Apple doesn't let you disclose their 30% IAP fee to your customers

https://twitter.com/getify/status/1299569045348454401

by tomasreimers • 6 years ago

301 169 6 years ago

ecf• 6 years ago

Which is smart of them.

I’d guarantee that every company with a financial interest in the App Store would start putting up banners about the fee in an effort to stoke the Epic x Apple tensions in their favor.

Let the court decide the case without the mob influence of millions of uninformed users.

manderley• 6 years ago

You mean without the influence of millions of informed users.

theonemind• 6 years ago

As a counter argument, this does not fall outside of the business or legitimate concern of the people in a representative democracy. The court should judge according to the law, but if the people do not like the outcome of the law, they might want a different law, and in the end, we will have the proceedings in the public record. If the people have no business in this, we should also make sure the same millions of uninformed users can't get access to record of the court proceedings as well, lest they think to form opinions even afterwards, as it did not concern them while it went on.

himinlomax• 6 years ago

uninformed users

Are you arguing for or against letting users know the fee is 30%?

pier252• 6 years ago

If it was closer to 5%, or even a fixed fee (eg: $1 per app sold), I would accept the narrative that it's a fee.

30% of your business is not a fee, it's more like a partnership. Apple is, in practice, a business partner to each and every iOS developer. Except that they have total and absolute control of the business. If they shut you down on the App Store, you're done. Your iOS app is worthless on any other platform.

I shit you not, I've personally had apps rejected by the review board because they didn't like the screenshots. Those were screenshots of the app itself.

CharlesW5• 6 years ago

I shit you not, I've personally had apps rejected by the review board because they didn't like the screenshots. Those were screenshots of the app itself.

That kind of editorial feedback seems like a good thing, no? Do you feel like that process improved how your app was presented to users?

mhh__3• 6 years ago

I don't know how much time the average app get looked at for but is it long enough to be feedback? I don't know what this app looks like, but if a screenshot of the app is a screenshot of the app what more can you do?

Ideally, I would assume the creators of the app would know their customers well enough to choose.

prepend2• 6 years ago

I mean most retail software gives what 40-70% to retailers and wholesalers, right?

If I sell something at Target for $50, I’m probably getting $25 tops. Don’t think I’m in partnership but definitely an important relationship.

slindz• 6 years ago

True...

But the difference here is that you've prepared an asset that can only be sold in one place.

mhh__3• 6 years ago

As for Target, it's a brick and mortar store. Apple do have some hefty expenditures, sure, but they're luxuries (e.g. Making your own CPUs is cool but ultimately not all that for a product that most users won't have even the slightest clue of the trade-offs that went into that decision) - 30% is quite a lot for software, especially in a market like apple's.

grawprog• 6 years ago

Yeah but you're also free to sell your product at Walmart, smaller stores, or any other retailer which may have different rates. With the Apple store you have well....the Apple store.

cnst5• 6 years ago

When there's the internet, why would you sell any software title at Target?

It seems like Apple still likes to give some antiquated metrics for how much cheaper iOS is compared to retail software, but it's never explained why that's the metric.

kemayo• 6 years ago

Interestingly (sort of), 5%-or-$1 wouldn't work out well for Apple. This is because credit card processing fees are generally structured as a flat fee plus a percentage of the transaction.

Something like 5 cents + 1.3% would be a great deal on payment processing, generally. Apple is a behemoth, so let's assume they're getting a good deal.

For a $1 purchase that'd be ~$0.07 to the transaction processor... which is more than the flat percentage already. Then Apple has some amount of costs involved (bandwidth, maintenance of systems, general overhead, etc) even if they started running the App Store at cost as they originally claimed they'd do.

There's definitely room to lower the cut Apple takes... it's just that somewhere in the 10-20% range is still a reasonable fee to cover their costs.

It's also worth considering how gift cards affect what Apple can charge. Apple sells gift cards through retailers, who are getting a cut of those sales. That cut comes directly out of Apple's portion of the sale, so they have to account for some percentage of transactions having that effective cost, which is probably higher than the aforementioned payment-processing cost. (There are some markets where gift cards are incredibly common. Kids get given them a lot. They're super common in Japan and other countries for everyone.)

(The flat $1 fee wouldn't fall apart on processing costs until you reached really expensive in-app purchases... but it'd massively change the economics of the App Store, where $1 apps / in-app purchases are pretty common. I have no idea if that's a good idea or not.)

cnst5• 6 years ago

Wait a moment, how do you get from 5 cents + 1.3% to the 10-20% range all of a sudden?!

Electricity and processing power aren't that expensive.

They'd probably do just fine if they'd lower the fee to 10%, and stop enforcing that you don't have third-party payments.

dlubarov• 6 years ago

That's a fair point, but Apple always has the option of changing their fee structure to a fixed amount plus a percentage, to reflect their actual costs plus some reasonable markup. If they charged a fee like $.50 + 5%, credit card fees should be less than half of that for any transaction size, so they'd have plenty left to cover any other costs like bandwidth.

I don't know what discount retailers expect on gift cards, but I would guess that in the range of a couple percentage points, otherwise networks like Visa would lose money on those sales.

canes123456• 6 years ago

Apple batches credit card charges, so the per transaction fee will be much lower in practice. Also, nothing stops them from charging 10-15% for the first dollar and 5% after that.

SyneRyder• 6 years ago

It's also worth considering how gift cards affect what Apple can charge. Apple sells gift cards through retailers, who are getting a cut of those sales.

That's a particularly interesting example, because Gift Cards regularly go on sale (at least here in Australia). I would often wait until my local stores sold the $100 App Store gift cards for $85, and stock up so everything I bought on the App Store was 15% cheaper.

So if Apple is able to sell retail gift cards at 15% discount, it suggests their 30% rate might be higher than it needs to be.

heavyset_go2• 6 years ago

Bandcamp is able to keep their fees at 10% - 15% of the purchase price.

usefulcat• 6 years ago

As long as there are still plenty of people making apps for iOS, I don't see how Apple has much incentive at all to change their behavior.

If this stuff is that big of a problem for the average iOS developer, then shouldn't this at least be an opportunity for Google (to attract more developers to its platform, possibly exclusively)? Or no because G has pretty much the same incentives that Apple does? Or is this already happening and I'm just not aware of it?

crooked-v• 6 years ago

From what I understand, Google, Microsoft, and Sony all also charge 30% for the app marketplaces on their devices. There may be some game-theory pressure here not to lower the cut for risk that the others will do the same and a race to the bottom will ensue.

megablast• 6 years ago

Still, 30% is a huge improvement on what it was before the App Store. Publishers would take 60-80% in the old days.

sgc3• 6 years ago

No it's not, because you could previously self publish apps for any major os and not be locked out by default from virtually all devices. I understand the benefits of an app store and walled garden (not that I want one for myself, but I understand), it's always been way too much nonetheless.

kalleboo2• 6 years ago

Before the App Store I sold software on my web page and the only fees were the 5% PayPal takes and $9/mo for dreamhost

antris• 6 years ago

If they shut you down on the App Store, you're done. Your iOS app is worthless on any other platform.
I shit you not, I've personally had apps rejected by the review board because they didn't like the screenshots. Those were screenshots of the app itself.

My experience sending applications to the app store was certainly frustrating as a first-comer as the App Store has numerous rules about the screenshots, descriptions, naming etc. that you have to follow.

However, every time the app got rejected, the reviewer sent clear feedback on which rules the submissions were violating and how to fix those issues. After that, you could send your app for another review. Calling that "shutting you down" is slightly harsh in my ear. We fixed the problems they had with our submission and then we got approved.

Diesel555• 6 years ago

I agree with this partially. I have had very good feedback from the reviewers when my app was rejected. I could find and fix their issues, I may not agree with it, but the terms were clear.

Also... I've submitted a minor bug fix and got flagged on something I did not change that was previously approved and their terms did not change. That gets frustrating. I feel like every update is a gamble. Some parts of it seem pretty vague. Sometimes I just resubmit and get a new reviewer and he approves on the iffy ones. But with people in the loop interpretation is always a thing and I can't get too mad over it.

pier252• 6 years ago

I only added the rejection as an illustrative anecdote.

My main point is not about rejecting an update, but about pulling you out of the store entirely or never accepting your app. Even deleting your Apple dev account as we just saw with Epic.

wbercx• 6 years ago

I do appreciate those rules because they lead to a higher quality listing.

I had a bugfix update rejected a little while ago for a business app.

Apple wanted a video walkthrough of every screen in the app, explaining what each screen is for and with a breakdown of device permissions needed on each of those screens. That day was a complete write-off. If the app required excessive permissions I could understand there might be some concern, but it doesn't. Any permissions we do need are justified in the info.plist as required, and are very descriptive.

They then rejected it again the next day, as I had apparently failed to mention what we use ARKit for in the video. We don't use ARKit and it is not in the codebase.

Another day goes by and they finally approve, with a friendly disclaimer that they will now require an updated video with every future update.

It just seems like busywork to me.

norswap• 6 years ago

Your experiences are not necessarily representative of that of all iOS developers.

Even if they are representative of 99% of experiences - imagine the damage and anger caused by the remaining 1%.

quest88• 6 years ago

Some of these businesses wouldn’t exist if it weren’t for the appstore. 30% is comfortably fair for many.

qzw• 6 years ago

And the AppStore wouldn’t exist without apps. Just ask Microsoft.

risyachka• 6 years ago

Usually this is because your app is low quality of looks bad. I've published lots of apps and followed changes of Apple policy for years, and in 99% those increased the quality of apps published and user experience.

If someone doesn't deserve 30% it is Google. With Apple at least I speak to a human (or if this in an AI - cudos to the developers, it is super real). While with Google all you get is a bot reply "Sorry, we can't tell you shit. Go figure out a problem and unless you do we will block your account and all RELATED accounts". Well that is some wild shit.

monadic2• 6 years ago

I have no idea how Apple could claim to make a decision about quality for me with a straight face. Just look at the gaming section: it's full of abusive software with repeatable in-app purchases. Apple is fully responsible for the use of addictive psychology to con people out of their money. They don't even allow you to filter this crap out in their app store. If there were any justice in the world this would be criminal.

jjtheblunt• 6 years ago

Considering the business partner angle, i wonder how expensive it was, 20 years ago, to market, securely deliver to consumers, and process payments from customers for small developers selling in CompUSA or BestBuy, while providing analytics on sales.

I wonder if it gave rise or "justification" to the 30% thing, but don't know.

crowbahr• 6 years ago

Compared with other publishers of software 30% was probably pretty reasonable.

Now it's just simply not.

CuriouslyC• 6 years ago

The margins on retailers are razor slim, and publishers did handle a lot of marketing and front money. Apple has a muppet play with the app for a bit then they add a row to a database. They are absolutely bleeding developers to capitalize on their silly mindshare.

kapp• 6 years ago

Apple considers the iPhone a single product. It has many features: some of them require extra payment. For example, you can purchase a feature that allows you to play a game about Pokemon. Apple outsources the development of some of iPhone features to 3rd parties. Some of those 3rd party iPhone feature developers mistakenly think of themselves as independent application developers. Apple mercifully allows such miscategorization because it does not really matter for them or their customers.

ksk• 6 years ago

The fundamental question is of "rights". Do we apply 17th century morality and economic models for digital markets? Modern problems need modern solutions. We need to re-define where these "rights" of digital businesses come from.

Comcast invest millions and therefore has a "right" to control internet access, block websites, etc? Comcast "allows" a business to reach millions of customers.

Apple invested millions and therefore has a "right" to block third party payment processors? Apple "allows" a business to reach millions of customers.

Microsoft invested millions in their platform and there has a "right" to block Chrome/Firefox? Microsoft "allows" a business to reach millions of customers.

etc, etc.

Taking 30% of sales of a digital-only product is not morally acceptable to me.

sebastien_b6• 6 years ago

Funny how most replies in that thread don’t actually address the initial question: why is there a policy of prohibiting disclosure of how the money the user pays gets distributed?

Most “answers” immediately diverge into monopoly discussions, or questions-as-answers of why 30% ‘seems so high’ (even though neither was initially brought up).

lacker• 6 years ago

It seems pretty obvious to me. Apple wants a user experience that makes the user happy with Apple products, not one where the app is complaining to the user about Apple policies. Apple is happy to prohibit zillions of random different things; they perceive the openness or fairness of their platform as much less important than user experience.

hetman• 6 years ago

But how does prohibiting disclosure of money distribution facilitate this?

CharlesW5• 6 years ago

It seems pretty obvious to me.

Me too. Absolutely no retailer, digital or physical, would allow anything like this.

sebastien_b6• 6 years ago

And besides this, most people seem content to compare it with the physical world with (IMO invalid) comparisons of malls, etc.

There's another thing: Apple already charges developers a fee every year. And they also sell ads on the App Store (which you basically have to buy otherwise you're a 'needle in a haystack'). AND they sell ads to your competitors, which use your (sometimes trademarked) keywords in their ads, which means you need to buy even more ads to counteract those.

Apple wins, and wins.

modeless6• 6 years ago

And they make every developer buy a Mac because they prohibit running macOS in VMs and in general don't allow building iOS apps without the use of Mac hardware. That's probably a bigger expense than the app store fees for most, and artificially inflates macOS market share in the important developer market.

skewart• 6 years ago

Don’t forget their initiative to capture an even bigger percentage of app advertising spend. Nerfing the IDFA is designed to make advertising anywhere other than the App Store less effective. Apple is betting that this change will force developers to shift more advertising dollars to Apple, and away from places like Facebook.

spideymans• 6 years ago

And besides this, most people seem content to compare it with the physical world with (IMO invalid) comparisons of malls, etc.

Are there any major digital stores that disclose the costs of doing business (royalties, fees, etc...) to the customer as purchase? For example, the PlayStation/Xbox Online Store or Amazon Music

kstrauser• 6 years ago

An analogy I heard:

What would Target do if their canned beans vendor started putting labels on the cans like "we sold this item for $0.23. Anything else is profit that your store is charging you."? Those cans would never see the shelves.

If, in effect, Apple buys a product from its vendor for $3.50 and then resells it for $5.00, keeping the difference as profit, I can understand their statement that the wholesale price is irrelevant and shouldn't be shown.

tyoverby• 6 years ago

What would Target do if their canned beans vendor started putting labels on the cans like "we sold this item for $0.23. Anything else is profit that your store is charging you."? Those cans would never see the shelves.

Arizona Iced Tea does this and they're very successful.

TheJoeMan• 6 years ago

Well every product I buy has a website address on the packaging, and often I can go there and buy it direct from manufacturer but I don’t see Publix banning beans anytime soon.

sebastien_b6• 6 years ago

An analogy I heard:
What would Target do if...

Again with the real-world mall/stores comparisons!

Does the beans vendor need to buy a machine from Target to manufacture the cans? Do they need to also pay a separate yearly fee to Target?

jasonhansel• 6 years ago

“We know that these freedoms require protection,” [Tim] Cook said of First Amendment rights. “Not just the forms of speech that entertain us, but the ones that challenge us. The ones that unnerve and even displease us. They’re the ones that need protection the most.”

Source: https://9to5mac.com/2017/04/18/tim-cook-free-expression-awar...

nemothekid• 6 years ago

why is there a policy of prohibiting disclosure of how the money the user pays gets distributed

The same reason Visa doesn't let you let disclose to your customers that using your credit imposes a 3% fee to the merchant. People would use alternatives if they knew

smabie4• 6 years ago

They would? Why? I don't care what my merchant is paying in fees. I care about what I'm paying in fees.

mdoms2• 6 years ago

Visa and Mastercard fees are absolutely disclosed to customers, as a matter of course. In fact Australia implemented a law a couple of years ago that retailers who pass the processing fee to customers must only charge the actual fee itself and not an arbitrary "CC fee" (some retailers had been charging ridiculous fees like $5 or 15% previously). So by law these fees must be available to the public.

https://www.accc.gov.au/media-release/excessive-payment-surc...

epanchin• 6 years ago

Including your “answer”.

m463• 6 years ago

I think there are all kinds of weird clauses added by apple, #1 being you can't disparage apple.

sebastien_b6• 6 years ago

Then those kinds of rules should apply both ways: Apple's can't disparage others either.

ClumsyPilot3• 6 years ago

I am gradually coming to the conclusion that active censorship of information should be illegal, on any platform, public or private.

These companies control most of the modern society's information intake, you can't keep justifying everything they do with 'it's private, they do what they want'. The potential for abuse is just too great.

dudus• 6 years ago

Certainly you don't believe that. What about child porn? Well you could say that's illegal so then it would be ok to censor it. But what about anti-vaxxers, QAnon or other blatant misinformation or lies? What if it's proven that the misinformation, is posted by foreign agents trying to stir controversy and hate in the country?

You clearly need to draw the line somewhere. But it's impossible to draw it to comply with the expectations of everyone. It's just an impossible task.

ClumsyPilot3• 6 years ago

The focus is on 'information', as in factual information. 'Apple takes 30% of your transaction' is clearly factual information that is different from general political speech.

Clearly misinformation does not qualify. I am trying to outline it as distinct from general freedom of speech, but I am not sure how to draw the line. However, the edge-cases are quite clear.

azangru• 6 years ago

I strongly feel that it should be up to the consumer of information to decide whether to treat it as true or false. Otherwise, what's stopping you from banning all religious texts? Spiritual texts? Ads for homeopathic pills? And so on, and so forth.

If people are manipulable enough to fall for "foreign agents" stirring up controversy and hate — well, they'll just need to learn and get smarter.

9HZZRfNlpR2• 6 years ago

Would you be willing to censor BLM just because Russians are using it for their disinformation campaigns? Afterall Muellers report revealed they have big hand in it, but it doesn't mean we have to censor it.

madeofpalk• 6 years ago

If I make a discussion website about video games, and someone wants to my site and discuss Axolotls, shouldn’t I have the ability to moderate and control the content that goes on my website?

That’s a fairly innocuous example, but now someone comes to my site and starts spreading some pretty racist and otherwise vile bigoted content. Are you saying I should be forced, by laws, to host and publish that hate for others?

The internet, primarily sites that host user generated content, exist due to them being able to moderate the content that goes on them.

9HZZRfNlpR2• 6 years ago

If you don't control the whole society's information pipeline it's very different, just like we don't want our ISPs force on us what to visit or charge for.

Traster• 6 years ago

Welcome to hardcore porn on every website. Oh look, a Facebook competitor! Oh no! Facebook hired 100,000 people to post furry porn on their site to discredit them.

hoistbypetard3• 6 years ago

Sure they do. They just prohibit you from putting that in your app's UI. If you were selling your software in a box at Walmart, they may well refuse to display it on the shelf if you included a message stating that Walmart had just gotten 30% of the software's and that the publisher had just gotten 20% of the software's price. Similarly, many publishers would likely refuse to publish such a message.

I don't think the question of why Apple doesn't allow such messaging is all that interesting.

I do think it's interesting that:

1. Apple is more likely to notice such a message buried within app UI, because they review apps. Walmart would probably only catch it if it appeared on the packaging.

2. We're more likely to hear about it , since we're more likely to know someone who has published an app on the Apple store than we are to know someone who has published an app through a traditional channel then marketed it on retail shelves.

sithlord• 6 years ago

Guess Apple could let developers disclose the 30% iap fee, but only if they disclose the margins they make off of each user/transaction/etc.

kgin2• 6 years ago

And yet people would rather battle Apple than make a web app and push open technologies further.

ThatPlayer2• 6 years ago

Because Apple cripples their browser on iOS, so you cannot make a web app. Basic app features like push notification are not implemented on iOS Safari.

sdfhbdf• 6 years ago

Its a trade off between new and exciting technologies like the Push Notification and privacy - the service worker needed to provide them.

baddox5• 6 years ago

You’re free to send emails or text messages from the backend of your web app. This is hardly a great example of “Apple crippling their web browser.” Personally I don’t want your advertisements pushed to me. Even the notifications permissions prompt on desktop Chrome is ridiculously spammy since it’s on basically every commercial website these days. Safari on iOS is a great web browser that provides a great web browsing experience in my opinion.

naveen99• 6 years ago

Atleast apple’s surplus is not only taken by its employees, and a reasonable chunk passes to shareholders. So people paying the fee can just buy apple shares and get back some of the fee.

hkai• 6 years ago

Well, it's easy: just develop your own mobile phone and operating system, make it popular, and then you don't have to pay the 30%.

Anti-free speech advocates use this argument when they say it's okay that Facebook, Twitter and Visa ban you - they are private companies and you can just create your own social media and payment systems. It's that easy!

floflo79• 6 years ago

How is this different from any other store that offers access to a wide audience? Connecting devs to hundreds of millions of people, taking care of warehousing, logistics and sale/payments handling? Do those retailers tell you who gets what further down the supply chain? No. You see the price of the product and nothing even remotely reminds you of how much the retailer payed the manufacturer, and how much the manufacturer payed their designer.

Imagine you make a toaster. You want that toaster on the shelves at a retailer. How much do you think the retailer gets? And the transporting company? I think 30% is low in comparison. But but but this is digital. Yeah, so where do you you have access to Apple’s client base? How much do you pay for the running and maintaining of the App Store infrastructure?

How many apps do you think are hosted that don’t make any money? For neither dev nor Apple? All those are costs. For Apple. Admitted they make a lot of money, but they do so because they’re successful. If you want to be successful on their platform, you play by their rules. And those are clear: you pay 30%.

pornel• 6 years ago

Apple to Facebook: if users were informed about your tracking, they wouldn't like it.

Facebook to Apple: if users were informed about your fee structure, they wouldn't like it.

Both companies have a cash cow that works better when users are unaware of it.

Apple doesn't let you disclose their 30% IAP fee to your customers

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