Hacker News Reader

Comment by ecshafer | Hacker News Reader

If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold.

For the record I don't even really like Spotify that much, I don't use the app nor am I subscribed. I do like my iphone but Apple is in the wrong here.

View on HN

> Walmart, Costco, et al wish they had a 30% profit on everything the sold.

Is the work the same for them too? They all charge a percentage of sticker price. Oh and none of those stickers say free.

The tension I see is that Apple’s work is correlated with number of developers and number of users. They very much have a long tail of developers and apps with effectively no users or income, but who still cost Apple money. Maybe this is actually covered by the $99/yr fee but maybe not. Then at the other end, the top 0.001% of apps get so much use (downloads, IAP api calls, support requests) that account for the majority of App Store costs. Apple runs a CDN just for apps like facebook and YouTube to make the downloads faster. Support staff will tell you how many people blame Apple for what happens in apps - famously when Snapchat was A/B testing videos Apple support was swamped with FOMO’d teenagers wondering why they couldn’t download the latest update. Apple probably loses money on the facebook app (ignoring downstream revenue).

My point is that Walmart costs are pretty linear with the number of boxes on the shelf, and none of them are “free”. As long as we have free apps and it’s cheap to be a developer, companies will need to over compensate by using higher fees.

Edit: Spotify is the collateral damages caused by Apple needing Snapchat, but also needing to fund that support costs somehow.

Also Spotify - the company in question - has a terrible price structure where they give their first margin to Apple and the rest of their money - and then some - to record labels. That basically means they’ll always lose money to record labels but they also can’t win if they pick a fight with them - just ask Taylor Swift.

I shouldn't be as surprised as I am that people contact apple support for issues in apps.

This would all make sense but why doesn’t Apple get 30% of software subscriptions on MacOS or subscriptions initiated through the Safari browser.

The dev work is the same for building those thing as iOS and Apple fields support questions about those things from naive users like the Snapchat users you described.

If the iOS 30% cut is justified then it makes no sense not to charge say Notion or OpenAI for subscriptions transacted from Safari. If that seems ridiculous then maybe it’s time to question the iOS cut because it’s inconsistent.

Genuinely, the answer is that Apple can’t enforce it. They totally would if they could but website makers don’t sign contracts with the browser companies.

What's the principle you're advocating? That the number of 30% is too high, but 20% would be ok? How are we to decide what number is right? Isn't the principle that parties entering into an agreement voluntarily and with competition get to set their own prices?

Do you follow the same rule you're advocating for? When your app some day makes more than 30% margin on customers revenue, you're going to lower your prices, right?

> Isn't the principle that parties entering into an agreement voluntarily and with competition get to set their own prices?

Yes. Though since this is voluntary in the same way that having internet access is "voluntary", I'm going to say that isn't relevant here. Similarly, there is competition in the same sense that you have a choice of more than 2 parties to vote for.

> How are we to decide what number is right?

Don't know, but I do know that 30% is wrong.

If there really was competition, and this was voluntary, there would be no way they could charge 30%.

I guess developing an app on iOS for sale at a healthy profit margin just became a fundamental human right.

No. Though I _would_ like to live in a world where there is true free market — i.e. not the way capitalism is practised in the U.S.A. When you don't regulate the market, you end up monopolies like Apple. Nobody is able to compete fairly, and we lose out.

I don't know how you came to "I guess developing an app on iOS for sale at a healthy profit margin just became a fundamental human right.".

Apple is not a monopoly, and the court agreed with that.

Maybe you should more carefully examine what exact market you're talking about.

> Isn't the principle that parties entering into an agreement voluntarily and with competition get to set their own prices?

The only change of pricing ever made within a decade was made because of a threat of an anti-trust lawsuit and copied word for word by Google almost instantly after that.

Safe to say that the competition is dead.

I think your understanding of competition is a little warped or flawed. The mark of competition isn't that a company's price changed. It's that other people/companies were free to enter the market.

You are absolutely free to go and develop your own phone ecosystem and app store, or go provide your app development services elsewhere. That is competition. And that is what the court has found.

Competition is not that I need to give you more shelf space or a better price for selling something on my marketplace.

How about allowing competition and different app stores? Or hell, allowing someone to download an app from their website and run it like we do on desktop.

Apple chooses not to do that, to be able to give a controlled experience, to be able to review apps and screen them, and to, yes, benefit from the pricing power that allows them.

They don't have to allow more competition in their own store. There are other stores you can sell apps through.

> If I write an app for the app store and sell it for $10, apple gets $3.

Keep in mind that, for the vast majority of developers, Apple gets $1.50.

Apple gets $3 only if/when you hit $1 million in annual App Store earnings.

> Walmart, Costco, et al wish they had a 30% profit on everything the sold.

You should see the markup these retailers charge on accessories. If 30% revenue upsets you then 300% on HDMI cables, USB cables, game accessories is going to blow your mind.

Indeed, but that's why you can buy those items at different stores. With Apple, not so much.

30% is not exorbitant when comparing to say, Walmart, who purchase products wholesale for up to 50% less then retail pricing (depending on the product category).

In fact, when 30% was announced, it was considered generous compared to what developers were paying Best Buy, CompUSA, mobile carriers, etc before that.

Physical store comparison makes no sense. To stock your product it actually takes up physical space in a store that is limited and could be used to sell something else, if it doesn’t sell they have to pay to destroy it or send it back to you.

I understand storing/downloading binaries isn’t free. But it’s nowhere near the same logistically.

Sure, but when the 30% was announced most software for the Mac was purchased on the developer's website with a credit card. Not bought at retail store in a cardboard box.

Margins on digital goods are not bound by the same rules of economics as margins for physical retail sales.

To be precise it is 30% revenue.

They have costs. And they allow free apps! Every free app that gets downloads and doesn’t monetize at all is pure cost for them.

> To be precise it is 30% revenue.

15% until you hit $1M in annual App Store revenues. Most developers will only ever pay 15%.

Apple charges 99$ per year to publish apps.

Apple has ads in the App Store.

I am not asking for a PhD thesis. I am asking for five minutes of middle school level googling.

The already cheap cost of distributing data gets cheaper by the day. For an entity like Apple, with its vast economies of scale, distribution costs are negligible.

What is the percentage or part that spotify takes from the songs we listen to? I mean, not what they pay eventually to the artists, but before that.

Aren't you free to use Android instead?

Just potentially throw away hundreds or thousands of dollars in purchases for apps/IAPs and related things! FFS there isn't even a way to watch videos purchased on iTunes on Android so if I want to watch my copy of Futurama on a phone, it has to be an iPhone ( and for those in the U.S, "Movies Anywhere" doesn't exist outside it and I have no idea if that even applies to TV).

Which has the exact same pricing structure?

Which suggests it is not in fact an Apple problem.

Sort of. One can use an alternate store on Android. Otherwise I would see google in the same boat. Apple could allow such side-loading but I kinda get the feeling they don't want to take the revenue hit. (I know arguments appealing to user security; it's hard to ignore the convenience of these arguments with regard to them retaining revenue.)

Well no, it's a duopoly problem.

Reply on news.ycombinator.com