Hacker News Reader

Comment by maxsilver | Hacker News Reader

Something like ~6% feels "fair" (where "fair" means, is equal to the approximate value provided).

Apple isn't really incurring any costs for this. They don't make any of the content, they don't write any of the software, they do host the 'applications', but they only deliver the tiniest parts of the app (they host a small binary, but they aren't hosting the videos on Netflix or YouTube, for example, or the major assets in an MMO game or such) and a lot of the labor they do "provide" isn't necessarily valuable (their "review" of the apps, for example).

The 30% figure seems to be pulled from gaming console markets, but it was never really justified over there either, and the previous economics that made it work (like subsidized hardware) never applied to Apple's ecosystem. (iPads aren't like, $99 each, and priced at that point, with the expectation that Apple will 'make it up' via the 30% tax on app store sales, the way consoles once were)

View on HN

The value being fought over here is distribution.

For Epic this is almost entirely about Fortnite, where they're making ~$5 billion a year selling skins and emotes to children while not being in App Store or Google Play.

Epic wants the millions of users and IAP they would get by being on these platforms but they want to pay 0% to the platforms for it.

Which is completely fair because Apple does not "own" those users.

If I want to run a television ad during the Super Bowl it should cost $0 because the network doesn't own the audience, right?

Of course not. That's why the ask has always been a percentage reflecting the economic value to the developer created by the platform, which is surely non-zero.

That's a specious example. If I'm showing your Super Bowl ad, I can't show anyone else's at the same time. Having one app available by a means doesn't make others unavailable.

And even then - the Super Bowl ad pricing is directly correlated to the number of users that ad will be delivered to.

All of that becomes even more emphasized if there's an alternate app store experience.

the Super Bowl ad pricing is directly correlated to the number of users that ad will be delivered to

Correct. The value is in the audience reach, not the opportunity cost of not being able to show another ad.

Epic stands to make billions from the audience reach of these platforms, but when it comes to paying for that reach it somehow computes the value to be zero. That's some Hollywood accounting.

"Hollywood Accounting" refers to exaggerating losses on items so as to avoid paying dues on profits and is completely irrelevant to this situation.

The "App Store" is a platform that offers reach in distribution channels. The Epic Games store is a platform that offers reach in distribution channels. The iphone is not. If you buy software through the epic games store, then apple gets nothing but a middle finger.

Do we not understand metaphor here? Revenue exists when paying ourselves but disappears when we owe a cut to others. Hollywood Accounting.

Epic would not be fighting so hard to get back on iOS and Android if they did not expect to make piles of cash from the massive market those platforms created, but when it comes to paying those platforms, they say the fair value is 0. That's the same logic at play.

As for buying from the Epic Games Store, I think you may be a little confused. These terms are for link-outs from apps you first installed via the App Store. You're still getting the app via Apple with this.

> Epic would not be fighting so hard to get back on iOS and Android if they did not expect to make piles of cash from the massive market those platforms created, but when it comes to paying those platforms, they say the fair value is 0. That's the same logic at play.

I would argue that it's also entirely possible that if Apple had taken or being willing to negotiate a less usurious cut, that Epic would have been quite happy and not played hardball.

> Do we not understand metaphor here? Revenue exists when paying ourselves but disappears when we owe a cut to others. Hollywood Accounting.

No you just don't understand accounting. Hollywood Accounting has nothing to do with hiding revenue. It obfuscates profit.

Epic standing to make money is not a problem. Apple made its money when it sold the phones to customers. It has no right to continue to extract taxes. That is completely unrelated to hollywood accounting.

The fees on links are just part of a broader problem that apple is preventing fair competition on software distribution.

Bad analogy. The ad company is purchasing slots from the network.

This is more like the TV manufacturer demanding a cut of the ad revenue because they've demanded all incoming feeds go through their middleman software layer.

Yes, the ad company purchases slots from the network, because audience reach has value. In this case the audience is 4+ billion iOS and Android users.

The problem is not that selling access to users has no value. The problem is that it is anti competitive to sell access to these users in the first place by virtue of putting up barriers for other companies to distribute to customers

Reply on news.ycombinator.com