Apple cuts App Store affiliate commission from 7% to 2.5%
techcrunch.com
techcrunch.com
So from my perspective, this is just the latest in a long line of developer hostile developments from Apple.
Sidenote- I tried deploying an app to testers on Testflight for the first time, and the app was rejected. What a complete waste of time. It was rejected for not running on iPad properly and not working with ipv6. Not exactly too frickin helpful when I needed to get the app out to testers/stakeholders asap. Fortunately Tryouts.io don't want to waste my time.
This represents a roughly 6% cut in post-Apple revenue... on sales of our own apps. Unbelievable.
http://www.businessinsider.com/apple-changes-app-store-reven...
AKA Highway robbery and Google doesn't do any better. It should be in the single digits.
Why single digits?
It's also way more than you'll get shipping for XBox or PS4.
What's is their cost? When you look at an ebook Apple makes more money then the Author of a book. Most developers don't make a profit but Apple is guaranteed a profit form each purchase. http://alltopstartups.com/2016/03/30/do-apps-still-make-mone...
When the creator makes less then the deliver there is a problem. When the deliver makes money from purchase 1 and the developer might never see a penny after thousands of purchases there is a problem. A developer makes an app that cost her $10,000 and she must sell $14,300 to break even and not make a dime. Apple will make $4,299.
> they keep developing better services, devices, and platforms for devs to use (and, they give some of that away for very cheap or free).
Follow the money and Apple, Google and Valve are making a killing off the backs of creators. The cost of delivery is what 1% if that?
Well, if the cost of delivery and maintenance of these platforms is so low and the charge to developers is so high, why not arbitrage this? Create your own trusted multi-billion hardware/software platform with expedited payment and protection from cheating, and you can cut developers a better deal!
I think you should forget about "hard" costs. They're completely irrelevant to how valuable something is.
And while you're locked into Apple (not that anyone is forcing you - and Apple basically created that whole industry), with Google and Valve, you're free to run your own setup and deal with all the middleman stuff yourself. 30% to hop onto their infrastructure and let them deal with bad payments is a pretty good deal.
In short, you can always tell the people inexperienced in business in these conversations, because they think that 30% is a crushing 'take'. 30% is actually pretty damn good - normally in retail it's what you'd get, rather than what they'd take.
Also, think on the reverse situation. Apple currently makes 0$ on the sale of free apps but obviously these apps have a cost in storage and distribution. ¿What is the "fair" proposition in that case?
That is 100% not true and probably right now Apple makes most of their App Store money from free apps.
98% of Google Play income is from free apps.
https://www.smartappmarketer.com/how-do-free-apps-make-money...
* An upgrade of some sort (often ad removal)
* In-game currency (which may or may not be a defacto requirement)
* A tip to the developer with no added functionality
The fair thing is anything lower than what it is now. Distribution costs have dropped dramatically, and user trust has increased so accepting credit cards on your own really isn't as huge of a deal as it was ten years ago. Visibility is now zero from the App Store as well which was also a benefit back in the early days.
As an app developer, I can tell you that visibility is not zero. If you understand how the store works, there is still excellent money to be made there. The 30% cut isn't outrageous. You just can't be pushing shovelware.
Cost isn't relevant, the commission is because Apple brings X hundred million credit cards to your door and presumably increases sales by at least that much.
> Most developers don't make a profit
Because most apps are garbage?
> but Apple is guaranteed a profit form each purchase. When the creator makes less then the deliver there is a problem. When the deliver makes money from purchase 1 and the developer might never see a penny after thousands of purchases there is a problem. A developer makes an app that cost her $10,000 and she must sell $14,300 to break even and not make a dime. Apple will make $4,299.
Except Apple eats all the credit card fees, server fees (hosts free apps for free), built the platform with an install base of hundreds of millions with a demo that spends more than other platforms etc.
Except that developers have demonstrated with real numbers that that is not always true: https://weblog.rogueamoeba.com/2017/02/10/piezos-life-outsid...
http://bgr.com/2016/07/20/ios-vs-android-developers-profits-...
The bad parts: - No customer data, this is fine, except for when the expectation is that you will host the application for that specific user indefinitely. But this leads into the next point...
- No ability to do customer support - Want to refund a user? We have to tell them to go to Apple. Want to give a user a free subscription month? Can't do that, as subscriptions will just continue to auto-renew on apple's servers. Want to give an existing user a discount on a new app? Can't do that without some super awkward app bundle. Want to even know that a user purchased your app in the first place? I hope you collected an email when they signed up...
- Arbitrary app review process - my company has had an app stuck "in review" for two weeks. We pulled it and resubmitted and it was available later that day. What?
- Search. And now Search Ads. Search highly favors volume over user satisfaction. Have a small user base but impeccably high retention rate? Who cares, we have another app with 10x the downloads and a 2.5 star rating that will rank above you. Also your competitor is buying your app name as a keyword to also bump you down one more slot.
- Subscriptions: They pushed these really hard last WWDC, but in iOS 10.3 users still have to find the subscriptions page buried in settings and use a crappy web view emulating iOS to cancel.
So for "all that" Apple takes 30%...
I appreciate all Apple has done in creating the market, but they need a way to make it actually sustainable for things that aren't SaaS or candy crush clones with in-app currency. Paid apps are dead along with anything wanting to be "pro" level on the iPad. My main issue is that almost all of these things can be fixed with some small changes to how things work. Responding to reviews was a definite step in the right direction, but they still have a ways to go to actually be worth 30% in 2017. There is a reason you can't sign up for Spotify Premium in the iOS app anymore.
If someone is looking at your software within a Store (Apple's, Google's, Valve's, whoever), you've essentially already "won" in terms of likelihood of conversion. You will still have to do some inbound-marketing work up-front to drive the user to that Store-page, but that's way less effort than the several-funnel-step process required to qualify and convince a "cold lead" your app, and your site, and its CC processor, are all safe to interact with, and that your app actually does what it claims to do.
Competitors to the Mac app store charge in the single digit range, whether it's Paypal or Stripe at about 2.9%, or a more full-service offering like Paddle at 5% + 50c, FastSpring at 5.9% + 95c, or Avangate at 4% - 8%.
Fastspring / Avangate / Paddle are better comparisons, as they also handle license/serial keys, file hosting, subscription management & tax accounting like the Mac App Store does, and have been doing so before the App Store ever existed.
Apple and Google can have their 30%, but only if they allow third party stores to exist just equally.
Mac developers are free to choose distribution via the App store, or to roll their own and not pay a cent to Apple.
I don't have any numbers (and I'd guess very few people do), but I'd guess that the majority of developers is still in the App store, even though there were a few high-profile defections. OTOH, the Mac app store may be <50% in total revenue because the really expensive stuff is usually distributed independently (Adobe, for example, is big enough not to need the platform).
So right now I'd say most iOS developers are probably still getting a positive return on investment. Although that doesn't mean that it's a completely fair price–Apple is probably getting the lion's share of the App Store's value.
Three years ago was when I got my current retina MBP, I do stuff on it that's considerably more demanding than iOS app development, and I expect to replace this in 2020.
If you're complaining about the "Apple tax" of hardware in a thread about Apple taking 30% off the top of an App Store sale, then it stands to reason that you're talking about using that hardware to build applications that would be hit by the first. But even if you overlook the "sail into a topic and go grind that axe" non sequitur of it, the complaint here was that software was being "upgraded" to the point where it no longer suffices for "normal daily functions"--which is kinda silly, Sierra is about as performant on my older MBP (a 2011 midrange one) as OS X ever was even if applications running on it have gotten more grabby, but that's not Apple's fault either.
(But to be clear: gaming? Hey, that's totally fine. I keep a moderately recent gaming rig, myself. But I don't then turn around and complain about the "tax" of my own choices, because that would be transcendentally dumb.)
And this is why I haven't made any apps for iOS :P
For iOS v10, the iPhone 5, which was released in 2012, is still supported. So no, Apple is not forcing you to purchase a new iPhone every 2.5 years.
Its great that Apple supports the iPhone 5 still, but the user experience on an iPhone 5 is different from an iPhone 7, and its hard to optimize for a device you don't have that is multiple generations newer.
If it runs fine on a iPhone 5, it runs better on an iPhone 7.
You are not writing drivers, you don't need to optimize anything.
Android's computer requirements are more modest, but if you're a serious Android developer you'll need to have at least one of the flagship phones from every major vendor to be sure your stuff runs properly. That can mean dishing out thousands a year for the latest Android device from Samsung, Motorola, and Google itself, normally unlocked so you're not also paying for service you don't need.
If all you're doing is building web sites, maybe you can hack it on a Linux desktop with Windows in a VM. Anything else requires more hardware.
Android has low development requirements, but you can definitely get by without a flagship phone from each of the major vendors, one mid-range device will usually suffice.
Wrt web development, why bother with a Windows VM? It either renders in Firefox & Chrome or it doesn't, and if IE/Safari can't hack it, tough luck, you get the JS free version of my web app for being a steaming pile. I'm not willing to waste resources on dying platforms, that is silly.
Android has also settled to the point where I disagree on the need for multiple flagship devices (most people I know develop on a single device and use something like Device Farm to test more widely, though this doesn't work so well for game development.
You can also use the iPod Touch for iOS development if you don't want to buy an iPhone.
I've thrown it in the back of my pickup and let it slam side to side as I drove all over town, no worse for wear. Speaker fell from 20ft up and busted the screen once, and an angry former friend punched it and broke the last one, but I was able to get a new screen same day and swap it in both instances. Took me two screws and less than 5 minutes to be back up and rolling again.
If I need more than an i5, 8GB ram & an SSD, I've got a new KVM box that I can use as a desktop easily.
Wrt iPod Touch as an iOS development target, that would likely work for some applications, but if your app involves voice or seeing how performance is over cellular, it'd be non-optimal. Same for using an iPhone 5, your missing out on features that newer devices bring to the table, so you can't optimize for them/leverage them.
On another note, the Mac Mini is one of the most neglected product lines out there that Apple is currently selling, akin to their routers before they finally killed them off (which was a mercy kill).
Mac Mini: http://www.macworld.com/article/3154027/macs/what-the-mac-ne...
FWIW I just replaced my 5 year old MacBook Air, but only because I wanted to. It was still working perfectly well - and is now my flatmate's main computer.
But a few years pass, and now it's the Apple Tax? Some people could promote and sell it themselves for less. A lot less? Maybe, maybe not. But most of us could never ever do it for the 30%. Why does everyone think they're the smartest one in the room these days? Odds are, you're really not. Sorry. You're just not.
They are using their monopolistic stance to kill others. But then it's their platform and they can do as they please. They gotta make the $$$ to keep shareholders happy with ever expanding profits.
Welcome to America.
The counter-argument is of course the PC era, where you could sell stuff and give 0% to the manufacturer and OS vendor.
I know this is a common practice but it's not the intended use of the tool and therefore I think it's quite a stretch to say this is a "hostile development towards developers". I understand the frustration, though.
They don't want you to come from a web page that you arrived from after a google search or a facebook ad.
They want you to go to the AppStore app first. And search there and see advertisements there.
[1] http://blog.anylistapp.com/2015/02/open-letter-to-tim-cook-r...
Isn't this, in some ways, good for the consumer? While some legitimate review sites may be impacted, this would imaginably help cut down on the number of illegitimate spammy review sites that are pushing ad-ridden and malware-ish apps.
Not really, one thing is revenue, another thing is profit.
Those spammy sites pay a lot of money to appear on those clickbait tables that appear at the end of articles. And without guarantee that the user (victim) buys anything.
I'd much rather read reviews from people not incentivized to write them, and I'd rather not have to wade through all of the organic results from those that are affiliates to find the ones that are not.
Spammy review sites are also Google's problem, and they do a lot to keep them out of rankings. This won't hurt forums though where people candidly share their feedback on apps.
I'm not clear how people using CPI installs through shady tactics like malware will suddenly rise to prominence. I can't see an honest reviewer who is reviewing for the sake of it (vs. the paltry affiliate commission) saying "yes, I should review this scummy app that forced its way onto my device."
Instead, I think we'll see the rise of reviews from sites that monetize in other ways such as traditional display advertising, email sponsorships, other products, subscriptions, etc. Forums and social will also hopefully have less spam as it becomes less financially viable for the spammers in question.
The App Store developers are now farmers on Apple's domain, and their landlord has figured out they can pay more.
What do you mean by "now"? As far as I can tell, it has always been like that.
This could be because the app store is more stable or reliable as a source of income or from a realization that the Mac App store is the best/only way to present information to a sufficiently wide audience - that wasn't really something developers knew to be true in the earlier years I imagine - maybe the thoughtful ones knew but the rest were still warming up their feet.
What you expect? You're not a big company like Google or Apple that owns the land.
Do you think that, for example, youtubers aren't farmers in the google's farm?
Or that web developers and content creators aren't farmers for the ad networks?
The company has an excess of over $250B in liquid cash but it decides to stiffen its products to revolve around pleasing shareholders, not consumers. Let's not even get started on the disaster of catering to professionals using their MacBook "Pro" or Mac Pro line.
EDIT: It just doesn't bother me: https://imgur.com/a/FHMSy
As a consumer, changing from a plastic headphone-delivery container to a paper one was a positive. Such a large amount of plastic that was never used after delivering the headphones to me and, I'd assume, other customers.
However I think I'm the exception, I understand that most never use the plastic case for regular storage/transport.
No one is having a bad experience because of a paper wrapper and lack of 10 cent cleaning cloth in the box.
They've simply lost their touch of resembling a company that started out of a garage and are looking more like a Walmart superstore of electronics with knowledgeable reps that only care about the quantitative.
Isn't maximizing profit the entire point of a company? Providing a good customer experience is just one way to maximize profit. Apple doesn't care about you, they never did.
fake reviews on the app store: increase app profile and visibility, secondary feeder to your affiliate site via organic; Maybe affiliate site uses app store category top 20 lists to generate its links?
So, the sites promoting Hollywood get to keep the 7%, but the sites promoting Apple's developers get tanked?
To me it says more along the lines of: we know that media gets a lot of marketing through word of mouth, which affiliate links promote, but for apps, they usually spread though being useful, so we don't think we'll loose a lot of money but cutting off the "word of mouth" marketing channel for apps.
The commission cut will only make the problem worse, by lowering the incentives to write about little-known but good apps. Instead, the only apps that get written about will be those where the app creator has a big budget and puts pay-per-install offers on affiliate networks. The competition and steep commissions on these netowrks is such that a typical install will cost a publisher $2-$4, making it unprofitable except possibly in the very long term, and even then only if the app has an extremely aggressive revenue model.
Please stop treating the entertainment industry as a monolithic 'Hollywood' to be hated on, that's neither true nor fair.
Some comments have mentioned the 30% cut that Apple takes. From my point of view, I'd be making $0 without the App Store, so a 30% cut I was aware of from square one doesn't seem unreasonable. Apple have never raised the figure, and I don't think they're likely to in the near future.
Like if most iOS developers were part of the guild, and if Apple made too drastic a cut like this, the guild would disable all of the apps in the store for some number of days until a compromise could be reached between Apple and the guild. Not to single Apple out - we seem to be seeing a lot of these unilateral decisions in tech lately.
Minimise the house take, so to speak.
The volume needed for that to be any sort of business model seems extraordinarily high.
OK maybe it's different with something high volume, perhaps a large volume popular website that focuses on apps... two seconds on Google reveals "Touch Arcade" is a large volume and popular website with such a focus. Well they are saying the commission schedule puts them in "incredibly scary financial territory."
https://toucharcade.com/2017/04/24/apple-slashes-referral-pa...
Maybe there is a larger volume example? I don't know, but that website seems very popular (124,000 twitter followers, high rank on Google) and if they can't make it work, who can?
If it can be easily automated that is not a big deal.
Still requires a lot of volume to make decent money, but maybe not as much as you imagined.
I'd be more than happy for it to be 0%, but you do get a few things for that cut:
* Credit card processing
* Handling refunds (you need to do this manually on refund, just another thing to deal with)
* Some level of app discovery
* Distribution of app and files
My biggest problem with the 30% is that it is now the de-facto amount that other similar services charge developers for everything now (Google Play - there are others too that escape me now).
Amazon charges 15% for most things. eBay is 9%. Etsy is 3.5%.
Software house commission is definitely on the high side. Interesting that Steam, Apple, and Google are all at the same rough figure.
Turns out, they have several other fees on top. So it's not only 3.5%, it's actually $2.4 a year per item. Add to that the credit card fees of minimum 3-4.4% + $0.25 per sale. On top of this, you need to add the shipping fees, currency conversion fees and each platform have their own particular setup.
This all goes to show that you can't just randomly pick fees out like that. The total cost to the user needs to be considered.