
 Apple is actually asking for 100% of SaaS mobile revenue - bdfh42
http://whydoeseverythingsuck.com/2011/02/apple-is-actually-asking-for-100-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+WhyDoesEverythingSuck+%28Why+does+everything+suck%3F%29
======
saturdaysaint
As I added in the content section, I think that SaaS providers have the leeway
to pass along the "Apple tax" to iOS users and thus embarrass Apple a little
bit here. I'd like to see a service at least try to make an "iOS plan" - if a
service is normally $10/mo, create a separate plan (that would be the only way
of accessing the content for iOS users) that costs enough to offset Apple's
take. This plan would cost the same both on the service provider's website and
in the app, and would be the only way of accessing the service's content in
the app, meeting Apple's rules... it would just be conspicuously more
expensive than the version for all other platforms.

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...](http://www.thetechbastard.com/post/3326771970/a-hypothetical-
netflix-ios-plan)

~~~
dazzla
What about Apple's rule that the in app subscription needs to be the same or
better than available elsewhere?

~~~
shade
It seems to me that the simple way is pretty much what the grandparent
described. Classify API/mobile access as a value-add and charge extra for it.

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...

~~~
stcredzero
Another way: have entirely separate accounts for mobile access. If you have
access to both a web-interface app account and a mobile app account, they can
be "linked" such that the data is synchronized between the two. This would
also be the only way mobile accounts could share data with non-mobile
accounts.

This would work for apps where the mobile UI is only an adjunct for doing real
work on the desktop version.

~~~
bane
Keep your high-priced mobile access plan to yourself buddy! Or at least keep
it with iDevice users. Us Android folks have gone with a corporate parent that
doesn't abuse us or our vendor friends.

~~~
stcredzero
_Keep your high-priced mobile access plan to yourself buddy!_

All of my apps are planned to be free, ad-supported, with in-app purchases.

------
mithaler
While the OP comes across as a tad hyperbolic, this is what I've thought for a
long time: if a business is dependent on the good graces of the provider of a
platform it's built on, it simply does not have a working model. It happened
before with Facebook credits, and Apple making a similar move is no surprise
to me.

~~~
scrrr
Exactly. But how can one oppose new methods of the closed, proprietary system
that generates revenue, when the open alternative doesn't?

~~~
towelrod
That's not what is happening here. My company makes all of its money from
subscription services that we sell directly to customers. Now if we provide a
IOS app to access that content, we risk losing 30% of our revenue if the user
happens to sign up via the app instead of via our website.

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.

~~~
GrandMasterBirt
Now take that and move that to Amazon's domain. The currently offer insanely
low prices. Selling each book with a 30% to apple can make their profit margin
zero or less. Which means that either Amazon must raise prices on their
products and thus giving Apple the ability to compete vs Amazon on price via
unfair advantage or Amazon pulls out giving apple a monopoly. I don't think
Microsoft ever made these sort of policies. Though granted MS never made an
amazing platform.

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.

~~~
stcredzero
_Now take that and move that to Amazon's domain. The currently offer insanely
low prices. Selling each book with a 30% to apple can make their profit margin
zero or less._

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.

~~~
towelrod
> My read is that Apple is looking ahead at a future full of small/startup
> ebook publishers.

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.

------
YooLi
"... they will need to give Apple 30% of their subscription revenue for all
customers that want to access SalesForce via mobile."

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%.

~~~
mithaler
...and if your profit margin is close to that 30%, as it is with many
businesses, you are now required (should you choose to develop an app for iOS)
to sell your product to users whom you have to support and stand a very good
chance of gaining nothing from.

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.

~~~
podperson
No-one is _required_ to sell stuff in the App Store. Don't sell stuff in the
App Store, keep all your profits.

> 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?

~~~
anonymous246
> It costs Apple to distribute (and market, and support) your App

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).

~~~
YooLi
But they are marketing your app by marketing the platform. Those commercials
you see with catchy tunes and hands swiping and flicking apps, those make
people want an iOS device to run apps. Everything Apple does is to make
consumers _want_ to come to the platform, and based on their numbers, it is
working. Then you, the developer, gets to put you app in the only marketplace
available to those 100M+ users. _That_ is the value Apple is bringing.

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.

~~~
blueben
Apple is marketing their hardware product and the platform, _not_ your
app.Yours is just one app out of hundreds of thousands, soon to be millions.

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".

~~~
ThomPete
Can you please show me an utopia where you are not fighting against thousands
of competitors?

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.

~~~
blueben
That's not the point in question and you know it. Stay on topic please.

------
chapel
Apple is notorious for ripping businesses built on their platforms out from
under the people that created them. It has happened with OS X by them taking a
popular 3rd party utility/app and integrating the idea/look/feel directly with
no attribution. It has happened with iOS, and now it is just coming to a point
where Apple is flat out saying that if you make money on our platform,
regardless if the value is outside of iOS, we want a cut if you want to be on
it at all.

~~~
ghurlman
_It has happened with OS X by them taking a popular 3rd party utility/app and
integrating the idea/look/feel directly with no attribution_

Citation?

~~~
marchdown
Konfabulator comes to mind:
[http://arstechnica.com/apple/reviews/2005/04/macosx-10-4.ars...](http://arstechnica.com/apple/reviews/2005/04/macosx-10-4.ars/17)

~~~
protomyth
This subscription model I have a problem with, but....

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?

~~~
glhaynes
Can't believe this debate is happening again in 2011. Serious deja vu.

[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.]

~~~
protomyth
I just get sick of people trotting this one out when it was history ignoring
in the first place. It also ignores the whole Yahoo thing, but I digress. Its
like during a really in-depth boxing debate trotting out the boxer's W-L
record when wearing blue shorts....

I could be in a bad mood just because this foolish policy probably destroyed
any hope of micro-payments on iOS devices.

------
russnewcomer
I've read Apple's release a couple of times.

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.

~~~
towelrod
Why is it only a major issue if it relates to SaaS? Isn't screwing over Amazon
and anyone else selling that kind of content already a major issue?

Anyway, Apple clearly wants this to apply to XaaS, where X = anything and S =
subscription. Or by this time next year, Xaa$.

------
groby_b
It seems OP hasn't quite thought this through...

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.

~~~
portman
_"All we require is that, if a publisher is making a subscription offer
outside of the app, the same (or better) offer be made inside the app"_ \--
<http://www.apple.com/pr/library/2011/02/15appstore.html>

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.

~~~
groby_b
Not really - all apps that offer subscriptions must go through Apple's
mechanism _anyways_. And subscription is (IMHO) well defined as referring to
content, with types of content enumerated.

So unless you make the case that SaaS is content, the post is baseless.

~~~
natrius
Baseless? Because Apple would never try to skim 30% of all the revenue that
flows through their devices. That's crazy talk. /sarcasm

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.

~~~
groby_b
Making a statement of fact ("Apple is taking 100% of mobile SaaS revenue")
with no basis in reality is pretty much the _definition_ of baseless. Unless
and until Apple speaks on SaaS, this is a figment of the authors imagination.
I'm not saying "it can't happen". I'm saying "not true as of right now"

I'm surprised "making shit up" qualifies as news on HN these days.

~~~
natrius
The article begins with the premise, "It appears to me that the new "give
Apple 30% of revenue" policy will apply to software subscriptions just as well
as it appears to content." Assuming that sentence was always part of the
article, it seems like you're just reacting to the headline.

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.

------
lshepstone
I'm starting to see a whole bunch of posts/comments about people reacting to
losing 30% of their SaaS software revenue but no one seems to be calling out
the Apple contract specifically lists _content_ as defined as magazines,
newspapers, books, audio, music, video. So I don't see where the SaaS angst is
coming from.

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.

~~~
bradleyland
The argument in your last paragraph is almost exactly what everyone said about
Apple's approach to subscriptions. "Apple would be crazy to demand 30% from
publishers and distributors. Amazon can't afford 30%!"

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.

~~~
lshepstone
I wasn't arguing that Apple _won't_ do it, just that they would be even more
crazy to try this for SaaS than for content subscriptions. It's one thing to
charge 30% for when someone is selling an entire product through your
platform.

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.

------
codingthewheel
_affecting companies like Amazon, and companies like SalesForce that have made
a significant investment iOS investment, one has to wonder whether building
iPhone apps is safe_

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.

------
phatbyte
If this is true, this will be a very unfair policy coming from Apple. This
will be the divorce between web apps and iOS. I can see
HP/Microsoft/Google/etc opening their doors to free SaaS.

Apple is getting greedy and capricious, and when this happens no good will
come from it.

------
vegashacker
APIs for software services make this whole thing even more complicated. Some
company has a web service offering which they charge $10/month for. They also
have a web API, which allows 3rd-party developers to write apps for the
service. Case (1): The services writes an iOS app to access their service.
Case (2): A third party comes along and writes an iOS app for the service,
using the service's API.

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.

------
me_again
I'm confused by how far-reaching this is. Let's take Netflix: I currently
subscribe to netflix via their website and consume it via multiple channels,
including the iPad. What, if anything, is Apple asking netflix to do? It
sounds like: provide a link in the app to subscribe to netflix, which must
cost the same as signing up elsewhere, and pass 30% of the $18 a month to
Apple.

------
bambax
But isn't the solution to simply make a mobile webapp instead of an app?

It's not technically always feasible, but most of the time it is.

------
eugmandel
The example of SalesForce in the article sounds wrong. Apple's 30% fee on
subscriptions does not apply to ALL subscription revenue of a publisher, just
to the subscriptions of users who found the publisher in the App Store. Quote:
"when Apple brings a new subscriber to the app, Apple earns a 30 percent
share; when the publisher brings an existing or new subscriber to the app, the
publisher keeps 100 percent and Apple earns nothing". If this is true, there
is nothing unfair about it.

~~~
bradleyland
This assumes that every business model has a 30% margin they can give up to an
"agent"; in this scenario, Apple. Many, many businesses operate on less than
30% margins.

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.

------
callmeed
So, the key is to make sure no one finds your app unless they are _already_ a
paying customer.

I see a burgeoning new field: "reverse SEO" for SaaS mobile apps.

------
austintaylor
The press release begins by referring to "publishers of content-based apps",
and uses "publishers" throughout. I think it is pretty clear that they are not
talking about SaaS.

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.

~~~
portman
What would a "content-free" app look like? Aren't all apps, by definition,
based on content?

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.

~~~
groby_b
"content" is actually well defined in the App Store terms. And it doesn't
include SaaS under it.

~~~
portman
You mean these terms? <http://www.apple.com/legal/itunes/us/terms.html>

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.

~~~
groby_b
Those are the _consumer_ terms. Devs and publishers would instead have to look
at the approval terms. (<http://developer.apple.com/appstore/guidelines.html>)

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...

~~~
Gibbon
Saas does not sound like a subscription service to me, not in the traditional
sense.

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.

------
lshepstone
Just 4-5 years ago most Telco's were building portals and walled gardens where
they were licensing the content themselves (or even had teams creating it in
house) and selling it in various ways to their customer base. So never mind a
30% cut, they were competing with content producers. If you were trying to
sell content the Telco was hoping to sell forget a 30% cut, you couldn't even
get on their platform and you earned a big fat $0.

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.

------
gte910h
I think they need to just offer a "iPhone connectivity" option for extra $$$.
Then they need to offer that and only that via the appstore in app purchase on
the phone.

------
rapind
I'm assuming that if you decide to sell your SaaS via the AppStore, you can't
move your customer data outside of it should you choose to discontinue
offering your AppStore interface?

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.

------
profgarrett
Sounds pretty similar to Apple's earlier attitude about 3rd party developers
being parasites on 'their' platform. While (of course) they do own it, the 3rd
Party developers are partners that add value, not parasites.

------
keeran
Is this a potential win for independent iOS developers?

If the SaaS provider isn't the supplier of the app, but they fully endorse
(and promote) its use, does that create a loophole?

------
SPOTINT
what about dropbox 30% of 9.9$ LOL

