem to translate into additional sales.

I'd like to see a source for this assertion. In my anecdotal experience of selling software on the App Store and not on the App Store, it's 10x harder to do it yourself (so for me worth the 30%). Reducing friction increases purchases -- that's why Apple, Amazon, and even Stripe now store consumer credit cards. That's not even taking into account how valuable being featured is.

Maybe 30% is not the right number, and I totally agree that the OS should not insist that your apps be procured through a blessed channel, but there's a huge difference in effort between setting up your own store using Stripe and selling on the App Store.

replicatorblog3• 11 years ago

All your points are fair, but if Apple's value is just 3%, why don't we hear as many stories about other app stores? Android has a much larger userbase, but the common wisdom is that actual revenue in that store is much smaller.

Beyond the 3% in transactions you're paying for the review process, which while imperfect, makes parents pretty comfortable letting their kids pay $1M/day to the Clash of Clans/Angry Birds folks.

While getting featured is rare, you still need to pay the salaries of the editors who pick the best apps, the graphics artists who merchandise the collections, etc.

I also look at it as the subsidy that helps offset the cost of developing Objective-C, Swift, etc. You might argue that it's in Apple's best interest to develop that anyway, but I don't fault them for trying to recoup the cost.

Look at it this way, it's a progressive 30% tax that you pay if your successful, while keeping the cost of development low for beginners.

Really, I think the big thing you're paying for is access to a customer base that is much more likely to pay you.

I've had a couple products featured in the iTunes store despite not being super connected and had great success. I understand the frustration, but it's not like you're not getting anything in return.

gozo• 11 years ago

Yes, but the digital world in theory enabled greater competition so therefor we expect things to be better. Kickstarter takes 5% + payment fees for instance. Unfortunately, in practice the digital world many times enables companies to employ the same old business practices on a much larger scale.

ISV_Damocles• 11 years ago

The /value/ of "discrete software" has always been close to zero. Just a few megabytes of disk space.

The value of software creation is something else, though, and ages ago the one was tied directly to the other.

But even that wasn't truly the case. Shareware gave away part of the software for free, and relied on goodwill from the users for them to pay for the rest rather than sharing the full versions.

As you've pointed out, continuous services are another area where money can be made, but then the software isn't the value proposition, just the enabler of those services.

hsuresh• 11 years ago

Well, retail stores bring people to the store looking to buy things. App stores (not just Apple's) are mostly mandated by Apple/Google/Amazon. They do provide some value (trust, for the apps), but 30% seems quite high for that.

exelius• 11 years ago

Look on the bright side; distributors like Apple used to take closer to 50%. The trend in the industry is towards shrinking payments, and when Apple started doing this, 30% was considered a small cut.

But why would Apple cut their rev share take when they have no reason to do so? It's not like there's competitive pressure, and if app developers want to get more revenue, they can raise prices.

mikeash12• 11 years ago

On the bright side, distributors like Apple used to take 50%. On the dim side, distributors like Apple used to not be the only option, and that 50% was at least vaguely justified because they were doing things like staffing call centers for taking orders, and shipping physical media to customers.

7Z7• 11 years ago

The Mac App Store is still not the only option. Buy your software wherever you like.

jasode2• 11 years ago

Feeder is over 10 years old now, long predating the Mac App Store, [...] , and while they should profit, should they really be taking so much that it risks putting independent developers like me out of business?

I'm having trouble following the logic. How can a new distribution channel for potential customers that didn't exist until 2011 bankrupt you?

If Feeder is 10 years old, what's significant about 2011-2015 of the Mac App Store existence that causes financial insolvency?

For a niche app like Feeder, which typically only manages to cover the cost of supporting and maintaining it, doesn’t need any Mac App Store-only features like iCloud,..., it hardly makes sense for me to sell it there from a financial perspective… and yet if I don’t, many people might not even know it exists.

How did people find out Feeder existed before 2011? Did Mac App Store remove that option of reaching the public?

asadotzler• 11 years ago

App stores indeed have dramatically obscured other distribution channels. Pretending that's not the case isn't helping anyone.

jasode2• 11 years ago

dramatically obscured

We're not talking about the iOS App Store. The authors complaint is about the Mac App Store. It's a software store that Mac desktop/laptop users don't even bother to click on.[1]

I'm still having trouble connecting the dots here. How exactly has a distribution channel that has gained very little traction over the last 4 years "dramatically obscured" other distribution options for a 10-year old app? Has there been an explosion of demand for sandboxed apps? It doesn't look like it.

[1]"An alarming number of customers who already have Macs have absolutely no idea that the Mac App Store exists, even though the blue icon sits in many an unchanged Dock."

http://www.imore.com/nsfw-apples-benign-neglect-mac-app-stor...

s73v3r4• 11 years ago

Not really. Maybe on phones.

kelukelugames• 11 years ago

Is there a mirror? Site looks down.

ikeboy• 11 years ago

https://web.archive.org/web/20150811061243/http://reinvented...

pbreit• 11 years ago

30% is pretty much the going rate for digital goods (marginal cost $0), even without the distribution might of the Apple Stores.

bosdev• 11 years ago

The site is down for me. In the future, please consider making your blog a static site. It is generally more reliable, cheaper, and more tolerant of spikes of traffic like this.

scholia• 11 years ago

There was another Mac App Store article on here yesterday: https://news.ycombinator.com/item?id=10056593

The Mac App Store Still Needs Paid Upgrades http://dancounsell.com/articles/the-mac-app-store-still-need...

Apple's 30%

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