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Apple's 30% (reinventedsoftware.com)
36 points by milen on Aug 14, 2015 | hide | past | web | favorite | 53 comments



FWIW, I used to work in hardware and sold products to Walmart, Target, CVS, Kroger, the Apple Store and had stuff on the shelves of ~20,000 retail locations in the US.

30% is a bargain. In physical retail we'd pay 50% pretty consistently. We were also at the mercy of the retailer to send things back to us if they didn't sell, without paying. So they would buy 20,000 units, sell 5,000, and a few months later send us back the remainder and call it even.

If we wanted promotion in their stores, circulars, or websites we had to pay for the privilege.

Considering Apple puts you in the pocket of hundreds of millions of people, puts you a password or fingerprint away from their credit card, and provides the opportunity for massive exposure in their store, it feels like a super fair deal.

I'm more troubled by the fact that they essentially have driven the price of discrete software to zero, but fortunately there are more and more ways to monetize via SaaS, IAP, Hardware, etc.


Your point makes more sense for the iOS App Store, but this was desktop software and the Mac App Store is a different animal. It's nowhere near as successful, even "top" apps are't selling many copies. The sandboxing also means your apps can do less than apps that aren't in the store. You also can't do demos or paid upgrades. Same 30% tax though.

There have been many similar rants:

http://www.panic.com/blog/coda-2-5-and-the-mac-app-store/

http://sixcolors.com/post/2014/10/bbedit-at-max-q/

http://blog.helftone.com/mac-app-store-the-subtle-exodus/

http://www.macstories.net/news/textexpander-4-first-casualty...

https://www.omnigroup.com/blog/update-no-upgrade-pricing-for...

Etc


In retail, you pay 50% because that's something like what it actually costs to sell stuff to people in a physical store.

The cost of selling software is almost zero. Unlike retail's cut of your selling price, Apple's cut is completely arbitrary and rather unjustified.

If you sell software directly to users, the cost can be something like 3%, depending on which payment processor you want to use.

What additional service does Apple provide for that additional 27% cut? The buying experience is easier, but this doesn't seem to translate into additional sales. You mention "massive exposure," but there's pretty much universal agreement among developers in the Apple world that the App Store's "marketing" bump is pretty much zero unless you're extremely lucky and get featured.

But hey, if it's worth it, then you should be able to let developers choose and they'll still go for it. On iOS, there is no choice. If you want to sell, it's either Apple's 30% or nothing. On the Mac, there is a choice (for now) and the trend now seems to be to choose not to use the App Store there.


It's definitely not 0 to build, maintain, and curate the App Store. Not even "almost zero".

>> The buying experience is easier, but this doesn't seem to translate into additional sales.

I'd like to see a source for this assertion. In my anecdotal experience of selling software on the App Store and not on the App Store, it's 10x harder to do it yourself (so for me worth the 30%). Reducing friction increases purchases -- that's why Apple, Amazon, and even Stripe now store consumer credit cards. That's not even taking into account how valuable being featured is.

Maybe 30% is not the right number, and I totally agree that the OS should not insist that your apps be procured through a blessed channel, but there's a huge difference in effort between setting up your own store using Stripe and selling on the App Store.


My source for the assertion is purely personal, from knowing a lot of developers who sell both in out of the store. Pretty much universally, if a product is available both through the Mac App Store and directly, the sales through the two channels are comparable. No, I have no numbers to back it up, just talking with people who actually do it.

Having done both, in terms of effort I'd much rather set up my own store.

Selling on the App Store is a horrible mess. Code signing, provisioning, verification, review, they do not make it easy at all. And good luck if you want to actually test the build you submit to the store.

Any competent programmer should be able to set up a web store without a great deal of pain.

I think there's a big disconnect here in terms of how different people approach and prioritize things. You're pointing to the submission process as an advantage. A sibling poster actually pointed to app review as an advantage. To me, they are both horrible disadvantages that make the App Store a terrible place for developers.


All your points are fair, but if Apple's value is just 3%, why don't we hear as many stories about other app stores? Android has a much larger userbase, but the common wisdom is that actual revenue in that store is much smaller.

Beyond the 3% in transactions you're paying for the review process, which while imperfect, makes parents pretty comfortable letting their kids pay $1M/day to the Clash of Clans/Angry Birds folks.

While getting featured is rare, you still need to pay the salaries of the editors who pick the best apps, the graphics artists who merchandise the collections, etc.

I also look at it as the subsidy that helps offset the cost of developing Objective-C, Swift, etc. You might argue that it's in Apple's best interest to develop that anyway, but I don't fault them for trying to recoup the cost.

Look at it this way, it's a progressive 30% tax that you pay if your successful, while keeping the cost of development low for beginners.

Really, I think the big thing you're paying for is access to a customer base that is much more likely to pay you.

I've had a couple products featured in the iTunes store despite not being super connected and had great success. I understand the frustration, but it's not like you're not getting anything in return.


Paying for the review process is not a feature! That's the software equivalent of how oppressive governments will execute a prisoner and then send their family a bill for the bullet.

Apple is making billions from the App Store. It doesn't cost anything close to that much for Apple to build their developer tools. They were giving those tools away for free long before anyone had even heard of iOS.


Paying for the review process is not a feature!

While it might be argued that it doesn't work as well as it should, or that it shouldn't be forced, it's certainly a feature. It's a mechanism that improves user confidence in unknown apps, making them more likely to make a purchase when they are uncertain. No different than having your business certified under some ISO standard, which also costs money, but is essential to getting some clients.


I'm starting to realize there is a massive disconnect between disparate communities here, sort of like when I came to realize that there are people out there who genuinely believe that the clouds that form behind airliners come from the deliberate spraying of mind-altering chemicals.

Apparently there are people out there who genuinely believe that app review is not an anti-developer requirement that Apple uses to further its own goals, but rather a pro-developer feature that's worth paying for. I don't know that I can usefully continue the discussion without spending some time thinking about this state of affairs first.


And how much does it cost to maintain the distribution network? For bandwidth?

You claim they are making "billions" off their cut. So show it. Most sources show that the revenues are about at the same level as their costs. If you have something different, please feel free to show.


They're bringing in billions. I don't know what their profits are. But either their profits are huge, or the App Store is ridiculously inefficient in terms of cost, because payment processing and bandwidth just do not cost that much on relative terms.

I'm sure the App Store is breathtakingly expensive in absolute terms. But there's no reason it has to cost anything like 30% of sales. This stuff scales up sub-linearly, not super-linearly.


So basically you do not have numbers to back up your claims.


This is an internet discussion, not a scientific paper. I base my claims on long experience.

If that's not good enough for you, that's certainly your right, but it's a bit ridiculous of you to complain when you've offered no more support for your side.


Anyone who thinks the cost of selling software is remotely near zero should be ignored. Ads need to be produced and thought up and salesmen need to be paid and packaging still must be done and and someone has to be in charge of all that, along with all the people beneath him.


Salesmen? Packaging? We may both be talking about "software" but you're talking about a completely different kind of product than what one finds in the App Store.


One of the reasons why the Apple app store is so popular is that Apple spends billions on TV/BillBoard/Magazine/Web advertising for the store and apps within it. It's a massive marketing/sales/"packaging" cost.


Which is great if you're one of the top apps and can get Apple's attention, but useless for 99.9% of developers.

I would also say that by far the main reason for the App Store's popularity is simply that it is the only channel for third-party apps on a massively popular platform. Apple could do nothing beyond making it available as an icon on the home screen and it would still be enormously popular.


on a massively popular platform

And that's part of what you're paying for.


If you want to say that you're paying for access, that Apple can charge what they like, and that 30% is good value for the money for that access, fine. I disagree, but I respect that argument.

But the person above was comparing Apple's 30% to retail's 50%, which is a bad comparison because retail's cut is largely based on the actual costs of selling.


Who creates what you see on the App Store? Who wrote all that and designed it? Who wrote the code for the App Store? Are you saying no professional sales people were involved in this? How does anyone in the world know when a new item shows up in the App Store? Who pays for all those ads you see on TV and in magazines and online?


Is this just a terminology problem? "Salesmen" to me are the people in suits who you talk to when you want a piece of software that doesn't list a price and just says "Call for a quote." The people you're talking about are programmers.

How does anyone in the world know when a new item shows up in the app store? For 99.99% of apps, it's either word of mouth or marketing activities undertaken by the developer. Apple's own marketing is great if you're one of the favored few, but for everybody else it does nothing.


Yes, but the digital world in theory enabled greater competition so therefor we expect things to be better. Kickstarter takes 5% + payment fees for instance. Unfortunately, in practice the digital world many times enables companies to employ the same old business practices on a much larger scale.


The /value/ of "discrete software" has always been close to zero. Just a few megabytes of disk space.

The value of software creation is something else, though, and ages ago the one was tied directly to the other.

But even that wasn't truly the case. Shareware gave away part of the software for free, and relied on goodwill from the users for them to pay for the rest rather than sharing the full versions.

As you've pointed out, continuous services are another area where money can be made, but then the software isn't the value proposition, just the enabler of those services.


Well, retail stores bring people to the store looking to buy things. App stores (not just Apple's) are mostly mandated by Apple/Google/Amazon. They do provide some value (trust, for the apps), but 30% seems quite high for that.



Thanks!


>Feeder is over 10 years old now, long predating the Mac App Store, [...] , and while they should profit, should they really be taking so much that it risks putting independent developers like me out of business?

I'm having trouble following the logic. How can a new distribution channel for potential customers that didn't exist until 2011 bankrupt you?

If Feeder is 10 years old, what's significant about 2011-2015 of the Mac App Store existence that causes financial insolvency?

For a niche app like Feeder, which typically only manages to cover the cost of supporting and maintaining it, doesn’t need any Mac App Store-only features like iCloud,..., it hardly makes sense for me to sell it there from a financial perspective… and yet if I don’t, many people might not even know it exists.

How did people find out Feeder existed before 2011? Did Mac App Store remove that option of reaching the public?


App stores indeed have dramatically obscured other distribution channels. Pretending that's not the case isn't helping anyone.


>dramatically obscured

We're not talking about the iOS App Store. The authors complaint is about the Mac App Store. It's a software store that Mac desktop/laptop users don't even bother to click on.[1]

I'm still having trouble connecting the dots here. How exactly has a distribution channel that has gained very little traction over the last 4 years "dramatically obscured" other distribution options for a 10-year old app? Has there been an explosion of demand for sandboxed apps? It doesn't look like it.

[1]"An alarming number of customers who already have Macs have absolutely no idea that the Mac App Store exists, even though the blue icon sits in many an unchanged Dock."

http://www.imore.com/nsfw-apples-benign-neglect-mac-app-stor...


Not really. Maybe on phones.


Last I checked the App store was not a significant revenue source for Apple. My guess is the review process is expensive and most apps are a net negative from Apples perspective.

One way around this would be if apple reserved a portion of sales, but with the number of 'free' apps out there this would probably not work. And for near breakeven apps it would probably result in similar numbers. (EX: 100% of the first 10k, 10% after that.)


I'm not sure when the last time you checked but $10 billion [1] in revenue is significant. That's only 2013.

[1] https://www.apple.com/pr/library/2014/01/07App-Store-Sales-T...


That's the iOS App Store, not the Mac App Store. The app store on iOS is significantly different in that you can't choose to just sell apps directly.


Plus the fact that if there was no App store Apple wouldn't have as high of hardware sales so it has intrinsic value just being there.


That's the 100% of revenue, Apple's take would be $3B. Still not insignificant...


The Unreal development kit has an interesting pricing method. The first $50k you make is completely royalty free, and after that Unreal takes a 25% cut. Now that I think about it, Apple's approach seems incredibly lazy considering its size and the size of the market. I guess there's enough demand for apps that developers are willing to put up with shitty terms.

I can't link directly to the answer, but it's the last FAQ, 'Can you explain the UDK commercial license terms'. https://www.unrealengine.com/previous-versions/udk-licensing...


For Apple the review process is more about offering a clean user experience for their users to sell more phones/tablets/macs.


Look on the bright side; distributors like Apple used to take closer to 50%. The trend in the industry is towards shrinking payments, and when Apple started doing this, 30% was considered a small cut.

But why would Apple cut their rev share take when they have no reason to do so? It's not like there's competitive pressure, and if app developers want to get more revenue, they can raise prices.


On the bright side, distributors like Apple used to take 50%. On the dim side, distributors like Apple used to not be the only option, and that 50% was at least vaguely justified because they were doing things like staffing call centers for taking orders, and shipping physical media to customers.


The Mac App Store is still not the only option. Buy your software wherever you like.


Yes, which is why it seems to be falling out of favor among many third party developers. Over on iOS, it is the only option, and I'm pessimistic as to how long the optionality will last on the Mac end.


There was another Mac App Store article on here yesterday: https://news.ycombinator.com/item?id=10056593

The Mac App Store Still Needs Paid Upgrades http://dancounsell.com/articles/the-mac-app-store-still-need...


Apple take 30% because they can take 30%. You are paying it. You haven't switched to developing for another platform like Android or PC. They can do it because you, along with all the other app developers, are masochistic enough to put up with this walled garden. Somehow I cannot muster up sympathy.


Developers don't need to switch. They can just host and authenticate their software internally. Spotify passes on the savings to their consumers [1] with a model like that.

[1] http://www.cultofmac.com/328554/spotify-wants-its-listeners-...


That doesn't make any sense, considering Android also has the same 30%, but makes less.


You are right. I stand corrected. Still, he is free to chose other ways of distribution that cost him less.


30% is pretty much the going rate for digital goods (marginal cost $0), even without the distribution might of the Apple Stores.


I feel the author's pain and 30% does seem ridiculously high given the service Apple provides. And given that it's these same developers that make Apple's hardware as popular as it is by providing awesome apps and services. And I do not like the monopolistic nature of the App Store -- that it's integrated into Mac OS X in a way that other software sales platforms could never compete with.

But.

If 30% is too expensive -- if the added benefits of promotion through the App Store and other services don't make up for the loss -- why is it even a question? Don't sell through the Mac App Store. The presumption is that it's more profitable not to. So don't.


"given the service apple provides"

- put your app or iap 1 click away from an already loaded credit card; seems highly valuable to me.


Then the App Store is for you!

It may, nevertheless, be too expensive for many people. The article author, for example.


Is there a mirror? Site looks down.



The site is down for me. In the future, please consider making your blog a static site. It is generally more reliable, cheaper, and more tolerant of spikes of traffic like this.




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