Apple is actually asking for 100% of SaaS mobile revenue

http://whydoeseverythingsuck.com/2011/02/apple-is-actually-asking-for-100-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+WhyDoesEverythingSuck+%28Why+does+everything+suck%3F%29

by bdfh42 • 15 years ago

83 106 15 years ago

whydoeseverythingsuck.com

mithaler3• 15 years ago

While the OP comes across as a tad hyperbolic, this is what I've thought for a long time: if a business is dependent on the good graces of the provider of a platform it's built on, it simply does not have a working model. It happened before with Facebook credits, and Apple making a similar move is no surprise to me.

scrrr• 15 years ago

Exactly. But how can one oppose new methods of the closed, proprietary system that generates revenue, when the open alternative doesn't?

tomjen3• 15 years ago

You make the alternative pay? That's what the angry birds guys did.

But in the more general case, this is where it would have been great to have somebody with a business degree. Because they probably know the answer to your question.

towelrod4• 15 years ago

That's not what is happening here. My company makes all of its money from subscription services that we sell directly to customers. Now if we provide a IOS app to access that content, we risk losing 30% of our revenue if the user happens to sign up via the app instead of via our website.

I'm not sure what "open alternative" you are referring to. My website -- built on "open" everything, other than the subscription cost -- is doing fine. I would like to provide a native IOS app to access that content. But I can't accept a 30% revenue cut.

russnewcomer• 15 years ago

I've read Apple's release a couple of times.

I think someone should directly ask them what their policy is on SaaS subscriptions, because you could easily make a case either way from the press release.

But I agree with the article, if Apple's intent is to get into the SaaS revenue stream, it's a major issue. I have clients who have been considering moving to platforms that include mobile apps on iOS devices, and that 30% Apple iTunes cut will get passed right on to them. Not to mention the hassle of having to create and manage purchases for individual iTunes accounts for each device.

HP has a great opportunity here to loudly announce that they are going to be SaaS friendly, and I think this could be the turning point on iOS's market share.

towelrod4• 15 years ago

Why is it only a major issue if it relates to SaaS? Isn't screwing over Amazon and anyone else selling that kind of content already a major issue?

Anyway, Apple clearly wants this to apply to XaaS, where X = anything and S = subscription. Or by this time next year, Xaa$.

fpgeek• 15 years ago

You can ask Apple what their policy on SaaS subscriptions is today, but it doesn't really matter. If Apple decides going after the SaaS revenue stream is in their interest, that policy will change tomorrow.

chapel• 15 years ago

Apple is notorious for ripping businesses built on their platforms out from under the people that created them. It has happened with OS X by them taking a popular 3rd party utility/app and integrating the idea/look/feel directly with no attribution. It has happened with iOS, and now it is just coming to a point where Apple is flat out saying that if you make money on our platform, regardless if the value is outside of iOS, we want a cut if you want to be on it at all.

ghurlman• 15 years ago

It has happened with OS X by them taking a popular 3rd party utility/app and integrating the idea/look/feel directly with no attribution

Citation?

glhaynes2• 15 years ago

http://en.wikipedia.org/wiki/Karelia_Watson

marchdown• 15 years ago

Konfabulator comes to mind: http://arstechnica.com/apple/reviews/2005/04/macosx-10-4.ars...

loewenskind3• 15 years ago

This sounds a bit hyperbolic. The company that is notorious for doing this is Microsoft.

statictype2• 15 years ago

[Citation needed]

austintaylor• 15 years ago

The press release begins by referring to "publishers of content-based apps", and uses "publishers" throughout. I think it is pretty clear that they are not talking about SaaS.

The article also fails to understand that it is not taking cut of revenue from existing subscribers: only those that sign up through an iOS application.

patio11• 15 years ago

I'm inclined to believe you as it regards Apple's policies as of today. As regards the future policies about non-content SaaS apps, suffice it to say that there is non-zero informational value in this announcement.

portman3• 15 years ago

What would a "content-free" app look like? Aren't all apps, by definition, based on content?

I'm not meaning to be cute or trite -- I'm genuinely confused from the press release which category of apps will fall under these new rules. Which is why we'll need to wait for the legalese in the iOS developer terms to understand what this _really_ means.

groby_b9• 15 years ago

"content" is actually well defined in the App Store terms. And it doesn't include SaaS under it.

groby_b9• 15 years ago

It seems OP hasn't quite thought this through...

Apple does not demand 30% of out-of-app sales, just that out-of-app sales are not cheaper than in-app sales.

And as far as I read the release, SaaS is not concerned. Unless you're using Apples subscription mechanism, you're not offering a subscription in-app. So if you simply use a web API, that's not a subscription.

Can Apple change that at any time? Yes. Closed platforms take power from developers and give it to the platform vendor - in exchange for (often) a bigger pie to get your slice from.

Is the OP yet another pageview troll? Yes. Posting blatantly false information in the headline seems to indicate that.

portman3• 15 years ago

"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app" -- http://www.apple.com/pr/library/2011/02/15appstore.html

By this rule, all apps that offer subscriptions must additionally implement Apple's subscription mechanism.

This is what the OP (and everyone else) is reacting to.

groby_b9• 15 years ago

Not really - all apps that offer subscriptions must go through Apple's mechanism anyways. And subscription is (IMHO) well defined as referring to content, with types of content enumerated.

So unless you make the case that SaaS is content, the post is baseless.

JamieEi• 15 years ago

It would be bad enough if Apple was just demanding a 30% cut of all in-app purchases. Imagine if Visa or Mastercard tried to charge the same rates.

jonknee2• 15 years ago

Apple has suggested that if you offer subscriptions (or purchases) outside of your app that you need to do it inside your app. At the same price. Hence the whole drama over Kindle--the purchases are done on the Amazon website but Apple has stated they want 30%.

groby_b9• 15 years ago

Yes. How does 30% of content subscription translate into 100% of SaaS, again?

raganwald3• 15 years ago

"but Apple has stated they want 30%...." of the revenue from those people who purchase content or subscriptions inside the application.

If you purchase your content on Amazon's website, you can play it on an iOS device and Apple doesn't expect a cent.

allwein• 15 years ago

>And as far as I read the release, SaaS is not concerned. Unless you're using Apples subscription mechanism, you're not offering a subscription in-app. So if you simply use a web API, that's not a subscription.

That's the point that you're missing. If you offer subscriptions or purchases out-of-app for use by the app, You are REQUIRED to offer subscriptions or purchases in-app as well for the same price and minus Apple's 30% cut.

Section 11.13 of the approval guidelines read: "Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions."

So the whole question comes down to whether SAAS counts as a subscription, content, or otherwise.

groby_b9• 15 years ago

I never even entertained the idea somebody would consider SaaS "content". The thing also lists explicitly what they consider content. There's no "etc."

Yes, you can probably bend it to mean anything, but as is, this really doesn't seem to include SaaS.

eugmandel• 15 years ago

The example of SalesForce in the article sounds wrong. Apple's 30% fee on subscriptions does not apply to ALL subscription revenue of a publisher, just to the subscriptions of users who found the publisher in the App Store. Quote: "when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing". If this is true, there is nothing unfair about it.

bradleyland3• 15 years ago

This assumes that every business model has a 30% margin they can give up to an "agent"; in this scenario, Apple. Many, many businesses operate on less than 30% margins.

Because of this, offering an iOS app becomes a loss leader. No, 100% of your user base will not sign up through iOS, but the 30% commission to Apple will dilute your margins on non-iOS sales. The net effect is that any company who operates a direct sales model will see a dilution of their margins, and must bet on the fact that in-app subscriptions will compensate for this in increased sales. There are many scenarios where this makes absolutely no sense.

bambax• 15 years ago

But isn't the solution to simply make a mobile webapp instead of an app?

It's not technically always feasible, but most of the time it is.

phatbyte• 15 years ago

If this is true, this will be a very unfair policy coming from Apple. This will be the divorce between web apps and iOS. I can see HP/Microsoft/Google/etc opening their doors to free SaaS.

Apple is getting greedy and capricious, and when this happens no good will come from it.

YooLi2• 15 years ago

"... they will need to give Apple 30% of their subscription revenue for all customers that want to access SalesForce via mobile."

Wow, a huge post based on this flawed understanding. It isn't 30% of every customer that accesses the mobile app, it's 30% of each client that signs up via the mobile app.

The rules are pretty simple. If you offer subscription service purchasing elsewhere, like your website, you also must offer it in your app via in-app purchase. If a person finds your service by installing the mobile app and then decides to sign up, using the now required in-app purchase ability, Apple gets 30%.

mithaler3• 15 years ago

...and if your profit margin is close to that 30%, as it is with many businesses, you are now required (should you choose to develop an app for iOS) to sell your product to users whom you have to support and stand a very good chance of gaining nothing from.

In other words, such a business would be required to offer an option to hand off all of its profit to Apple, should it choose to offer a native iOS app. Apple gets a better experience for its customers, and the third party gets more customers it gets zero profit from. I can understand if such a business would find this unacceptable. (And look at it from a user's perspective: if given two options, one-click billing through Apple or time-consuming credit card entry through a web portal, which do you suppose the majority of users will take?)

So how exactly is that understanding flawed?

Edit: More details added, and some wording correction.

ryanwaggoner• 15 years ago

You're using the words profit and revenue interchangeably.

podperson• 15 years ago

No-one is _required_ to sell stuff in the App Store. Don't sell stuff in the App Store, keep all your profits.

> I can understand if such a business would find this unacceptable.

Let's say you distribute a FREE app in the App Store and it requires a subscription at $10.00 per month (through Apple) but you provide a handy button labeled "Get subscription for $8.00 per month" that goes to your website.

Apple doesn't want this. It costs Apple to distribute (and market, and support) your App. Apple gets nothing. And now you are selling your profitable product via an inferior user experience AND making anyone who actually uses Apple's service look like a chump.

Gee, why doesn't Apple allow this?

stcredzero4• 15 years ago

Wow, a huge post based on this flawed understanding.

That's about 80% of the entries from this blog that make it on the front page of HN. It's a great blog for gauging general developer perception and dissatisfaction, but that doesn't mean that the opinions expressed are actually true. (Signals all stations to prepare for downvotes.)

SPOTINT• 15 years ago

what about dropbox 30% of 9.9$ LOL

lshepstone4• 15 years ago

I'm starting to see a whole bunch of posts/comments about people reacting to losing 30% of their SaaS software revenue but no one seems to be calling out the Apple contract specifically lists content as defined as magazines, newspapers, books, audio, music, video. So I don't see where the SaaS angst is coming from.

Apple can charge 30% for apps and content because the ENTIRE product is being delivered on iOS. They can't charge that cut for SaaS because only a subset of the product is being delivered.

Could Apple attempt to take a cut from SaaS products if a user signed up from within your app IN THE FUTURE...sure, but I doubt they'd be stupid enough to try for 30%. Should Apple be compensated in some way for hosting/downloading your mobile app for your SaaS backend...maybe, and I'd be prepared to pay some commission if it drove signups, it might just be a tad lower than 30% though.

bradleyland3• 15 years ago

The argument in your last paragraph is almost exactly what everyone said about Apple's approach to subscriptions. "Apple would be crazy to demand 30% from publishers and distributors. Amazon can't afford 30%!"

Yet here we are today, wondering just how the hell everyone is going to carve 30% out of their business model. Anyone who thinks that task is anything even approaching trivial has never run a business.

lshepstone4• 15 years ago

I wasn't arguing that Apple won't do it, just that they would be even more crazy to try this for SaaS than for content subscriptions. It's one thing to charge 30% for when someone is selling an entire product through your platform.

It would be unprecedented if they tried to charge 30% merely for access from your iOS device to a SaaS app. I think there is a pretty big difference.

Lastly, carving 30% out from your list price is pretty common if you're the wholesaler, manufacturer or orignal producer. For most of those scenarios they'll often be able to afford much more than 30%. It's the middlemen and distributors that get really hosed...and unfortunately services that do provide value but licence their content from others are collateral damage.

saturdaysaint• 15 years ago

As I added in the content section, I think that SaaS providers have the leeway to pass along the "Apple tax" to iOS users and thus embarrass Apple a little bit here. I'd like to see a service at least try to make an "iOS plan" - if a service is normally $10/mo, create a separate plan (that would be the only way of accessing the content for iOS users) that costs enough to offset Apple's take. This plan would cost the same both on the service provider's website and in the app, and would be the only way of accessing the service's content in the app, meeting Apple's rules... it would just be conspicuously more expensive than the version for all other platforms.

I'm not normally the self-promoting or blogging type, but since I'm an enthusiastic user of many of these iOS services (Rdio, Netflix, Audible, The Economist...), I expounded a little bit here: http://www.thetechbastard.com/post/3326771970/a-hypothetical...

dazzla• 15 years ago

What about Apple's rule that the in app subscription needs to be the same or better than available elsewhere?

wmeredith• 15 years ago

You could just offer them both in both places. It would be an interesting to see the conversion rates in both environments.

shade• 15 years ago

It seems to me that the simple way is pretty much what the grandparent described. Classify API/mobile access as a value-add and charge extra for it.

For a web-based SaaS, I could see them doing something like "Web-only access including mobile web, $10/mo" and "Web + native mobile/API access: $15/mo" -- then only offer the latter option in-app.

I suppose you could try to classify Android and iOS API access differently, but I suspect that might be a little over the line in terms of trying to slip it through the app store review process.

I do still wonder how third party apps to hit a subscription API are going to work, though. I suppose a lot of those will be for-pay so Apple gets their vig from that anyway, but it's always possible someone will decide to release a free one...

akashs3• 15 years ago

That's an interesting way to get around Apple. I wonder if it will hold. You're basically saying that if you want iOS accessibility, you pay 43% more. So maybe WSJ has a newspaper version, a newspaper plus digital (including android, any non iOS device), and then a newspaper plus digital plus iOS plan.

Wonder if there's also another way to get around it, maybe by just jacking up the rate 43% everywhere to please Apple, but maybe giving some other type of promotion (loyalty points, coupons, free stuff) for people that don't use iOS. Maybe you could give 3 months free or something as a credit for anyone who doesn't use iOS?

Given the level of detail Apple has provided, it sounds like either option could work.

Edit: changed 30% to 43%

yummyfajitas• 15 years ago

42% more, not 30% more.

kbutler• 15 years ago

> I think that SaaS providers have the leeway to pass along the "Apple tax" to iOS users and thus embarrass Apple a little bit here

And why exactly would Apple choose to allow this?

callmeed• 15 years ago

So, the key is to make sure no one finds your app unless they are already a paying customer.

I see a burgeoning new field: "reverse SEO" for SaaS mobile apps.

gte910h2• 15 years ago

I think they need to just offer a "iPhone connectivity" option for extra $$$. Then they need to offer that and only that via the appstore in app purchase on the phone.

codingthewheel• 15 years ago

affecting companies like Amazon, and companies like SalesForce that have made a significant investment iOS investment, one has to wonder whether building iPhone apps is safe

This. iOS remains, by the numbers, one of the worst places for freelance developers to spend their time. Profits are diminutive in the average case, and app store policies impose additional risks that have forced entire shops to leave the iOS ecosystem or change how they do business inside it.

vegashacker• 15 years ago

APIs for software services make this whole thing even more complicated. Some company has a web service offering which they charge $10/month for. They also have a web API, which allows 3rd-party developers to write apps for the service. Case (1): The services writes an iOS app to access their service. Case (2): A third party comes along and writes an iOS app for the service, using the service's API.

If it's true that in (1), they have to offer an IAP-way for users to purchase a subscription, what does that say about (2)? The third-party developer has no way of adding IAP to their app (it's not their company and the API doesn't expose such functionality).

Under these (more and more crazy sounding) rules, is (2) still required to pay the 30%? And given that it's impossible for (2) to have an IAP subscription option, maybe (2) isn't even allowed to exist? But if it is, then the service company could just pay 3rd-party developers to write apps for their service to add value for their subscribers without having to deal with the 30% stuff.

me_again• 15 years ago

I'm confused by how far-reaching this is. Let's take Netflix: I currently subscribe to netflix via their website and consume it via multiple channels, including the iPad. What, if anything, is Apple asking netflix to do? It sounds like: provide a link in the app to subscribe to netflix, which must cost the same as signing up elsewhere, and pass 30% of the $18 a month to Apple.

rapind• 15 years ago

I'm assuming that if you decide to sell your SaaS via the AppStore, you can't move your customer data outside of it should you choose to discontinue offering your AppStore interface?

So anyone who purchased a recurring subscription via the AppStore would be lost (would have to be prompted to re-purchase) should you leave the AppStore?

If so, then iOS definitely doesn't seem like a good investment for a SaaS business.

keeran• 15 years ago

Is this a potential win for independent iOS developers?

If the SaaS provider isn't the supplier of the app, but they fully endorse (and promote) its use, does that create a loophole?

lshepstone4• 15 years ago

Just 4-5 years ago most Telco's were building portals and walled gardens where they were licensing the content themselves (or even had teams creating it in house) and selling it in various ways to their customer base. So never mind a 30% cut, they were competing with content producers. If you were trying to sell content the Telco was hoping to sell forget a 30% cut, you couldn't even get on their platform and you earned a big fat $0.

If you really were lucky they'd decide to let you on but would take a 50/50 or 60/40 revenue share.

30% is starting to seem not so bad...compared to that at least.

profgarrett• 15 years ago

Sounds pretty similar to Apple's earlier attitude about 3rd party developers being parasites on 'their' platform. While (of course) they do own it, the 3rd Party developers are partners that add value, not parasites.

Apple is actually asking for 100% of SaaS mobile revenue

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