
Today’s developers don’t need what the App Store offers - awwstn
https://capiche.com/e/ecommerce-and-app-store-fees-compared
======
latexr
> Today, a free app brings Apple zero revenue

Today and always, a free app brings Apple $99/year for a developer account,
which is mandatory to publish on the App Store.

~~~
gregmac
This is actually fairly significant.

As a point of comparison, in 2019, Apple did about 50 billion in sales [1],
which means they made about $15 billion

In 2018 (latest I could find numbers for) they reportedly had 20 million
registered developers [2] so that's another $2 billion. That's 3.5% of their
2019 net income of $55 billion [3] (of course there are costs to running the
app store, distribution, etc that aren't accounted for in here).

It makes me think of Costco -- whose membership fees make up nearly _all_
their net income [4]. Don't make money from the thing, make money from
enabling access to the thing -- well or I guess in Apple's case, make money
from both.

[1] [https://www.cnbc.com/2020/01/07/apple-app-store-had-
estimate...](https://www.cnbc.com/2020/01/07/apple-app-store-had-estimated-
gross-sales-of-50-billion-in-2019.html)

[2] [https://techcrunch.com/2018/06/04/app-store-
hits-20m-registe...](https://techcrunch.com/2018/06/04/app-store-
hits-20m-registered-developers-at-100b-in-revenues-500m-visitors-per-week/)

[3] [https://www.macrotrends.net/stocks/charts/AAPL/apple/net-
inc...](https://www.macrotrends.net/stocks/charts/AAPL/apple/net-income)

[4] [https://money.com/costco-doesnt-make-much-money-selling-
you-...](https://money.com/costco-doesnt-make-much-money-selling-you-
groceries-heres-how-it-really-earns-billions-a-year/)

~~~
kevindong
> In 2018 (latest I could find numbers for) they reportedly had 20 million
> registered developers

Keep in mind that the term "registered developer" is fairly ambiguous. Does it
include non-paying developers? Does it include all developers under a single
business account (e.g. at one of my jobs, I was a registered developer under a
broader organizational account)?

~~~
maguay
I would presume that includes paid and free developers; you have to have an
Apple Developer account to sign Safari extensions, for instance, or to sign
non-App Store Mac apps, neither of which require a paid Apple Developer
account.

The point would still stand though that the total revenue from Apple Developer
subscriptions would not be insignificant (perhaps insignificant to Apple’s
overall revenue, but still enough to be a sizable startup’s budget on its
own), which I should have noted in the original article.

~~~
latexr
> you have to have an Apple Developer account to sign Safari extensions, for
> instance, or to sign non-App Store Mac apps, neither of which require a paid
> Apple Developer account.

Their documentation suggests otherwise[1] (scroll down to “Benefits and
Resources”). “Safari Extensions distribution” and “Software distribution
outside the Mac App Store” are listed on the column of the 99 USD fee.

[1]: [https://developer.apple.com/support/compare-
memberships/](https://developer.apple.com/support/compare-memberships/)

~~~
maguay
Interesting, this may have changed.

Just remembered that Safari now only lets you install extensions from the App
Store, so that would actually make sense if a paid developer account is now
required.

There’s yet another reason why Safari has so few extensions.

------
kevindong
> Amazon’s Kindle store charges 30%, but with conditions. Your book must cost
> $2.99 to $9.99, and 20% less than any print copiesell. It must be exclusive
> to the Kindle to get this rate in some markets. Any VAT comes out of your
> cut, as does a download fee of $0.15/mb. Sell a $9.99 book, and you might
> get $6.69. > > Don’t meet those requirements, and Amazon charges 65% of your
> selling price. Sell a $10 book, get only $3.50.

That is an incredible fee to pay for a digital good. I looked into this
expecting the author to be just outright lying. There is one factual
inaccuracy (Amazon and the ebook author split proceeds after accounting for
VAT/delivery charges), but it is substantially accurately.

[https://kdp.amazon.com/en_US/help/topic/G200634500](https://kdp.amazon.com/en_US/help/topic/G200634500)

[https://kdp.amazon.com/en_US/help/topic/G200644210](https://kdp.amazon.com/en_US/help/topic/G200644210)

[https://kdp.amazon.com/en_US/help/topic/G200634560](https://kdp.amazon.com/en_US/help/topic/G200634560)

~~~
smnrchrds
It's a common theme. X used to be expensive to do. People used to pay Y to get
X. Through technological advancements, X has become much cheaper or even
practically free now. The entity closest to the source of X still charges Y
for it and does not pass any of the savings to the entities and consumers
below.

Your example is one. Printing, distributing, storing, displaying, and shipping
physical books was expensive. Booksellers got ~50–60% of the book price for
their trouble. Given the cost of doing business, it was a fair and reasonable
price. All those costs are near zero now. Booksellers still want their 60%,
because they can. They prefer to keep all the savings and pass none
downstream.

The same is true for digital distribution, banking monthly and transaction
fees, TI calculators, "convenience fee" for printing your own ticket with your
own printer at home, ...

Until recently, brokerages charged exorbitant fees per trade. This is even
though trades were effectively free for them and they were earning money in
other ways. The status quo of charging for something that would naturally be
free was preserved for decades, before a new kid came to the block and ruined
the party for everyone. Now the consumers are much better off.

We as the consumers should demand and try to make more of this happen.

~~~
kevindong
Ebook pricing never really made sense to me. During college when I was buying
textbooks, the ebooks on Amazon were frequently significantly more expensive
than a new copy of the physical book. Not sure if that's still the case
though.

Robinhood has truly disrupted the brokerage market. But I'm curious about
their viability now that a ton of mainstream brokerage have also dropped
commissions.

~~~
smnrchrds
They are probably not viable. But that has nothing to do with their lack of
commission fees. As Matt Levine has described [0], zero is the natural price
for transaction fee.It's not like TD Ameritrade and Schwab are losing money
now to compete with Robinhood.

Many banking packages in Canada have a low number of debit transactions (like
4 or 12 or 20) per month for free and charge a fee ($1–$2) after that. It's
not like debit card transactions are costing them anything (they actually get
transaction fees from merchants). But they can get away with it, so they do
it. It's just another revenue stream. The natural price for an additional
debit transaction is also free. If they drop the fee, I would not be worried
at all about their viability.

[0] [https://www.bloomberg.com/opinion/articles/2019-10-02/the-
tr...](https://www.bloomberg.com/opinion/articles/2019-10-02/the-trades-will-
be-free-now)

------
michaelmrose
A modest proposal: Legally require sales and lease of computers herein to
include laptops, tablets, phones provide owner or lessee with root access to
devices including right to modify device software and use services normally
associated with sale/lease of device including updates and cloud services
without prejudices insofar as how you use it.

This is to say they cannot deny you updates or access to icloud but if you
modify your software so as to prevent it from working that is solely on you.

This would make it impossible for Apple to prevent third parties from offering
their own app stores which could offer devs their own terms.

It's exceptionally likely that prices would stabilize under 10%.

------
chadcmulligan
SaaS costs money to though - there's not an analysis of that in this article,
if you use AWS or Azure they cost as well. I can see Apple need to charge for
their service (I'd want a lot to argue with developers all day :-)), they
could probably charge less though, but the same argument can be made for all
their products.

Personally I think its great that I can write some code publish an App and
Apple looks after a lot of stuff for me, would I like it if they charge less,
sure - but its a level playing field, everyone on the App Store pays the same,
so just add 30% to your price and move on. As a user, I like that I can
reasonably trust the apps I download from the App Store - and thats who apples
customers are, users, not developers. If you want to use apples service then
you have to pay a premium, if you don't like it you can probably go to android
(I'm sure this is Apples position).

~~~
maguay
Author here, and agreed—I mentioned the payment processing fees, and that SaaS
might also pay Stripe an additional 1% (or something like Recurly even more)
to manage subscriptions, but that’s only part of the costs.

And that’s the problem I think. SaaS already has all these other costs, from
hosting to account management to cross-device development, none of which the
App Store help with. The App Store _does_ offer native app developers value,
in licensing, distribution, updates, and more—none of which apply to the SaaS
model. Which is where I think part of the conflict comes from: SaaS developers
incur the costs of building SaaS, get little-to-no value from the App Store,
and so find the 30% fee more frustrating.

~~~
chadcmulligan
Yes, I see that, but I'd say that Apple isn't really interested in making SaaS
players lives easier - its not their business.

Edit: and upon thought, SaaS actually competes with their business model.

~~~
maguay
True enough—and yet, the App Store by not offering software upgrades, has in
many ways pushed developers to the subscription model.

~~~
chadcmulligan
I never really thought of that - maybe thats what they wanted :-), they get a
continuous stream of money forever from all the apps.

------
webbdev
1000% this. The App Store is stagnant because Apple refuses to improve their
store to where developers choose to distribute their app on the App Store. 30%
may have made sense in 2008, but it certainly doesn’t make any sense in 2020.

~~~
maguay
Author here. It would be interesting to imagine what Apple could offer SaaS
developers that would make them _want_ to pay the App Store a percentage.

Imagine if Amazon was the dominant platform, and they were the ones charging
an App Store fee, but somehow that included AWS fees as well...

~~~
zeroimpl
A subscription fee closer to 10% starts to look attractive at least for
smaller ventures. By dealing with taxes, exchange rates and credit cards, that
is a fairly nice set of things to not even need to think about.

But the developer APIs/processes for dealing with in-app purchases are brutal
and virtually unchanged over the past 5 years.

------
butz
Good time to concentrate on pushing progressive web apps (PWAs) forward: ask
for browser developers to agree on standards and implement few missing
features that are available only on native, like file system support. Build
more PWAs, even if some features are still not available - they might be
tomorrow. Let users know about PWAs, what are the benefits (usually faster
install and smaller size), how to install them.

~~~
TheCoelacanth
Apple is never going to allow full PWA support on iOS. It's too big of a
threat to their App Store revenue.

------
RandallBrown
The App Store offers discoverability, hosting, reviews/ratings, payment
processing, return handling, and (limited) QA in the form of the review
process.

If I think about how much time I'd spend building and managing all that stuff
_on top of_ building my app, I wouldn't be surprised if 30% was actually a
pretty good bargain.

I would love if Apple lowered their percentage, but I don't feel particularly
ripped off by it.

~~~
itskwanyall
As DHH explained though, letting Apple manage the payments process means that
the user becomes Apple’s customer rather than yours, which is actually a
negative for them since they can no longer handle any problems customers have
with billing.

> QA in the form of the review process

They are checking that you aren’t breaking _their_ rules, they’re not looking
out for you. This is akin to companies telling you their HR/legal department
is there to help you. They are not, they are there to protect the company.

> I would love if Apple lowered their percentage, but I don’t feel
> particularly ripped off by it.

The problem is you don’t get a choice whether you think they are ripping you
off or not

~~~
lotsofpulp
> etting Apple manage the payments process means that the user becomes Apple’s
> customer rather than yours, which is actually a negative for them since they
> can no longer handle any problems customers have with billing.

As a buyer, it’s awesome to be able to use Apple manage the payment process. I
am able to cancel recurring services far more easily (I don’t ever want to
call someone or mail something), and I trust them to be more secure with my
payment info.

------
k__
If you can get away with a web app, do it. It doesn't just save you the app
store fees, it also gives you more control over your software.

~~~
arvinsim
Unfortunately, Safari is not so friendly to those

~~~
noir_lord
"not so friendly" is a nice understatement.

I'd go as far as to say Mobile Safari is actively bad at the technologies
required to build a compelling web application so that they don't threaten
their cash piñata in the app store.

------
0_gravitas
It's curious to see so many saying that these developers _owe Apple_ x amount,
but only a couple acknowledging that a steady stream of people developing apps
for their locked-in platform is one of the only things keeping them relevant
for anything beyond the most basic use-cases. I'm not an Apple guy nor an
Apple developer (and hope to never be one), so I don't have an immediate skin
in this race, but this kind of behavior just seems unhealthy overall, and
reads as biting (one of) the hand(s) that feed(s) you.

For instance, people developing games mainly for windows is the only reason
I'm not running a full Linux box right now (maybe some day, c'mon proton...).
If MS made releasing on windows hostile enough to make a non-trivial number of
people consider releasing titles linux-only, I would abandon it in a heart-
beat.

------
warmfuzzykitten
The article doesn't live up to the title (on Hacker News). Or, really, the
actual title. SaaS means nothing to the developer of an iPhone/iPad app. Apple
offers distribution, collection, and a limited form of discoverability. In
addition - people don't talk about this much, but it's real - if you sell an
app direct, no matter how much you protect it, if it's popular sooner or later
some hacker will break your protection and offer downloads of your app for
free. Apple protects you from your revenue suddenly going to zero because
somebody "cracked" your app. That's why it's still possible to make millions
from a $1 app. Not a bad deal.

------
dhsysusbsjsi
This article makes a good case for why ALL of these big monopolistic
corporations need to be more heavily regulated due to abusing their market
power in all of the ways mentioned.

------
hashbig
Is it me or the math in the article doesn't make sense. The author is
accumulating the costs for selling a SINGLE instance of the product on
Shopify, Ebay, Amazon, and Walmart. When in reality, you would be paying only
for the one you sold your product through, even if you offer your product on
multiple platforms.

------
Axsuul
To make it fair for both parties, Apple's App Store needs to adopt a
hybrid/affiliate model. The App Store still provides lots of value in terms of
discoverability and marketing. Many users find apps to download while browsing
the App Store. The App Store will also feature apps while continually
optimizing its algorithms to ensure the right apps are shown to the user in
order to increase conversion rates, thereby benefiting the developer. Ranking
highly on the App Store is very lucrative just like on Google. So this notion
of developers not needing the App Store doesn't jive with me, especially for
smaller developers who don't have the brand awareness that Basecamp does.

For that, Apple deserves to be paid for it but _only_ if new users are
referred from the App Store–an affiliate commission. That 30% is more than
worth the extra marketing and customers you wouldn't otherwise have gotten.
For anyone that isn't referred, the fee shouldn't apply.

~~~
maguay
Author here—I guess, to a degree, that’s how Apple sees it too, it’s just they
think they deserve a larger percent than developers want to give. There are
apps—business software including Adobe and Microsoft’s subscriptions, media
subscriptions, and more—that offer subscriptions directly on their site, plus
offer in-app purchase subscriptions on their mobile apps. If you’ve already
subscribed on their site, Apple gets nothing, but Apple gets a percent of any
sales that originate from the App Store.

If it were closer to just payment processing + an affiliate cut (say 3% plus a
7% affiliate cut) perhaps it’d frustrate devs less. And for what it’s worth,
Apple does take only 15% on subscriptions after the first year which gets
closer.

------
tinus_hn
Then don’t publish on the App Store

~~~
lexs
What exactly is the alternative for iOS devices?

~~~
tinus_hn
I thought you said you didn’t need what the App Store offers?

------
cma
It's like a store not needing the protection the mob offers

------
gretch
The App Store model is thriving. Absolutely bursting at the seems gushing
cash... SaaS did not “kill the App Store model”

~~~
dang
We've changed the baity title to the less baity subtitle.

------
NovemberWhiskey
The new definition of 'dead' is 'doing $50bn a year in sales'?

