Apple is actually asking for 100% of SaaS mobile revenue
whydoeseverythingsuck.com
whydoeseverythingsuck.com
I'm not normally the self-promoting or blogging type, but since I'm an enthusiastic user of many of these iOS services (Rdio, Netflix, Audible, The Economist...), I expounded a little bit here: http://www.thetechbastard.com/post/3326771970/a-hypothetical...
For a web-based SaaS, I could see them doing something like "Web-only access including mobile web, $10/mo" and "Web + native mobile/API access: $15/mo" -- then only offer the latter option in-app.
I suppose you could try to classify Android and iOS API access differently, but I suspect that might be a little over the line in terms of trying to slip it through the app store review process.
I do still wonder how third party apps to hit a subscription API are going to work, though. I suppose a lot of those will be for-pay so Apple gets their vig from that anyway, but it's always possible someone will decide to release a free one...
This would work for apps where the mobile UI is only an adjunct for doing real work on the desktop version.
All of my apps are planned to be free, ad-supported, with in-app purchases.
Wonder if there's also another way to get around it, maybe by just jacking up the rate 43% everywhere to please Apple, but maybe giving some other type of promotion (loyalty points, coupons, free stuff) for people that don't use iOS. Maybe you could give 3 months free or something as a credit for anyone who doesn't use iOS?
Given the level of detail Apple has provided, it sounds like either option could work.
Edit: changed 30% to 43%
And why exactly would Apple choose to allow this?
But in the more general case, this is where it would have been great to have somebody with a business degree. Because they probably know the answer to your question.
I'm not sure what "open alternative" you are referring to. My website -- built on "open" everything, other than the subscription cost -- is doing fine. I would like to provide a native IOS app to access that content. But I can't accept a 30% revenue cut.
I think the OP was referring to Android.
On the flip side, apple created a platform. That platform is where apple wants a piece of the pie of every transaction period. Don't like it? Don't make apps for it. Nobody is holding a gun to any developer's head forcing them to make iPhone/iPad apps. If enough developers turn away, apple will react appropriately. So quit complaining and pull your apps from their store. "But that will hurt my profits" well then quit whining and just accept what apple has to give you. If enough great developers move to Android, and make insanely awesome android apps that everyone wants a piece of, then iOS has some major competition.
I'm just saying, I'm not Amazon. I'm a content company that sells content to users in print form, and on the web (primarily on the web these days). Customers can only get to my content if they subscribe. Most of them get to that content via our website. Pretend I'm the Wall Street Journal (but I'm not).
I'd like to make a IOS app to allow my users to get to their extremely expensive content in a native application, but now that I have to pay a 30% tithe to Apple, I won't do that. Now I'll make a web based version which will suck more, and we'll let that ride until Apple pulls that out from under us too.
There's a new ecosystem waiting to be born here.
My read is that Apple is looking ahead at a future full of small/startup ebook publishers.
At the local iPhone dev meetup, I met this college kid with a modest little Catholic prayers and affirmations app. It's basically the electronic equivalent of a pamphlet. He doesn't put any effort into marketing it. It makes $150/month. Granted, that's a small amount, but a very tiny amount of investment went into that small return. With a little effort, I bet there's a lot of independent authors who could make a living publishing this way, and that the big players in ebooks and publishing are actually in the way of this ecosystem coming into being.
If I was a small/startup, I would happily give over some percentage -- possibly even 30% -- of my revenue to Apple in order to avoid building my own payment system. The App store is really nice, and if they want to compete on the merits of the store, then that's great.
But Apple isn't doing that. They are using the power of their marketshare to force publishers into paying a 30% tithe to Apple just to put an application on the device. It doesn't matter if you are Amazon or the New York Times and already have your own subscription system -- you have to eat the 30% cut.
That's what bothers me about this. If Apple wants to compete by providing a more cost effective point of sale system, then that's great; everyone wins. But they are abusing a monopoly position to force publishers into their system, and in that game, Apple is the only winner.
Then don't sell on the iOS stores. Simple solution. Unless you now want to complain about all the 70% revenue that you will be missing.
From everything I have ever read about iTunes and App stores, the 30% cut isn't profitable for Apple. It covers operating costs of the stores. Could someone point to me the place where Apple is making an actual profit on this?
Two solutions present themself. Solution 1: Give user a separate feature for "Mobile Access" only stick that on the appstore.
Solution 2: Apple may grow wise to solution 1, in which case, make an API to your product, then have a 3rd party developer legally unrelated to your first company make a native product which accesses your product.
Apple has no relation to your real product, however you can offer a free subscription app to your service as it's unrelated an just using an API (a la dropbox or freshbooks).
Wow, a huge post based on this flawed understanding. It isn't 30% of every customer that accesses the mobile app, it's 30% of each client that signs up via the mobile app.
The rules are pretty simple. If you offer subscription service purchasing elsewhere, like your website, you also must offer it in your app via in-app purchase. If a person finds your service by installing the mobile app and then decides to sign up, using the now required in-app purchase ability, Apple gets 30%.
In other words, such a business would be required to offer an option to hand off all of its profit to Apple, should it choose to offer a native iOS app. Apple gets a better experience for its customers, and the third party gets more customers it gets zero profit from. I can understand if such a business would find this unacceptable. (And look at it from a user's perspective: if given two options, one-click billing through Apple or time-consuming credit card entry through a web portal, which do you suppose the majority of users will take?)
So how exactly is that understanding flawed?
Edit: More details added, and some wording correction.
> I can understand if such a business would find this unacceptable.
Let's say you distribute a FREE app in the App Store and it requires a subscription at $10.00 per month (through Apple) but you provide a handy button labeled "Get subscription for $8.00 per month" that goes to your website.
Apple doesn't want this. It costs Apple to distribute (and market, and support) your App. Apple gets nothing. And now you are selling your profitable product via an inferior user experience AND making anyone who actually uses Apple's service look like a chump.
Gee, why doesn't Apple allow this?
Give me a break. You used the weasel word "costs" which is technically truthful, because it is greater than zero. But it is not material, IMHO.
Because developers PAY $100/developer to get on the Apple developer program. They spend their own money/time to develop the app. And sell it to a user who's PAID for his phone and net access. Apple is serving as a glorified download.com (which btw also does reviews and ratings for free).
Apple "markets" apps: again a weasel word, since in your universe listing your app in their directory is "marketing". Ditto "support" (they test your app cursorily to reject things).
It is the same value other market places bring. People sell on eBay because they know there are eyeballs there. Same with people who sell on Amazon. eBay and Amazon market their platforms to bring that value. No one creates their own webpage when they want to sell some stuff and hope people find it through Google. They go to where the hard part, bringing people to look, has already been done.
If Apple is eating your businesses margins, and you gain nothing from operating on their platform, then what's the point? "I get no profit from my customer, and this may even be costing me money because I'll never recover the cost of iOS app development and maintenance, but at least I got to pay $100 for the privilege of being app #823,465".
What is this sissy attitude?
It's hard to make a living it's hard to make money. You are no paying for the privilege you are paying for access to paying customers.
If you want freedom why not choose Android?
Then you don't have to pay anything and you get all the profit.
Only problem of course is that no one on Android is actually paying for their apps.
You are paying for access to a platform where many people actually pay for their apps. That is worth something and it is hopefully worth much much more than what apple charges.
If it was so easy to get this kind of distribution, then why don't you just develop an Android app and put it up on your website and watch the millions of users roll in? Oh wait, there aren't hundreds of millions of customers searching for apps on your website?
A user base, especially one that spends more $ per person that another, is extremely valuable. Historically this kind of access to a large distribution platform was just not available to mere mortals. I remember just 4-5 years ago, large companies would have to pay hundreds of thousands of dollars just to have their app listed on the Vodafone Live app store, and then have 50% taken as commission for the privilege.
And for content, many Telco's just didn't allow it...because they had their own content subscriptions they were trying to sell to their users..so forget 30%, you simply couldn't sell your content subscription.
Apple's app store, and a 30% cut is starting to look fair compared to the above.
That's about 80% of the entries from this blog that make it on the front page of HN. It's a great blog for gauging general developer perception and dissatisfaction, but that doesn't mean that the opinions expressed are actually true. (Signals all stations to prepare for downvotes.)
Citation?
Ignoring the original Mac OS (and all the OS version up to 9) is the only way to say they ripped off Konfabulator. Desk Accessories finally make an appearance in OS X after missing since OS 9 and it is a ripoff of Konfabulator?
[edit upon downvote: I don't mean it shouldn't happen, I just thought it was funny to suddenly be transported back to that time; hadn't even thought of the app nor the arguments around it in years.]
I could be in a bad mood just because this foolish policy probably destroyed any hope of micro-payments on iOS devices.
Here are a couple of links I found with a quick googling:
http://www.kmfms.com/whatsbad.html
http://web.archive.org/web/20071215231524/http://www.vcnet.c...
The second tries to document every company destroyed by MS and how.
I think someone should directly ask them what their policy is on SaaS subscriptions, because you could easily make a case either way from the press release.
But I agree with the article, if Apple's intent is to get into the SaaS revenue stream, it's a major issue. I have clients who have been considering moving to platforms that include mobile apps on iOS devices, and that 30% Apple iTunes cut will get passed right on to them. Not to mention the hassle of having to create and manage purchases for individual iTunes accounts for each device.
HP has a great opportunity here to loudly announce that they are going to be SaaS friendly, and I think this could be the turning point on iOS's market share.
Anyway, Apple clearly wants this to apply to XaaS, where X = anything and S = subscription. Or by this time next year, Xaa$.
Apple does not demand 30% of out-of-app sales, just that out-of-app sales are not cheaper than in-app sales.
And as far as I read the release, SaaS is not concerned. Unless you're using Apples subscription mechanism, you're not offering a subscription in-app. So if you simply use a web API, that's not a subscription.
Can Apple change that at any time? Yes. Closed platforms take power from developers and give it to the platform vendor - in exchange for (often) a bigger pie to get your slice from.
Is the OP yet another pageview troll? Yes. Posting blatantly false information in the headline seems to indicate that.
By this rule, all apps that offer subscriptions must additionally implement Apple's subscription mechanism.
This is what the OP (and everyone else) is reacting to.
So unless you make the case that SaaS is content, the post is baseless.
The post is absolutely not baseless. Apple hasn't made their intentions clear regarding SaaS subscriptions, and it is likely that they want that money as well.
I'm surprised "making shit up" qualifies as news on HN these days.
SaaS was an angle I hadn't thought of in regard to Apple's new policies, and their decisions there have important implications. I'm glad I saw this article.
It might be a decent argument, if he hadn't pulled that hypothesized number out of his left nostril.
In other words, "I made up random number A. Then I made up random item B. Together, they prove <really outlandish claim that will drive visitors to my blog, but has no connection to reality whatsoever>." I hear AOL is looking for writers.
If you purchase your content on Amazon's website, you can play it on an iOS device and Apple doesn't expect a cent.
It's a bit more complicated than Apple getting 30% of all your sales, but it's also more complicated than Apple just letting the iOS customers choose how to buy. You'll lose some random part of that 30% depending on your customers buying habits.
Now Apple says that (1) he has to sell the pretzels inside the park if he also sells them outside the park, (2) he has to charge the same price, (3) Apple muscles him for 30% of his action on sales inside the park, and (4) he can't have pretzels from outside the park delivered to you in the park. You actually can buy pretzels by phone from his store in the park, or with your web browser, but he can't put the link to his pretzel store or the phone number of his pretzel store on the pretzel tongs he gives away.
If pretzel guy can't make a profit, he leaves. If enough vendors leave, the park is less attractive and fewer people buy tickets.
So yeah, maybe as a customer you won't be happy if pretzel guy can't figure out how to make money at Apple's expense. And yeah, maybe as a developer you aren't happy if you can't figure out how to exploit Apple's customers without Apple exploiting you. And maybe everybody goes somewhere else.
Seems like the free market at work. So what's the problem here? You have choices, exercise your right to choose.
That's the point that you're missing. If you offer subscriptions or purchases out-of-app for use by the app, You are REQUIRED to offer subscriptions or purchases in-app as well for the same price and minus Apple's 30% cut.
Section 11.13 of the approval guidelines read: "Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions."
So the whole question comes down to whether SAAS counts as a subscription, content, or otherwise.
Yes, you can probably bend it to mean anything, but as is, this really doesn't seem to include SaaS.
Today, it doesn't, but based on Apple's ever expanding scope, that's not a bet I'm willing to make. We're sticking to HTML5 web apps and making sure they run on Android browsers as well.
I'm not saying "this could never happen". I'm saying "the OP is making stuff up to get page views"
Apple can charge 30% for apps and content because the ENTIRE product is being delivered on iOS. They can't charge that cut for SaaS because only a subset of the product is being delivered.
Could Apple attempt to take a cut from SaaS products if a user signed up from within your app IN THE FUTURE...sure, but I doubt they'd be stupid enough to try for 30%. Should Apple be compensated in some way for hosting/downloading your mobile app for your SaaS backend...maybe, and I'd be prepared to pay some commission if it drove signups, it might just be a tad lower than 30% though.
Yet here we are today, wondering just how the hell everyone is going to carve 30% out of their business model. Anyone who thinks that task is anything even approaching trivial has never run a business.
It would be unprecedented if they tried to charge 30% merely for access from your iOS device to a SaaS app. I think there is a pretty big difference.
Lastly, carving 30% out from your list price is pretty common if you're the wholesaler, manufacturer or orignal producer. For most of those scenarios they'll often be able to afford much more than 30%. It's the middlemen and distributors that get really hosed...and unfortunately services that do provide value but licence their content from others are collateral damage.
This. iOS remains, by the numbers, one of the worst places for freelance developers to spend their time. Profits are diminutive in the average case, and app store policies impose additional risks that have forced entire shops to leave the iOS ecosystem or change how they do business inside it.
Apple is getting greedy and capricious, and when this happens no good will come from it.
If it's true that in (1), they have to offer an IAP-way for users to purchase a subscription, what does that say about (2)? The third-party developer has no way of adding IAP to their app (it's not their company and the API doesn't expose such functionality).
Under these (more and more crazy sounding) rules, is (2) still required to pay the 30%? And given that it's impossible for (2) to have an IAP subscription option, maybe (2) isn't even allowed to exist? But if it is, then the service company could just pay 3rd-party developers to write apps for their service to add value for their subscribers without having to deal with the 30% stuff.
It's not technically always feasible, but most of the time it is.
Because of this, offering an iOS app becomes a loss leader. No, 100% of your user base will not sign up through iOS, but the 30% commission to Apple will dilute your margins on non-iOS sales. The net effect is that any company who operates a direct sales model will see a dilution of their margins, and must bet on the fact that in-app subscriptions will compensate for this in increased sales. There are many scenarios where this makes absolutely no sense.
I see a burgeoning new field: "reverse SEO" for SaaS mobile apps.
The article also fails to understand that it is not taking cut of revenue from existing subscribers: only those that sign up through an iOS application.
I'm not meaning to be cute or trite -- I'm genuinely confused from the press release which category of apps will fall under these new rules. Which is why we'll need to wait for the legalese in the iOS developer terms to understand what this _really_ means.
Here is "content" being used to mean "everything that's in an app":
"The Application Provider of each Third-Party Product is solely responsible for that Third-Party Product, the content therein, any warranties to the extent that such warranties have not been disclaimed, and any claims that you or any other party may have relating to that Third-Party Product."
And here is the section on subscriptions, in which content is, in my opinion, not well defined:
"Certain App Store Products may include functionality that enables you to purchase content on a subscription basis (“Paid Subscriptions”)."
I just scanned all 72 mentions of the word 'content' and couldn't find the definition you're alluding to.
And lo & behold, I give you Section 11.13: "Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app"... yadda, yadda.
Sounds like a definition of "content" to me...
Content subscriptions are timed releases of packaged, curated content pushed to you on a regular schedule.
Saas is a portal that lets you access data, information and tools on an ad hoc basis.
If you really were lucky they'd decide to let you on but would take a 50/50 or 60/40 revenue share.
30% is starting to seem not so bad...compared to that at least.
So anyone who purchased a recurring subscription via the AppStore would be lost (would have to be prompted to re-purchase) should you leave the AppStore?
If so, then iOS definitely doesn't seem like a good investment for a SaaS business.
If the SaaS provider isn't the supplier of the app, but they fully endorse (and promote) its use, does that create a loophole?