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Comment by nerdjon | Hacker News Reader

Then let's focus on lowering that percent instead of making the situation worse for consumers.

However to be clear, that percent is in the same area that game consoles and I believe Steam (someone correct me?) charge. And we accept that. When the 30% rule for the App Store came down, our smart phones were basically the same as a game console. Most people did not expect these devices to become the central part of all of our lives. At least not in this way.

Now that it has, than sure the percent needs to be lowered and I am not arguing that (I said in another comment the 30% is worth it for me personally but doesn't mean I am ok with it).

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If we want to make the situation better for customers then companies like Apple and Google should provide subscription management/payment API for IAPs for free to developers so developers are incentivized to use the centralized platform. Customers can manage and cancel payments through that centralized platform. The only reason developers come up with these roundabout methods for payment is because of the massive fees that Google and Apple have.

Steam isn't a monopoly like Apple and Google are with their respective marketplaces so it doesn't make sense to compare the two. If I want to publish or play a game there are a lot of different ways to do so that don't involve Steam.

Well even with all the available competition most developers seem to consider the 30% fee on Steam fair enough to host their games there. So maybe that 15/30% is not as ‘massive’ as one might think, especially considering that the app store model was massive improvement over what existed before them. Not that I’m a huge fan of closed ecosystems in general, but I’m not sure the government should dictate what sort of software features manufacturers should implement on their devices. Especially considering that most consumers don’t really value the ability to freely install any software they want on their devices and seem to be fine with the closed garden approach.

Governments regulate all sorts of features on all sorts of products: building codes, electrical codes, car mpg requirements, how planes work, tax requirements, how corporations are allowed to function, the rights of citizens, ...

Why should software get a free pass?

Because all of those things are about externalities?

Software has externalities.

> Then let's focus on lowering that percent instead of making the situation worse for consumers.

The only viable path towards finding a fair price for this service (apparently deemed essential and basically a steal by Apple and Google, but worth less than nothing by many app developers) would seem to be competition.

Why not offer both, explicitly allowing for different prices, special deals only for non-store subscriptions etc.?

Or regulation.

In Australia, the Reserve Bank regulates interchange fees and requires the end user to be made aware of card processing fees which can't exceed a percentage/value of the transaction.

Similar regulation applies in the EU.

There's no reason why Google/Apple/etc stores can't be similarly regulated.

That's possible too, but I believe there's much more uncertainty about the fair market value of app store compared to out-of-band subscriptions.

Of course it would also be possible to do both, i.e. to mandate either a fixed rate or alternatively allowing out-of-band payments.

Steam lets developers sell keys without the tax using their own systems. In addition to this you are allowed to list your games on other storefronts for PC.

Do you know if there is any revenue sharing happening in the background in that model?

AFAIK they do it without revenue sharing because it keeps customers using steam (running their client, seeing their ads, viewing their store, and being tied to the steam ecosystem). They don't need to turn a profit on the tiny, irrelevant volume of off-site sales.

As already already been said there is no revenue sharing.

Though there is fair-use policy that Steam users shouldn't be given worse deal. E.g you're not allowed to only run 30%-off discount exclusively on your store without offering same discount for Steam store users sometime later.

So, Spotify also reportedly takes 30% of the revenue before paying the creators.

This isn't an Apple/Google/Spotify thing, it's a service thing.

I don't understand this argument. Spotify is a service connecting listeners to the artists and infrastructure and development of said service has its cost whereas Google/Apple charge fees for the app store which Spotify subscription does not require.

So, Spotify is allowed to charge 30% for access to the market it has created, but Google and Apple are not?

An app store costs money too - the creation and maintenance of the billing platform/API, bandwidth, human curation, cross-device storage of saved configurations, user acquisition, etc.

What makes musicians so different from software developers that it's perfectly acceptable for Spotify to take such a large share of the revenue their music has earned?

(To make my own position clear, I don't think any of them deserve 30%)

The problem with this line of argumentation is - why single out phone OS providers as the only link in the very long supply chain that deserves a cut?

Why not internet provider? Verizon's infrastructure costs money, too - should they also be eligible for a 30% tax?

The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those

What about the phone manufacturer - Xiaomi or Samsung would definitely not reject their fair share

None of this would happen without electricity - power transmission companies deserve a portion

There really isn't a coherent moral argument in favor of the current status quo - it's simply about market power, nothing else

My point is: Spotify's 30% is not a fair cut. It's no more fair a cut as the Apple/Google/et.al. cut from developers.

Since HN is a lot more familiar with the cuts the stores take out of developers earnings, it makes for a nice point of comparison.

Spotify has very low margins so it's hard to say 30% isn't fair. Any lower they'd have trouble paying their costs. Streaming in general helped the music industry revenue grow. You can say Spotify might be bad at business for not making much money on a 30% cut, but overall they seem to be serving decent value for money to the copyright holders and customers. Before streaming, the overhead was a lot higher, with the retail distribution chain taking a comparable cut.

> Verizon's infrastructure costs money, too - should they also be eligible for a 30% tax?

> The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those

This is a novel idea. Verizon and Cisco could charge a price above their cost. They could call this a "profit margin". You might be on to something here.

Because those other companies are paid for their service directly. You don’t directly pay for the app stores.

Developers already pay Apple $100 a year to publish apps on the App Store. Google charges a fee for access to the Play Store, as well.

Because Apple and a Google created a market where there was none. It basically impossible to make money from selling mobile apps to consumers before them.

Had Verizon singlehandedly created the internet and had no real competitors they might have been able to tax it’s usage. Thank God that did not happen, though…

I am fine with them charging whatever they want, as long as they don't prevent competitors from opening alternative markets. The problem is the monopoly, not the price.

If they are a monopoly (or roughly equivalent) then they can be regulated.

Access to User, and Specifically Mobile Apps users, are split between Apple "App Store" and Google "Play Store".

Access to listener, or even if you limit to Mobile listener, are not bound to Spotify.

Apple/Google app stores are a service connecting users to app creators, and all the points about Spotify also apply to Apple and Google. In the case of Apple, they literally created the entire market, from the CPUs all the way up.

If 30% is too much, publish your content as a web app. If you want to play in the walled garden, pay the cover charge.

I think the biggest difference is that Spotify isn't a monopoly at the end of the day - it's a popular service. A lot of people still use different methods to listen to music like YouTube, iTunes, bandcamp and a plethora of others. If you, as a band, want to make money on your music you aren't required to do business through spotify, it's a choice that most people make because it's free money.

On the other hand if you want to write an app for a mobile device you're, realistically, either going to write it for Android or iOS. On the Android side you can distribute it as an apk assuming you can handle the cost of writing self-updating code - but on the iOS side you're hooped. Mobile devices are a part of modern life, the fact that one company dominates the market (and another company takes the remainder) leaves the market extremely unhealthy.

Google Play, which charges 30%, is not a monopoly either. Nor is Steam. The Microsoft/Sony/Nintendo scene is a bit less clear, but they charge 30% too.

Musicians have about the same freedom in this respect as any application developer, practically speaking. AKA, they're just as exploited (if not moreso, see other comments about how musicians are also being screwed over by studios).

Yep. One major difference is that with Google/Apple (and also Steam I believe), app makers can at least choose the price of their apps and services themselves, and they know how many units they sell. If Google/Apple are charging you 30%, just increase your price.

With Spotify, however, musicians can't choose how much their music is worth, and the payment of royalties is also not exactly transparent.

But the very concept of being an mobile app developer was brought to life by Apple, and later Google. 15 years ago, you could not really be a pro app dev. Now, you can, but with a 30% cut. You are strictly better off. And if you think the 30% is too much, do something else.

These companies created something that grew into a foundational element of modern life in about a decade. That’s amazing and should be awarded with trillions of dollars. The market should reward this corporate behaviour extremely well, and punish the IBMs and GEs and Boeings harshly.

As an aside, Apple et al are also not resting on their laurels, and keep pushing the envelope. My 2 y.o. + iPhone is literally better than on the day I bought it. I’m more than happy to pay more for apps / subs to get this.

The developer who made a useful website with a link to their paypal has been mostly obsoleted by app developers. Small tool development isn't a novel creation of modern mobile devices - it's just the packaging of these into bespoke binaries that have highly regulated distribution channels. A cynical person might assume that part of the reason Apple hated flash so much is that it threatened to stunt the upcoming app market. To lend some credence to this position, things like Kofi have taken off in recent (on my scale) years as HTML5 gained enough traction to essentially duplicate the functionality of flash without any of the security issues - I personally think this is what led to the feature to save websites as apps on iOS and that is something that doesn't threaten Apple much with their network advantage, but has the potential to cut into their revenue if it gets popular enough.

The problem is when that innovative company becomes the new IBM/GE/Oracle and starts treating every client as nothing else but a revenue stream instead of focusing on creating new and innovative products. I don’t think Apple/Google are there yet but they are clearly moving into that direction.

When that happens they die - does anyone care what IBM, GE, or Oracle do? All their customers are working to get off their platforms.

Apple does not have a monopoly on software distribution, nor on making computers.

Apple makes very popular computers in their iPhones, but other phones, tablets, laptops, gaming consoles, etc all do the same stuff.

Eg. When your phone is broken, you can still call people over your laptop, and you can access an internet browser from basically anything

Apple and Google are responsible for 99% of all mobile software distribution[1]. They both monopolize the mobile app distribution market, as well as the mobile app payment markets.

Both firms leveraged their dominance in the mobile OS market to dominate the mobile app distribution market, and then they leveraged their dominance in the mobile app distribution market to dominate the mobile app payments market.

When talking about monopolies, the working definition is firms that have significant and durable market power such that they can set prices and exclude competitors[2]. Both Apple and Google fit that bill for the mobile OS, app distribution and payments markets. Whether you use the words monopoly, duopoly or cartel to describe them doesn't really matter, because all of those terms are accurate descriptors.

[1] https://www.businessofapps.com/data/app-revenues/

[2] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

And the Play Store/App Store is a service connecting mobile users to apps and they provide an infrastructure to download apps, developer tools, etc.

What’s the difference?

>Then let's focus on lowering that percent

I dont think that is the correct way of looking at it. As you stated at the end, you think it is worth it.

The question is value delivery. Not percentage. I could argue in cases where even 90% is acceptable. The question is how much value is delivered and how much of those 90% are used, or was it pure profits, i.e rent seeking. For some categories of Apps, 30% doesn't make sense.

> let's focus on lowering that percent

A noble position but it seems to have been going other way unfortunately. Not sure how you would do that … further regulation or introducing artificial competition in the market. I think the most pro-business approach is to quash the monopoly and open up the market.

Going the other way? The fee started at 30% and has only gone down from there (ex. 15% for subs active > 1 yr). I believe the fees will fragment further and give developers the option of paying less but receiving less too. For example: You can pay 5% less but you will only show up in app store search results. Or something to this effect. We will never get blanket 30% take rates again. It was a simplification when the market was early

You can only lower the percent with at least the credible threat of competition. Would you pay $13 for a $10 service for the privilege of doing it through the play store?

Likewise would you be equally OK if the dollar figures involved were much larger for example your cable subscription?

> And we accept that.

You do. I certainly don’t. And you’re just doing that because it’s the status quo, not out of any analysis.

> than sure the percent needs to be lowered and I am not arguing that

Yes to 0% and any percentage of revenue should be made illegal. Google and Apple can charge whatever fixed values they want or even charge based on a wide variety of vectors but a % of revenue should be explicitly illegal that kind of blatant rent seeking is a quintessential example of something the government needs to stamp out.

Apple and Google are providing a service, so why exactly should they not get a cut of revenue?

To be clear, 30% is too much, but aside from payment handling and taking on fraud risk as a result of that (3-4% is generally the industry standard for card not present transactions), they provide a subscription management/payment API for IAPs, as well as app packaging and distribution, reviews, etc.

That certainly is worth more than 0%.

Isn't the fraud risk still generally born by credit card companies at the end of the day?

I think we can legitimately talk about the costs of maintaining the app-store as a marketplace, and we can talk about the future costs of providing updates free of charge in perpetuity and orchestrating the infrastructure to host those various downloads... but that's about where their service offering ends. App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).

I'd question whether Apple and Google are really providing a service or just exploiting a captive market.

> Isn't the fraud risk still generally born by credit card companies at the end of the day?

No – for online/e-commerce payments, the liability is generally with the merchant, not the card issuing bank.

If it was about risk/fraud, debit cards would be an economic non-starter, as their interchange is capped to 0.05% + 0.24$ for almost all issuers.

EU issuers also get by (probably not too comfortably so, but still) with the recently introduced interchange cap of 0.3%/0.2%.

> Isn't the fraud risk still generally born by credit card companies at the end of the day?

Absolutely not, the bank initiates a chargeback, which the payment processing network directs back to the one who handled the payments. They generally are then tasked with "proving" the purchase is authorized. Enough chargebacks, even fraudulent ones, and the payment provider cuts ties with you (although, at Google scale, I don't see this happening) as you're too great a risk.

> App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).

The implementation being a joke doesn't mean it's not a service with COGS that need to be accounted for.

Nope. All fraud and chargebacks go back to the merchant/seller. The processor will immediately hold those funds in question pending a dispute or resolution around the fraud or chargeback.

On top of that there's a hefty fee for any fraud or chargeback that's not refundable even if it's resolved in your favor. Usually in the range of $40 per instance.

Apple and Google (and others) also allow loading credit using physical cards that you purchase at retail stores. I believe the stores get around a 5-10% margin on these, i.e. you buy a $100 gift card, and the store only pays Apple/Google $90-95.

There is a definite cost to all these so 0% is unreasonable. Epic is trying to be the "good" games distribution store and they reportedly take a 12% cut. Something around there, maybe down to 10% would be a reasonable place for Apple/Google to be.

Unfortunately Epic can't honestly comment on what cut they're taking while their storefront loses immense amounts of money[1] - I agree that a lower percentage is probably a lot more reasonable but I don't think EGS can serve as that example.

1. https://www.pcgamer.com/epic-has-sunk-dollar500m-into-the-ep...

> can't honestly comment on

Of course they can, but we can acknowledge it's a moving target. I'm at least confident it will be better than Steam.

> loses immense amounts of money

This is the same for any growth business/product where you front-load marketing and business development costs, and is not an indicator of future trends.

Losing money at first is how almost everything works.

I know that Silicon Valley is a hell of a drug but starting a business by burning two hundred million dollars a year that you haven't yet earned is not how nearly anything works. It only works for tech startups and it's bizarre since tech doesn't actually cost that much money.

I'm pretty sure it loses money because of all the giveaways and coupons they pay for, so you'd have to take those out of the picture before doing the math for a proper comparison.

No, industry standard for online credit card transactions is 1-1.5% in the EU and 2.5-3% in the US. Even back in 2008 before 3d secure was common and before the EU regilations we as a tiny online casino had 2.5% fees.

30% is between 10 and 20 times a reasonable fee.

Doesn't this ignore the reality that a service with many of subscribers puts dramatically more strain on marketplace systems than a service with only a few subscribers?

For example, a smalltime dev isn't going to see hardly any refunds, but a dev on the scale of Epic Games is going to be seeing something on the order of tens or hundreds per minute. Should that not be accounted for?

That said, this could be accomplished with tiered fixed fees. An indie dev would probably land in a low rung where costs are tiny, where a triple-A game studio would get charged substantially more.

Apple provides software updates for devices for years after they been paid for. Apple and google both providedthe CDN bandwidth for incredibly popular “free” software for which they do not receive a penny.

The revenue from paid services covers that support.

Would I prefer the cut was lower, but at the same time the 15% (for most)-30% cut seems to match every other platform

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