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

http://blog.anylistapp.com/2015/02/open-letter-to-tim-cook-regarding-app-store-revenue-split/

by dirtae • 11 years ago

389 216 11 years ago

blog.anylistapp.com

coryl• 11 years ago

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

djcapelis• 11 years 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.

s73v3r13• 11 years ago

You're acting like they don't already have that.

bsaul5• 11 years 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).

s73v3r13• 11 years 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• 11 years ago

Economically, this makes absolutely zero sense.

srhngpr• 11 years ago

Just out of curiosity, could you elaborate?

ProAm2• 11 years 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).

nostrademons• 11 years 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.

throwawaymsft3• 11 years 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-...

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• 11 years 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.

stormbrew• 11 years ago

I'm pretty sure this is referring to the operating profits on hardware sales, which would be a pretty silly factor in deciding what platform to write software for. Third party software devs make precisely none of that profit. Samsung also doesn't, afaik, make any of whatever Google's cut of Android software sales are, so even if it does include app store cuts that just turns it into an apples and oranges comparison.

This is not to say the conclusion is wrong, just that the data here is not relevant to it.

scholia• 11 years ago

Most of Apple's profits come from hardware. In software, you should really go by software revenues. There's an installed base (units), but the installed base isn't the market, just the potential market. The market consists only of people spending money...

Having said that, you need to account for all the revenues, ie not just the purchase price of an app in the store. That's an area where not everybody is happy with Apple.

Ologn• 11 years ago

How many people pay to use websites? One of my side project Android apps made over $2100 in advertising revenue last month, and my other Android apps made hundreds of dollars in ad revenue. There are a number of ways people monetize Android apps - some games are freemium, and yes, some apps are paid for. I'm not unhappy with how Android monetizes.

piyush_soni• 11 years ago

I'm not sure why this comment was downvoted.

bad_user2• 11 years ago

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.

I hear this argument a lot. I'm an Android user and as somebody that received an iPhone 6 as a gift and sold it to buy an Android, plus I also own an iPad, let me give you a counterpoint.

1) I feel the need to block ads. On Android I have Firefox which has add-ons, on iOS I don't have it. Well, you can usually find a shitty shell to iOS's webview that does. And even if the cost is non-zero, it's still shitty, not to mention untrustworthy.

2) I feel the need to view videos in any format. On Android I have VLC, the leading open-source player, OK? On iOS I don't have it (even though an implementation of VLC exists for iOS, a month ago it was pulled from the iTunes Store). Welcome to the dozens and dozens of shitty alternatives from the iTunes Store, many of which demand money for it.

3) I feel the need to listen to streaming radio. On Android I have VLC. Need I say more?

4) I feel the need to block spammy phone numbers, blocking calls, automatically deleting SMSs, plus I want regular backups, like for my SMS messages and so on and so forth. Oh wait, on iOS that's not allowed, whereas on Android I'm a paying customer. Dropbox on iOS is freaking broken, because in order to stay active in the background and sync, it needs to detect movement.

5) On Android I bought Tasker, because it's so useful at times, whereas on iOS such a thing will never be allowed.

6) I have about 8 games that I bought installed on my Android right now, even though I'm not a gamer, but it just so happens that Google Play keeps suggesting me tower defense games - whereas this doesn't happen on iOS because iTunes is restricting reviews to locals and I'm not living in the US, so all I get are suggestions for, you guessed it, shit - to search for iOS apps, I'm actually doing searches on Google.

7) Android's apps for maps are much better in my experience - besides Google Maps, I have about 3 others installed, all of them good, I only keep them around because while in roaming I don't want to be caught with poor area coverage.

You're talking about iOS having "premium products", whereas the way I see it, my basic necessities are not satisfied and if I am to pay for something for iOS, it's usually in the hope that it works. And this happens primarily because of Apple's restrictions. iPhone 6 seemed to me like a really sexy phone, but I sold it anyway because of the ecosystem.

freehunter• 11 years ago

Yeah thanks for the Android vs iOS rundown. We now all know the differences between the two, but none of the things you listed are the signatures of a premium product, merely a product that better fits your desires. Other than that, it's completely off topic.

mynameisvlad• 11 years ago

Aside from what freehunter has already said:

If you have at any point purchased VLC, you'd still be able to get it even if it was pulled.

There are many varieties of streaming radio apps available, just as on Android. Just because you're used to VLC on Android does not mean it's suddenly impossible because you don't have VLC for iOS.

You can block numbers/emails, which will block phone calls, messages, and Facetime.

Messages (as well as call history, app settings, and more) are backed up to iTunes/iCloud. I switched from an iPhone 5S to 6 a few days ago, and messages came down from the cloud automatically.

I don't even know what you're talking about for 6). Reviews are per-country, but I believe they also display US reviews if you click a link or something, and my store experience was pretty much identical when I used a Canadian account, when I used a US account, and when I used each account in the other country. Hell, "Apps Near Me" would give me whatever city-specific apps were available in the Canadian store, it didn't care that I was in a US city with a Canadian account, nor would it care that I was in a foreign city with a US account.

So basically it comes down to you being too used to doing things on Android and then not willing to change even in the slightest when you switched to iOS.

higherpurpose• 11 years ago

Aren't the vast majority of apps on iOS free, too?

vacri2• 11 years ago

A minor relaxation of the 30% cut, to 25 or even 20%, won't change the bottom line for developers all that much, but cuts Apple's take by a third. In the article, the grumpy spouse who thinks $70k is not what they married into? That person isn't going to be much happier with $80k.

peterjancelis• 11 years 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?

xenadu022• 11 years 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.

mcintyre19942• 11 years 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.

tjl4• 11 years 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• 11 years 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.

calcsam• 11 years 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• 11 years 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.

xenadu022• 11 years 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• 11 years 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• 11 years 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.

bsaul5• 11 years 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.

qzervaas3• 11 years 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• 11 years 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.

bsaul5• 11 years 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• 11 years 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.

bsaul5• 11 years ago

Well, maybe Apple became that successful by also listening to their customers.

ceejayoz• 11 years 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".

Glyptodon• 11 years ago

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

pseudometa2• 11 years 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• 11 years ago

Yeah, that and the $1500 computer to write the software.

pseudometa2• 11 years 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.

chubs2• 11 years 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• 11 years 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.

cageface• 11 years ago

I know more indies making a living out of android, and i know far more ios developers, being one myself.

Really? Can you elaborate on this at all? What kind of apps? I know the Pocketcasts guys have said that they now get the bulk of their revenues from Android but the conventional wisdom is still that iOS is where the money is for indies.

As an indie developer with no platform allegiances I'm willing to go wherever the customers are.

yaeger• 11 years ago

I'd rather not have my purchases/interests being broadcast to my "friends", thank you. What are these "friends" anyway? Everyone in your contact list?

The last thing when buying an app I want to do is to worry about "What if X sees that I got this app?"

My purchases are my business. Not theirs. If I want to recommend an app I can do so through a variety of way in this communication age. I do not need some automated snitch for that.

qzervaas3• 11 years ago

I was going to post basically this exact thing.

Even basic filtering like "hide all apps that haven't been updated for iOS 8", or something along those lines would help with discoverability (and in this example, reward the developers who are stay on top of their updates).

There are a bunch of other filters that would be useful too.

toastking3• 11 years ago

There's also the issue of the filter's they do us now. The "Essential" apps on the Front Page of the App Store don't even seem that essential. Why is an app to teach kids to spell considered "Essential" for an Apple device?

mss69893• 11 years ago

App store discoverability is a problem, but it hasn't slowed downloads at all. Most app discovery happens outside the app store.

Putting money behind discovery at the outset is key. If you had that 30% back, you could invest it into ads, promoted posts, etc.

tomasien• 11 years ago

Yes but, in light of that, this would be a simple solution apple could implement overnight if they wanted. I'm sure they won't for political reasons but I hope they think about it.

alsetmusic• 11 years ago

It's always interesting to me how simplistic significant changes to a product seem to outsiders. "Overnight" was the key word here. What most people don't consider is that the UI may need to undergo a serious revamp (with nearly unlimited possibilities to evaluate in order to find what Apple's design team believes best), the testing that QA has to perform to catch edge case bugs from the revision, not to mention that these changes may only be deliverable through an update to iOS itself (something that is already considered to be an unwelcome burden by some users).

If you don't think that Apple and its competitors genuinely want to deliver the best experience that they can within the time and cost budgets that they have to adhere to if they want to remain competitive then you severely underestimate the people who put in the long hours required to get these products into your hands.

dpcan• 11 years ago

Yes. Since 2010, I've been begging in forums on Android and iOS to use a heavily layered category system or tagging system that would allow me to narrow and filter my search as much as I need to. I want this as a consumer. I want this as a developer. Why it doesn't exist makes absolutely no sense to me. Especially for games.

I should be able to go to action games, then platformers, then side-scrolling, endless, speed run, leveled, then filter out only those with boss battles, or powerup-ups, or 8-bit graphics, etc, and so-on.

The only thing I figure is that the developers will abuse the ability to tag their own apps, making the fine-tuned results even more ridiculous than general results.

politician• 11 years ago

I want this as a consumer. I want this as a developer.

What matters is whether you want this as the operator of a walled garden.

tjl4• 11 years ago

I think what you want could be solved by a better search. If there was a better search you could search for an 8-bit platformer game and find a list of them. Tagging doesn't really add anything that a better search couldn't provide. Plus, a better search in descriptions means that the terms still have to make sense in a description. I guess you could load the description up with terms, but I suspect that it is more likely that one would get caught gaming the system that with tags.

In my opinion, it's in Apple's best interest to improve discoverability as it could result in more apps being sold.

The problem with a lot of categories is that it makes navigation cumbersome as you'd need many taps to get to an app.

Oh, and if you want change (at least in the iOS case), send feedback to Apple and/or a bug report. Complaining on forums does nothing.

nitrogen• 11 years ago

Filtering by required permissions would be a must, too. Calculator app that needs location and Internet access? No thanks.

yusufg• 11 years ago

There is an idea I described in a blog post a few years back which would potentially improve discovery from top charts. Have a switch which would remove apps already installed by the user so that others would bubble up

http://blog.goolamabbas.org/2012/01/11/mockup-to-demonstrate...

hellbanner• 11 years ago

I've brainstormed a discovery model where your content gets seen by say, 100 people. If X% {buy|pay|like} it, then another 100 people see it. And so on. Rotating.

Any sites that do this?

hkmurakami• 11 years ago

Ironically, this is effectively what Blizzard's Battle.net custom game list screen did. (every time someone joined, it would bump up a hosted game to visibility)

warmfuzzykitten• 11 years 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• 11 years 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• 11 years 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• 11 years 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.

mss69893• 11 years 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.

onwardly• 11 years ago

I agree that its not for nothing and does help cover legitimate expenses Apple incurs. That said- its not a one-way street. The app ecosystem is one of several key drivers for iPhone/iPad sales- that alone probably justifies the cost to Apple.

Also- the point of this pitch is that the extra revenue means much more to smaller developers than it does to Apple, and that Apple in fact wouldn't lose that much revenue from such a scheme.

chongli• 11 years ago

payment processing, reach, marketing, infrastructure, testing/approval (you may or may not like this, but users probably do like it), app delivery, etc.

The problem is that the value of these things goes way down the more crowded the app store gets. Seriously, what good is approval in light of the endless legions of crapware and clones? How useful is marketing when discoverability is almost nil?

And how about free apps? It seems to me that paid apps subsidize free ones but that's a whole other ball of wax.

toastking3• 11 years ago

I'm not sure if paid apps "subsidize" free apps. I think it's more that most free apps have adds or in-app purchases.

dingaling• 11 years ago

it's for payment processing, reach, marketing, infrastructure, testing/approval,... app delivery, etc.

But if your app is free, then there is no charge for those services. How does it make sense that theit provision only costs Apple money if your app costs >= 1 cent?

etchalon• 11 years ago

Because Apple is willing to eat the cost for the benefit of having a free app?

Every free app in their store is one more reason for you to buy an iPhone.

Paid apps, while also adding to the ecosystem, do not offer the same value to Apple.

It's also just plainly logical. You can't charge people to give something away. You can charge money if you're helping them make it.

bboreham2• 11 years ago

Apple charge $100 per year to be a registered developer, not "no charge"

1123581321• 11 years 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.

dusing• 11 years 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,..."

yeukhon2• 11 years 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.

dirtae2• 11 years 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• 11 years 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• 11 years ago

I've disclosed my App Store revenues before (http://www.trevormckendrick.com/my-first-year-in-the-app-sto... and 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• 11 years ago

Why would someone with a monopoly over the software on millions of devices ever reduce prices?

Consultant32452• 11 years 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• 11 years ago

To gain more development support. More developers = more apps = more users = more revenue.

It makes sense.

TomGullen2• 11 years ago

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?

You missed the "They are making bank and don't see any need to change the payment structure" possibility.

filmgirlcw2• 11 years 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.

thesimpsons10222• 11 years 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.

filmgirlcw2• 11 years ago

I actually don't disagree with you at all, I'm just acknowledging the obvious counterpoint to that argument, that's all.

hackbinary• 11 years 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.

thesimpsons10222• 11 years ago

yeah but apple isn't a charity or government. they aren't in the industry of solving income inequality. imagine if you went to a restaurant and they checked your income and set the price of your meal based on that. it doesn't make any sense.

balls187• 11 years 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.

matheweis3• 11 years 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.

SwellJoe3• 11 years 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.

matheweis3• 11 years 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.

dirtae2• 11 years ago

Is it possible to take advantage of the affiliate program for sales on in-app purchases? Our app (like many) is free with in-app purchases, so I don't think we can generate affiliate revenue from our sales, but I'd love it if I were wrong.

matheweis3• 11 years ago

I don't have in app purchases, but Real Mac Software says yes: http://realmacsoftware.com/blog/itunes-affiliate-program

ares2012• 11 years 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• 11 years 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• 11 years 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.

greggman2• 11 years 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.

tomp2• 11 years 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• 11 years 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.

rdsnsca• 11 years ago

High fee ??? You should do some research, before Apples App store the split was often 30 % / 70 %. With the store taking the 70 %.

alexqgb• 11 years ago

I'd be willing to bet you've never built a successful business that handles everything done by Apple in-house.

If you had, you'd already be doing everything yourself (and doing it better that Apple) and happily collecting more than 70%. Alternately, you'd have realized that beating this price is a major accomplishment and probably not the best use of your time, making the 30% is a pretty fair trade.

In either case, you would not be complaining.

greggman2• 11 years ago

Stea

athenot• 11 years ago

Admittedly, Apple probably has an excellent rate negotiated with the Credit Card Processors. But if you were to sell something for $0.99 yourself, it'd be hard to beat what Apple offers.

Taking Stripe as an example, you'd be charged 2.9% of 99¢ PLUS a fixed 30¢ per transaction. That's about 32.9% you lose to the payment processor.

megablast• 11 years ago

Do you know how much it cost before Apple came in? It was about 70 to 80% that you gave the publishers. And that was if you were lucky to get accepted to develop apps. Which happened to only a few big companies.

simonh• 11 years ago

Funny. When they launched, everyone was expecting it to be 50/50, and in fact Intel and Microsoft had announced or launched stores with that as the split but changed to 70/30 as soon as the App store came out. Some rivals even complained that Apple was using it's financial muscle to undercut them at below-market rates as a loss-leader, yet even then at the same time others were making the same complaint you are.

Bear in mind the App Store was losing money or barely breaking even for most of it's existence. It's only in the last few years it's begun to make significant profits. They've sunk billions into it. That hardly seems like the business plan of a gouger.

As for being a monopoly. That's like complaining that the shop down the road is a monopoly provider of products in their own store. There is no monoploy, you can always buy an Android, Symbian, Tizen, or even Windows Mobile phone.

vacri2• 11 years ago

Ever since the start of the 30% take, people who have complained about it always sound like they have no experience on the business side of things. For that 30%, you get a canned marketplace, with all the financials and fiddly bits done for you (as you say). A 70% take as a producer of goods is very high for a manufacturer that doesn't own the distribution channel.

Also FTA: At $70K in net revenues per year, your spouse could be telling you to get a day job.

"Don't you want me to be happy, doing what I love?". I mean, if we're manufacturing convenient numbers to make an argument, let's also look at all the reasons why someone would want to be self-employed as a developer. :)

qzervaas3• 11 years ago

As an Australian developer, any sales to Australian customers include 10% GST (Goods and Services Tax).

Apple send a monthly GST report containing the amount of tax we need to pay for our Australian sales, which makes reporting super-easy.

Side note: Apple don't charge the tax on top of the price, so earning a 99c sale from a US customer (net revenue ~$0.70) is far more valuable than a 99c sale from an Australian customer ($0.63)

jsprogrammer2• 11 years ago

A 70% take as a producer of goods is very high for a manufacturer that doesn't own the distribution channel.

Is there a competing distribution channel that iOS users are allowed to access? Or does the distributor lock producers into its channel? If the later, the distributor's take is completely arbitrary and can only be assumed to be selected so as to maximize the distributor's take of the producer's generated value.

hinkley• 11 years ago

People forget that when the telcos were in charge, the split was 70/30 the other way, and with no transparency at all. You basically couldn't make money on an app. When Apple announced their price structure, it was a huuuge deal to everybody. That's why so many people retrained and retooled so fast.

mattmanser2• 11 years ago

Your comment shows a lack of understanding of what he's saying. You're not paying for software or payment systems, or anything, it's more like a tax. I'd get all of that if I just paid $100 and sold nothing. That stuff is provided for Apple's benefit as well as your benefit.

But there is benefit to be gained by not taxing the "poor". This is the same argument as the entire "regressive/progressive" tax regimes.

I mean, yes, 30% of fuck all is not a lot and well worth what you get, but that's not the point, Apple's not making much from the long tail, so why not give the long tail the economic freedom to experiment and grow and make everyone richer. That's the point. Let the small businesses grow into bigger businesses by alleviating the tax burden.

The point is that the big fat Rovio's of this world can easily pay for the Apple ecosystem by themselves. The take from the little businesses is relatively small, so why not cut them slack by introducing tiered pricing, allowing them to spend more on growing and advertising, or simply stay in the market, and thus increasing the growth rate of the overall app economy.

By using terms like "providing a service" and "platform" and "do all that yourself", you're fundamentally missing the OPs argument. He's not talking about the value of the services, the virtual bin men, or the armies, or the law systems, he's talking about the economy that pays for all that in the first place.

s73v3r13• 11 years ago

"Let the small businesses grow into bigger businesses by alleviating the tax burden."

Are you honestly trying to say that the only thing stopping some small app shop from getting huge is the 30%?

alexirobbins2• 11 years ago

I imagine the tax comparison is part of why they wouldn't want to do it. As your app is more successful, you have to pay Apple more and suddenly this favor to indie developers feels like a tax on the successful. Rebates would be a good work around – we plebs are dumb like that.

Shivetya• 11 years ago

Honestly I don't think its going to do squat. For the majority of apps if I search I am bound to find an equal number of free apps or even lower priced apps.

So first we reduce the burden then find out that the big guys cut their prices because they can afford too. What is next, surcharging the big guys because its not fair? Really that is all this article is about, its not fair. Guess what, someone is going to come in under you and if they did implement tiered pricing why not farm off a bunch of subsidiaries? One per product to keep yourself under thresholds?

jtwebman• 11 years 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• 11 years 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• 11 years 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/

SwellJoe3• 11 years 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• 11 years 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• 11 years 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/

yeukhon2• 11 years 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• 11 years 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• 11 years 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.

TomGullen2• 11 years 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• 11 years ago

completely agree, they should follow a tax bracket model.

bobbles• 11 years 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!

toastking3• 11 years 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• 11 years 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• 11 years 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• 11 years ago

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

newobj• 11 years 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• 11 years 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.

blahedo2• 11 years 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• 11 years 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.

s73v3r13• 11 years 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.

blahedo2• 11 years 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... [1] http://www.deptofnumbers.com/income/new-york/new-york/

ctdonath• 11 years ago

Perversely, I'll side with the albeit snidely described "elitism" angle. Most people in a position to actually write a mobile device app which has a shot at making real money have probably come from a social strata demanding a higher standard of living. A university degree or two, more than a few Apple products and other non-trailing-edge technologies, a voracious appetite for information & tools, and a vehicle which they're not spending copious time personally maintaining (to mention a few). While I'll usually argue fiercely that one can live well & productively on a pittance, normalcy is someone making a net $70K probably will be looking for at least a secondary occupation.

And note that the parent post referred to net income, implying a >$100K gross. Your retort indicates a gross $70K or $53K income. Let's keep the comparisons on par.

clarky075• 11 years ago

probably just used those for easy math, or perhaps if you are in NY of SF then it's not "great" and certainly below market rates. Just because you can live on it, doesn't mean you should if the 9-5 will pay you twice that to do the same type of work.

all that being said, just lower the numbers a bit and the point is pretty good. 60k gross turns into 42k net. At some point there is a line where that 30% is the difference between being viable and not.

spiritomb• 11 years 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• 11 years 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.

rahimnathwani• 11 years 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.

alttab2• 11 years 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...

21echoes• 11 years 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.

alttab2• 11 years ago

Sure, but those items are designed to be consumable, and purchased over and over.

lucaspiller• 11 years 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.

s73v3r13• 11 years 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• 11 years ago

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

s73v3r13• 11 years 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• 11 years 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• 11 years 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• 11 years 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• 11 years ago

I actually image that's how apple thinks

bonn1• 11 years 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.

clarky075• 11 years 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.

s73v3r13• 11 years 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.

clarky075• 11 years 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...

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• 11 years 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 ...

bboreham2• 11 years 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• 11 years 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• 11 years 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• 11 years 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• 11 years 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• 11 years 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• 11 years 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• 11 years 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

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