Apple Exec Suggested Cutting App Store Commission To 20% as Early as 2011 (theverge.com) 62
Phil Schiller, the Apple executive in charge of the App Store, raised the possibility of the company cutting its 30 percent commission rate to 25 or even 20 percent back in 2011 in response to competition. From a report: Schiller floated the idea in an email to then Apple CEO Steve Jobs and head of Apple services Eddy Cue. The email has been made public as part of the company's legal battle with Epic Games. "Do we think our 70/30 split will last forever?" Schiller's email begins. "I think someday we will see enough challenge from another platform or web based solutions to want to adjust our model." Schiller goes on to suggest that if Apple were to ever change its fee structure, that it should do so "from a position of strength rather than weakness" and floats the idea of Apple dropping its commission rate once the App Store is generating over $1 billion in annual profit. "I know that this is controversial, I just tee it up as another way to look at the size of the business, what we want to achieve, and how we stay competitive," Schiller wrote. "Just food for thought." Attached to the email is a Wall Street Journal article from 2011 which discussed the possibility of developers using web apps to bypass Apple's App Store fees.
Apple needs to drop rules about price must be the (Score:2)
Apple needs to drop rules about price must be the same for apps on other systems / can't say %30 goes to apple.
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oh thank god Joe_Dragon decided this for us, phew. i feel much better now.
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Apple needs to drop rules about price must be the same for apps on other systems
You'll be happy to hear that they don't have such a rule. Check Spotify's pricing if you don't believe me: a month will cost you $10 on most platforms, but costs $13 for users signing up on iOS.
What you described is called a "Most Favored Nation" contract clause, and while Apple has employed them elsewhere—perhaps most notoriously with the eBooks contracts that were ruled to be anticompetitive about a decade ago—iOS developers are not subject to an MFN clause. And Spotify is hardly alone in pass
Not a user problem (Score:2)
Apple can do what it will because only the users buy hardware so they need please no one else.
Developers who want a piece of that pie will bend the knee or work on something else, but there will always be more than enough people eager to sell via the app store so the disgruntled don't matter much (nor do their apps as neither are irreplaceable.
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FWIW .... (Score:2)
I always thought Phil Schiller was one of Apple's better leaders. Yeah, the guy might be a little too biased towards a personal interest in cameras and photography? But all in all, he seems pretty level-headed while truly believing in the benefits of some of the new things Apple comes up with.
(I know I'm not the first one to complain that Eddy Cue, by contrast, gives off a sleazy used-car salesman vibe.)
Anyway, I agree with what he said about the App Store and lowering commissions. Maybe it was way too ear
Why AREN'T we using web apps instead? (Score:1)
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All browsers on iOS/iPadOS use the same Webkit Engine as Safari. Chrome et al are basically just skins.
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that's the number one problem right there.
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Why AREN'T we using web apps instead of the app store?
Because users won't pay for a web app.
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And based on that, I'd assume Apple is indeed shooting themselves in the foot with the whole 30% thing, because there must be quite a few services out there that look at it as "Oh, so in order to put ourselves on the store we have to completely upend our revenue model and offer the same terms as our website but only get 70% of the revenue for anyone who uses the app", and don't bother.
Give us an example.
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Aren't many people buying apps these days
Many people pay for apps.
A quick Google search says that 39% of app revenue is the up-front fee for buying the app.
most of the time they're buying services or extensions
That is certainly true for Netflix. But not all apps, or even most apps, are portals to backend services.
believe it or not (Score:1)
20% is still high. (Score:2)
Back when I use to work consulting, if a customer wanted to buy some equipment (or software we didn't devlope) threw us, we would mark up our by 20%. This would cover our costs of placing in the order, research on how to use the product (as it is often a band new product), and money back to the company to help the company grow and expand.
Being that Apple may want to review the software first, and have it on its servers, and deal with purchasing and payments, there is a need for apple to take a cut. Howe
Re: 20% is still high. (Score:2)
Would reducing their cut by 3x increase their sales by 3x ? Thatâ(TM)s the amount they would have to sell to make up for the shortfall. I guess they could trial it and see what happens.
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Whatever you are earning right now I want you and everyone at the company you work for to take a two thirds cut in pay because then we all could get stuff cheaper.
This won't fix anything (Score:2, Interesting)
If they drop their commission to 25% or even 20%, people will still complain it's too much.
This won't fix anything, and might even make things worse because some will figure that if they can really reduce it by 5 or 10%, then it shows that they've been exploiting their position the entire time and there's no reason to think that they still aren't doing it and could reasonably reduce it by even more.
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Exactly... there's no reason to repeal the laws against murder, there's no reason for Apple to feel like it should change its commission structure.
Bearing in mind that I was not the one to initially bring up such an equivalence, only showing how given the equivalence, they can still be comparable.
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At 5% people wouldn't complain. At 20% they would complain less than 30%.
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1) Yes they would.
2) Possibly... or it may make it worse because some people will think that public pressure on Apple to lower its fees works, and they have no reason to think that Apple could not reduce it further.
Apple is has no obligation to app developers' demands, let alone a minority of them, to change its commission structure. Its only obligation is to provide a platform that they can create applications that the public can use. If people want to make more money from Apple apps, they are perf
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2) Possibly... or it may make it worse because some people will think that public pressure on Apple to lower its fees works, and they have no reason to think that Apple could not reduce it further.
Worse for whom? Those people would be right.
Apple is has no obligation to app developers' demands, let alone a minority of them, to change its commission structure.
Of course it isn't. It has to comply with laws however. They are on a hot seat around the world because of their abuse of dominant position because of that 30% fee.
Its only obligation is to provide a platform that they can create applications that the public can use.
They have no such obligation.
If Apple's contribution is so valuable, they should offer the option to side-load applications. If their store is worth it, devs will remain on it. If it isn't, they won't be forced to use it anymore.
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What Apple does in terms of controlling what apps are available for its stoore is no different than what companies that make game consoles do to control the applications that are made for their products.
Well you can buy console games at any video game store, but I understand that digital copies can only be bought from the official store.
I'm not buying any locked-down game console, but at least they are offered for cheap, and the business model is to make up for the loss by profiting on games.
Apple already makes a big profit on the iPhone itself. And the iPhone is useful even if you do not buy any application. Game consoles, not really.
Apple has decided that they are going to be the only provider of products that are interoperable with iOS devices. If developers do not like that, they are entirely at liberty to not develop for iOS. Apple is not twisting their arm, The only thing compelling to develop for iOS despite any dislike for Apple's policies is their own greed and desire to exploit the market that Apple controls for iOS products.
Oh I get that totally and it is part of the reason why I avoid buying an
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No, you are buying a locked down smart device that can, coincidentally, be also used to play many games.
Yes, but that does not somehow negate or lessen their right to profit from software that people make for iOS where they see a means of doing so.
If they are breaking laws, then video console makers are also break
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If they are breaking laws, then video console makers are also breaking those same laws with many of their digital downloads that cannot be bought in-store.
It may or may not. I wouldn't bet on that one.
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It just seems to be the same thing, as far as I can see... if a video console maker can be the sole provider of a virtual store through which a person can obtain even third party digital downloads for that console, why can Apple not be the sole provider of a virtual store for its platform? And if Apple is not allowed to do it, then why, for example, is Nintendo or any other video console maker?
As an aside, I can pretty much guarantee that the shit's gonna hit the fan with Nintendo if this *is* found to
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The point is moot if you can buy the game on a physical media in a real store. If console are going disk-less then I guess it could be different.
Also, as I said, console makers can argue they sell consoles at loss. Apple can't.
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No, you are buying a locked down smart device that can, coincidentally, be also used to play many games.
I do. It's called a Fire Stick. Cheap and meats that definition. Although I didn't install any game, or purchase any application. This way I am not locked-in to their ecosystem. It if ever breaks I could switch easily to a chromecast or something else if it's a better deal on that day.
Teach me like I am a toddler. (Score:4, Interesting)
I don't see how this is any different from a regular retail situation. Retailers in most cases are tacking 50% on everything they buy from the manufacture and sell to you. That Kayak you bought for $500 cost them $250.
So Apple, as a digital retailer is tacking on 30% for their margin.
My only real complaint is that Apple has a monopoly on the "App Store" itself. They need some sort of competition. But 30% doesn't sound too unreasonable.
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"I don't see how this is any different from a regular retail situation."
"My only real complaint is that Apple has a monopoly on the "App Store" itself"
The difference IS THE MONOPOLY.
In regular retail, if you think you you have a good take on what customers want and think you can make enough profit opening a retail store that it would be worth doing it; go ahead and open one. Customers can choose to shop there or not, regardless of what phone, car, or refrigerator they own.
Epic believes it can open a profita
Re:Teach me like I am a toddler. (Score:4, Insightful)
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The monopoly that makes it impossible for you to buy an Android phone. And download an app that you want on the Android play store.
The monopoly that says that if you want to communicate with your friends who all use iMessage, now you need an iPhone *and* an Android phone.
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Not if you want to video chat.
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Re: Teach me like I am a toddler. (Score:2)
No you don't. Your friends' iPhones will all automatically use SMS for any conversations you are on and Appleâ(TM)s servers for the conversations you are not included in.
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The monopoly that makes it impossible for you to buy an Android phone. And download an app that you want on the Android play store.
So as a consumer you do not want control over how you are able to use your own device like you would with a Macbook, for instance?
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In your world, CocaCola could own the entire country, be the only seller of beverages it allows to operate, block imports of other beverages, and pollute the wells and lakes so you can't even drink the water. And today i feel like drinking a rootbeer made by Pepsi, and so I complain about the monopoly Coke has.
And you'd be there to argue there was nothing wrong and that there wasn't a monopoly because there's nothing that makes it impossible to buy a house in pepsi-land across the sea, and travel there when
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The difference IS THE MONOPOLY.
Epic believes it can open a profitable store, sell its own Fortnite game, and other stuff too. And it would like to do that.
Oh, so the lawsuit they filed against Google at the same time as the suit against Apple was what? Just a misunderstanding? An accident? After all, Fortnite has been and continues to be available for Android outside of the Play Store [epicgames.com], and the app used to install it can be use to install "other stuff too". If Epic's complaint was actually about the platform owner having a "monopoly", Epic wouldn't have had a reason to sue Google. But they did, and that blows a hole in almost everything you said about their mo
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Oh, so the lawsuit they filed against Google at the same time as the suit against Apple was what? Just a misunderstanding? An accident?"
And the lawsuit against Google is a lot weaker, IMO. Because the terms on android are lot less anti-consumer.
No, this is about money and a golden opportunity to have more of it
As it should be for a lawsuit like this. Nobody is going to go up against apple and google without a pot of gold at the end of the rainbow.
And of course Epic is timing the lawsuit to maximum effect. They're a business not a charity or consumer watchdog. We all get that.
Meanwhile, Sony, Microsoft, and Nintendo have been successfully keeping their heads down, and Epic can see they'd be fighting an uphill battle if it went on the offensive, so they haven't said anything.
The console market despite its similarities is ultimately a VERY different market; yes the game consoles are exercising monopolistic
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Fair enough points all around. Though I wager I'd disagree with you about the majority of the arguments along the way—I disagree with arguments that companies like Apple, Google, Sony, Microsoft, or Nintendo are monopolies on the basis of their control over their platforms; I disagree with the idea that there's something inherently special about pocket computers that subjects them to greater scrutiny than TV-connected computers; and I disagree with the notion that regulators should be weighing in on w
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"I disagree with arguments that companies like Apple, Google, Sony, Microsoft, or Nintendo are monopolies on the basis of their control over their platforms"
Whether we call it a 'monopoly' or not, there's no question Apple and Google are an effective duopoly in mobile platforms, and that by itself should warrants regulatory oversight especially when they take measures that clearly restrict consumers ability to exert control over their own devices. Whether its an actual monopoloy or just anti-consumer restraint of trade made possible by their market dominance... is a difference without a distinction.
"I disagree with the idea that there's something inherently special about pocket computers that subjects them to greater scrutiny than TV-connected computers"
The courts frequently take into consideration the degree of pu
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While I think a lower rate would be more reasonable, many just assume Apple takes 30% of sales as pure profit. While I'm confident there's a health profit margin in there, that 30% covers:
- hosting/delivery mechanism and fees
- credit card transaction fees
- SDE/SDK
- access to a billion active iPhones and millions of customers: https://www.theverge.com/2021/... [theverge.com]
- ad revenue and marketing opportunities
And probably a myriad of other things I'm not thinking of.
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Yeah, so what is the other 25% for? All that never explains more than 5%.
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Yeah, so what is the other 25% for? All that never explains more than 5%.
Says who? Are you the super genius who can figure out without knowing a single number how much Apple should charge? Apple also takes 30% from free apps and makes - exactly zero that way. Commission is the same for all apps, no matter who writes them, no matter how much they sell. Nowadays a bit less if you don't have much revenue.
And what about profit? Apple is a for-profit organisation. They are allowed to make profit. They are not required to give stuff away for free, especially not to lying scumbags l
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Who are you to say 30% is good?
Hey, maybe Apple is losing money on that 30% and should raise the fee to 60%. Or maybe 90% to make a profit.
Apple has a monopoly on applications sold for the iPhone. Monopolies do what they always do: they inflate prices to get a higher than normal profit. Market forces no longer apply.
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You really have no idea what you're talking about. If a retailer sells a $250 Kayak for $500 it's because on top of that $250 price tag they have about $100 of staffing costs, about $125 of premises costs, transportation costs, taxes, and so on and make maybe $25 profit on it.
No shit really? I would have never guessed! Thank you for educating me. /s
PS. I have worked as a retail exec for 30 years. I think I know how it works.
20%, that's nice (Score:2)
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So you should take a 83 per cent pay cut because that is what your work is worth.
If I had a nickel for ever app store purchase (Score:2)
I'd be pretty dang rich.
So what? (Score:2)