Apple blocking SkyDrive from iOS store, wants cut of revenue

Also wondering what's stopping MS from doing down the DropBox path and not allowing purchases on iOS.

All pricing introduces inefficiency without perfect price discrimination. If you charge a fixed rate for a product or service you exclude the users where the wealth created is less than the rate charged, aka the marginal consumer. You can improve this by charge lower prices for the marginal buyers. You can then do a similar thing for very high value consumers. This is why Microsoft sells so many versions of Windows.

In the real world price discrimination is very crude. Consider that Microsoft only has ~6 versions of windows, that is only 6 discrete steps to covers the several magnitudes of value created for users.

The reality is there is no algorithmic way to determine the marginal apps. Thus if Apple wants to charge 30% for all apps except those for which this is excessive they are best off doing things on a case-by-case basis.

  "Let people do in-app purchasing however they want, if they use yours, you can take a cut."

Of course, this will never happen, but if it did (either because they thought it was morally right, or because of regulation), then it seems like a way to solve this issue.

Recently there was a story about a game that was 'killed' by piracy because apple didn't provide a way of connecting players to iTunes accounts, in order to ban pirates.

There's very little intrinsic value with the app store.

How about if you use the app store to deliver your content, you are given a unique id to tie to specific devices?

Or maybe if you could host content tied to in app purchases on iTunes?

To me it seems fair to say 'if you use their resources to conduct a transaction and deliver content, you should pay them'

Cancel all Apple subscriptions but maintain 30-60 free trial / continuous open use to existing customers.

Introduce new direct subscription with 30% discount (below previous rate i.e. minus Apple's cut) if signed up within 30-60 days.

One solution would be for Apple to introduce plans.

eg:

classic - flat 30% - no monthly fee

pro - flat 15% - $500 monthly fee

irock - flat 7.5% - $2,000 monthly fee

That's just an example, but I think the main issue is that a flat 30% just doesn't work for some types of business.

[edit: fixed confusing typos]

The problem is this. There is online content. The app is one way of accessing that content. Apple wants a 30% cut of everything you make on that online content EVEN THOUGH the user may be primarily accessing that content on another device.

My suggested compromise is this. Any purchase made through the app, Apple should take its 30% cut on. If you've gone through the effort of accessing that content and purchasing it another way, Apple should not be taking a 30% cut.

You'd be surprised about the extent of this problem. I get e-mails all the time from people who are worried that they have a monthly payment for my app, for example. There are just an awful lot of people who don't "get" software at all and derive real value from simplified one-party billing.

So if you start from the premise that billing for iOS apps has to be brain-dead simple, we arrive at the present rule: any payment that looks like it happens on an iPhone must [2] run through IAP at whatever rate Apple can break even. If your payment collection process consists of people using their fingers on the screen of an iPhone, then it is potentially confusable with IAP by Grandpa and he might get mad at Apple; this is unacceptable. But monetizing your pizza ordering app by handing money to a pizza delivery guy who shows up at your house is not confusable, so it's A-OK.

Now, it's perfectly debatable whether or not consumer confusion is really that big of a problem, or a problem big enough to justify the negative externalities of solving it. But if it is, then the result follows: the solution is to run all the billing through a break-even single party. If you accept the premise, then the rule that is fairest and best and also solves the problem is the rule that we already have.

It's unfortunate that we live in a world where the economics of Dropbox, Skydrive, Amazon et al seemingly don't allow enough profit margin to pay Apple's overhead to process payments. But I'm not really sure who is to blame for that: the consumers, for being confused about billing; Apple, for trying to fix it for them; Skydrive etc. for not creating a two-tiered pricing structure to charge IAP customers at 30% more; or consumers again for being unwilling to pay an extra 30% for single-party billing.

[1] http://www.macobserver.com/tmo/article/apple_app_store_runs_... [2] there are some exceptions, I'm speaking broadly to make a point

Simple: alternative stores should be enforced by law. Apple alone deciding what goes onto iDevices is wrong. (Ditto Microsoft with WP). Let the market decide.

The difficulty in finding that "fair line" might be that using government's implicit threat of violence to force Apple to capitulate to these guys demands to be in their store without playing by their rules is inconsistent with a belief in property rights.

The presumption by all of these vendors who operate their own app store is that they are legally protected in tying their hardware product (their smartphone, for example) to their online store.

But there is a history in both the written law and from the courts that makes these 'company store' policies illegal.

There is no technical reason whatsoever that prevents a smartphone/tablet vendor from allowing their smartphone/tablet from accessing anybody's online store. An Amazon tablet should be able to visit the Apple online store (if they sold Android apps) just as easily as an iPhone should be able to visit the Android marketplace (if they sold iOS apps.)

Imagine the outcry if Chevy could force you to only buy tires or gas for your Malibu from their store. Or if Mattel could force you to only buy outfits for your kid's Barbie doll from their store. Or if Dell could force you to only buy software for your laptop from their store.

The law has long been clear that this type of market coercion is illegal.

The only reason that today's device vendors are still getting away with this is because the threshold for an outcry hasn't yet been passed. But the more stories we read like this, the louder the volume is from the everyday consumer.

Microsoft has persisted in trying to work out a compromise with Apple, but has thus far failed to come to an agreement. The company offered to remove all subscription options from its application, leaving it a non-revenue generating experience on iOS. The offer was rebuffed.

If a service has a subscription option, it seems, and it is not listed in the iOS store, the application cannot, and will not be allowed. That is, unless you are small enough that Apple doesn’t bothers to check. I assume that smaller companies could slip under the radar.

(note for transparency: I worked on the SkyDrive team until a few months ago, but don't know the latest details of this situation.)

The Dropbox app only has a single subscription in comparison to several options on their website including paying monthly. I guess Apple is OK with that.

The rules apply to developers of all sizes--not just Microsoft. This is Apple being greedy--which is fine in principle. But as a heavily-invested Apple customer, I "cheer" for the Apple ecosystem (and the company's fair dealings with developers) because I'd like continued priority and investment given to this platform. That's my angle, and Apple seems to be working against it. I find it offensive (as I'm sure many developers do) that Apple claims the right to revenue made from outside of its App ecosystem.

Let's do the old car analogy: if Mercedes tells you the car requires high octane fuel, but you insist on putting in cheaper fuel, is Mercedes going to repair the resulting damage under warranty? Certainly not.

So Apple decides to create/craft/curate a certain user experience for their customers. And they create rules to enforce it because they don't want to be responsible for their screw-ups (like jailbreaking and installing malware) - if you don't like it, why are you buying Apple's products?