I make games on Roblox. When a user spends $1 in your game, you get to keep about $0.25 of it ($0.70 if you spend the funds to buy other stuff on Roblox).
Basically 1/4 is the Apple/Google cut, 1/4 is Roblox profit, 1/4 is what they say is used to run servers etc.
This is not a complaint. I’m a big fan of the platform and think they provide huge value to developers. Just thought some might find the economics of it interesting.
If I understand correctly, someone can buy 10,000 Robux for $99.99 and spend it all in your game. You'll get 7,000 Robux and you can cash them out for $24.50
That complains is from a Twitter user which seems unrelated to Roblox. He quote the IPO documents... which I don't think is a document usually used to complains about fees ;).
Roblox is free too, so you need to pay for the platform somewhere, which means it has to be part of the microtransactions. I expect to pay for Android and iOS while I buy the device, not during the subsequent multiple microtransactions, thus that platform fee is double dipping.
That twitter user seems to be OP, I'm just pointing out that maybe their ire is mistargeted.
What one pays for Android/iOS gets them a device with calendar, email client, camera, web browser and not much else. Since one can extend that functionality later by installing more apps — including these that did not even exist at the time of buying the device — the double-dipping is double-edged. The buyer can get more functionality, and the platform creator can get more money.
> I expect to pay for Android and iOS while I buy the device
I think when you buy an Android phone you aren't paying for the OS (based on a quick search it seems that Google doesn't get a cut of Samsung phone sales and doesn't charge OEMs any licensing fees).
Android is technically "open source and free", but all the profit from the Play Store goes directly to Google (i.e. The 30% from app store purchases completely skips OEMs like Samsung and funnels entirely to Google).
Hence, why they're willing to offer the OS for free and why they push so hard for it. They make far more money from app purchases.
Right: the comment I replied to was saying that they don't think the 30% cut is fair since the user paid for the OS. I was just pointing out that doesn't seem to check out since they didn't actually pay for the OS (if it's Android and not Google hardware).
They might reasonably say they'd rather pay for the OS upfront instead though.
They make _far_ more money from mining all the data your device sends them about you. The secret sauce for Android is the proprietary Google Play Services package that contains all the APIs that make the device usable (and enables the snooping). The base open source Android OS is limited in functionality.
Though you may be paying the device manufacturer for their (probably terrible) re-skinning of the stock Android UI (Samsung and Xiaomi come to mind as examples that make a pretty different-looking/feeling skin on their devices).
Theoretically, one could spend the requisite money and years to develop a competing device and software, like Apple and Google did to RIM, Microsoft, and Nokia.
Do you know why that argument didn’t work for Microsoft?
It’s not because they dominated Windows. They owned Windows, they could do what they wanted on Windows, but for something very specific. In fact, it was a key element of the case that the government had to prove before they could proceed with proposing a remedy.
That's not the thing that got Microsoft into trouble.
>Judge Thomas Penfield Jackson issued his findings of fact on November 5, 1999, which stated that Microsoft's dominance of the x86-based personal computer operating systems market constituted a monopoly, and that Microsoft had taken actions to crush threats to that monopoly, including Apple, Java, Netscape, Lotus Software, RealNetworks, Linux, and others.
Developing a game that competes with Roblox isn't close to the same magnitude of effort as developing a new mobile device and OS. The bigger the capital investment required to compete with someone, the lower the possible competition, and therefore it is more applicable to accuse them of anti-competitive practices. Economic effects are not scale-free.
How hard it is to do is not the determining factor. The question is whether the compan(ies) already in the space have created illegal roadblocks to your success.
I’d say creating a new mobile device is more easily possible today than at any time in the past, and in fact can be done on a relatively modest budget. [1]
Take for example Purism, maker of the line of Librem devices, which has raised a few million dollars over the years and has about $1 million in revenue.
Most Roblox games also have their own in game currency that you can earn or buy with Robux within the game. But you cannot buy/sell that currency for real world money.
I'm guessing it's partially a TOS thing, partially a lack of mechanism for transferring currencies between players, but also a lack of demand. Few games are popular enough in themselves to have a big enough market to make it profitable to run a competing alternate currency market.
With Robux you can buy 100 Robux for real money and then spend 20 Robux in one game, 15 in another, 40 for a skin you can use in all games and save the rest for use in some future game that you haven't discovered yet. This flexibility makes Robux much more 'desirable' than any single in game currency.
> Roblox provides way, way more value than the App Store does, and they don't have hardware to sell to make a profit on.
I'm not sure how you are measuring that value or what you are comparing it to.
Before the App Store, iPhone developers were stuck with web apps and jailbreaking (both of which still exist of course.)
Suppose iOS supported sideloading and multiple app stores? Would anything change?
Well, Android supports sideloading and multiple app stores, but Google can still command comparable royalties to Apple's.
In all three cases - Roblox, iOS, Android - the platform developer is providing a great deal of value (by creating the platform) and is trying to monetize it via commissions. Arguably iOS and Android provide much more value than Roblox since those platforms aren't restricted to running Roblox games.
This isn't a new model; Nintendo makes money on hardware sales (the Switch is basically customized tablet/phone hardware with some nice controllers) but still acts as a platform licensor and takes commissions for eShop sales.
It's probably not a coincidence either that most of the apps in the App Store are games.
How much are your games making? How hard are they to create vs a web app? Are most of the games made by professionals or just kids looking for more robux?
From my perspective, as a programmer dad who looked a bit at the game making situation in roblox about a year ago, I definitely got the feeling that games were not made by professional programmers but my feeling is also that has started to change in the last year.
My feeling was basically based on the tooling for the platform being awful, and some script I saw that was being passed around as boilerplate for new game development that was one of the biggest plates of spaghetti ever made!
My feeling on it changing is stuff like this article https://medium.com/@OverHash/roblox-development-in-visual-st... and other people doing things about sharing workflows and tooling improvements that reminds me of when some professional programmers first started to write JavaScript a long time ago.
But that's just a feeling I have for the situation, from the outside looking in.
FWIW, that is about the same amount the developer got to keep in the bad old days when games had to be packaged and shipped to retail stores.
Of course, the publishers and distributors and retailers took a lot more risk than the AppStores and actually had to hold inventory. It's probably just a coincidence, but it's interesting we've come full circle.
A app store offers reliable hosting of the game binaries and provides a versioning and upgrade mechanism on a platform with billions of user accounts.
Keeps the user's OS and device drivers up to date, maintains the OS and develops the hardware that it runs on.
Maintains the developer tools, compilers, documentation, so that your binary can run on the device's OS.
These things are expensive. I don't know how much exactly it would cost a company like Roblox to develop and maintain all the necessary tools and services provided by the app stores in order to run on all those devices.
Probably a lot. In fact, if they could do it, they would be Apple or Google :).
Whether it's a lot more than it should be, I don't know, but it helps to keep in mind that the app store cut is for a lot more than just payment processing.
> Keeps the user's OS and device drivers up to date, maintains the OS and develops the hardware that it runs on.
That's a license fee that you pay once you buy the device. It shouldn't be buying applications for it that fund it. In fact considering how little older phones get supported, it's pretty meaningless to say that it's to keep devices drivers up to date as they aren't ;).
> Maintains the developer tools, compilers, documentation, so that your binary can run on the device's OS.
Again, it's the customer that pay for it once he buy the device.
> A app store offers reliable hosting of the game binaries and provides a versioning and upgrade mechanism on a platform with billions of user accounts.
It doesn't cost 25% to host game binaries. I'm pretty sure Roblox host it all on Windows for example...
By the way, on Android, the license fee isn't for the Android system, it's for the Google Play services specifically. So that 40$ you paid, it's going toward the shop already.
Nobody is arguing that Google or Apple shouldn't make money. People are discouraged because these companies are double and triple dipping into their customers after record gargantuan profits. Google and Apple employees and especially executives enjoy a standard of living in the top 1% of the world. Why do they have to grab an extra $5 here and $10 there from the barista who works at starbucks, or the indie app developer in Bangladesh?
Just like the indie app developer is trying to improve their standard of living, so are the folks at Apple and Google. We all want to progress, no matter how high up we already are.
Those Cupertino mortgages aren't going to pay for themselves.
I own an e-commerce business. We offer PayPal and credit card checkout - 75% of users choose PayPal. When we buy a lot of our products to sell, we get lots of them from small businesses in lots of different locations, many of them also offer PayPal to us (even on wholesales transactions), because it gives some level of comfort with international transactions. Because we often have cash in our PayPal account and it’s cheaper than paying our bank to send internationally, we often pick PayPal.
So PayPal get a cut of the wholesale price and a cut of the sales price, on literally the same goods. Some of our customers create their own products from our products and use PayPal to sell them on again, making it a 3x cut for PayPal.
Being a payment processor and solving that last click purchase problem / apps store is incredibly lucrative.
I help out with my wife’s online shop and have noticed the same thing.
Personally, if I don’t see an obvious co-branding for Stripe or another trusted service I will usually pick PayPal over a naked credit card field. Who knows what the heck is going on in the backend. People are still doing stupid shit like storing untokenized cards in 2020.
Edit: talking about smaller merchants in case it wasn’t clear.
I’ll choose the naked credit card field to give the merchant more money since I’m not responsible for any fraudulent charges either. I know it costs me time and money to have to dispute charges, but I’ve never had to in 15 years of card usage, and the couple times my card number was attempted, the bank’s system had already flagged the transaction for me and asked me to verify.
Basically, I see no value in PayPal to be in a credit card transaction. However, I wouldn’t do the same for an ACH/debit card transaction.
Aren’t the fees for foreign exchange rates brutal with PayPal? Why not just get a couple prepaid credit cards and use those? The only way I can see the benefit of PayPal is if you have it linked to a credit card that you use like a short term 0% interest loan.
It seems crazy to me that they're allowed to do this. Imagine paying 30% more for software on your computer. It's pretty obvious that very few competitors could pierce the phone market, even less the phone app store market.
At least on Google phones you're allowed to jailbreak it and install whatever you want if you're a power user, but you can't do this on Apple's phones.
They should allow people to download and install APKs.
That's routine cost of business. Humble Bundle takes 25% of sale revenue, just for the distribution and marketing, and companies are queuing up to work with them. Steam also takes 30%. Both of these are for software you run on your computer.
In fact Steam kills the whole "Apple store is a gouge" premise stone dead. It literally is just a distribution mechanism on desktop computers, where you absolutely can side load apps and games as much as you like, and they're still considered very much worth 30% by the market.
There's a reasonable discussion to be had about side-loading on iOS, that's a separate issues, but the idea that the App Store cut is unreasonable in the market is clearly bogus.
> In fact Steam kills the whole "Apple store is a gouge" premise stone dead. It literally is just a distribution mechanism on desktop computers, where you absolutely can side load apps and games as much as you like, and they're still considered very much worth 30% by the market.
Except we also have off the top of my head / quick google search EA origin, bethesda game launcher, rockstar game launcher, ubisoft uplay, blizzard battlenet, and Epic game launcher all of which were almost certainly built because it is cheaper to just write your own distribution software and market your games yourself than give steam such a big cut once you reach a certain scale.
Steam doesn't force a payment provider for in-app purchases unless a user chooses to pay out of the Steam wallet and a developer has added support for it. Quite a few F2P games on Steam collect credit cards unlike what Apple/Google allow developers to do.
Steam also has a ton of social network features like chat/communities/etc.. and they support multiple platforms. They also reduce their cut to 25% and 20% above $10 million and $50 million respectively.
Developers and users are completely free to use or not use Steam, GoG, Epic, Itch.io, or others. Quite a few developers do pre-orders on Humble, and then sell on Steam, etc.. You're stuck with Apple/Google TOS for the vast majority of apps regardless if you're the developer or user. Epic couldn't possibly bring the same lawsuits against Steam, maybe the consoles, but even they allow different in-app purchase payment providers (F2P games collecting credit cards again) and subsidize the consoles quite a bit at the start of each cycle.
It's fair for Steam to charge that additional 25-30% since you have a choice to use it or not to reach that audience.
If you become popular, you can de-list yourself off of Steam, and continue running on your website for free.
The issue isn't that the app store takes 30% of your purchases to manage payments. If I'm a startup, I don't wanna deal with all of this complexity, so I'm all for it.
What bothers me is that they control everything that's allowed on your phone. If you want to target iPhone users, you have no choice but to go through them.
App stores are great, but forcing companies to go through them is bad.
Allow people to plug in their phones and install apps from their computer. Easy solution, Google phones already allow this with some technical know-how.
It's interesting that the top distribution channels charge exactly the same 30%.
One would imagine that they would try to compete and start offering lower rates to undercut rivals like Epic (which is much smaller than Steam/Apple/Microsoft/Google as a distribution channel) is doing.
The situation here is like all air major travel companies charging exactly the same for tickets for a given route and then justifying that by saying they offer a great value to customers.
Maybe that exact competitive dynamic has driven prices down to 30%. After all, the dynamic you describe has to end somewhere. It can’t just keep pushing down to zero and all the competitors in the market need to be competitive on price.
Humble Bundle seems like a good deal. They have a built in audience and you’re guaranteed visibility / promotion.
The other 2 are a total scam unless you get put on a featured page. What’s the value of being alongside 1 million other apps with terrible discoverability?
Developers still have to do all their own promotion and drive customers to the platform for purchase, but then Steam or Apple get 30 % for ringing through the transaction. IMO those 30% fees would drop to 10% very quickly if there were competition.
That's what happens when you get a huge portion of the market and get close to a monopoly. You could ask many Steam user what Steam got that others platforms doesn't, and most will say that it's because everything is on there. We prefer to use a single product instead of multiples, thus you choose Steam not because it's superior in any ways, simply because it's the default choice.
Epic Store had to give games for free to start being considered.
There's also the review system, the workshops, automatic updates, easy browsing, communities, friend lists, customer service (getting refunds is easier than on any other platform) etc.
The competing platforms biggest problems is that they assume that all they need to do is set up a HTTP server to download games from and add a few discounts/exclusives to get a customer base. But their UX is miles behind what Steam offers.
They’re the victims of demand aggregation commoditizing the supply side of the market. It’s not so much a choice as it is a requirement to access the market.
I think if developers set their price and Steam listed their 30% as a “Steam Fee” you’d see outraged gamers.
> In fact Steam kills the whole "Apple store is a gouge" premise stone dead. It literally is just a distribution mechanism on desktop computers, where you absolutely can side load apps and games as much as you like, and they're still considered very much worth 30% by the market.
Are they?
Look at how insane the backlash from the gaming community has been over Epic opening their own store, or how gamers acted when EA opened up Origin.
Steam also provides significantly more for their 30% than Apple/Google do for their storefronts.
Apple/Google are providing the whole operating system and API development and in Googles case access to billions of devices and in Apples case 250 MB cloud storage per app user for developers (up to 1 Petabyte) and piracy protection.
The OS and APIs are part of the device users paid for. DRM for piracy protection can be had by any developer on any platform now a days, just look at Netflix.
A person in charge of the Apple App Store told the US Congress it takes ~$100 million to run the App Store[1]. That's about $5/developer/year instead of $99/developer/year that Apple charges.
The User/Developer distinction is completely arbitrary. Any user can download Xcode/Android Studio and develop for their device which has the same libraries installed as an SDK including analytics/debugging/ads and such. Google used to charge developers a one time $25 fee, and Apple could charge as little as $5/developer/year to cover everything related to the App Store. The Swift compiler is common across a few Apple devices, and the device buyers are paying for that.
There's no Jailbreak needed for installing apps and alternate app stores. Just a permission change to install F-Droid, Amazon App Store or something else. Another permission change in developer settings lets you unlock the boot loader and install alternate ROMs like Lineage and get root. A few of the cheaper phones sold by carriers as part of pre-paid plans and such might not be able to unlock the boot loader, but you're still free to sideload any apps you want.
I wish there were more big name apps that would get on F-Droid or one of the alternative app stores on Android. The more competition there is, the better for developers and users.
If they are, then a markup isn’t a function of cost, it’s more accurately a function of pricing power, or how much your customers are willing to pay you over a competitor.
Best Buy can’t markup more because people will buy from Amazon or Walmart or Costco or Target or Aliexpress. Apple can markup more because people can’t get a similar product elsewhere for cheaper.
'Margin' is sometimes 'gross' and sometimes 'net'.
In competitive markets, price ends up being a function of cost: it's always cost + a little bit. That little bit is profit. Anyone who marks up more, gets lost sales.
The fact Apple can take 30% of a software sale, which is in many cases 80% of a companies revenue, and that it's all gravy (i.e. all net), is huge.
Best Buy takes 40% margin because they have underlying costs, meaning other competitors will have similar structures.
That money has to subsidize free apps. If every app was a free app and the apps offered in app purchases without involving apple's payment system then Apple would get nothing. The rules and mandatory cuts have to exist to ensure the continued existence of the App Store.
The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases.
I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes.
The true alternative to an app store with 30% cut is simply an open mobile standard OS that allows users to do whatever they want with their hardware and software. Just like with PCs, but on a smaller form factor. On PCs you don't have app stores or any of that kind of bullshit, yet you still have plenty of free software, lots of powerful paid software, which you pay directly to the creators.
Why can't people see that mobile phones are just a different form factor of a computer?
You have plenty of malware on mobile platforms. Not to mention vulnerabilities that have eclipsed any other platform in terms of potential for devastation. Like Stagefright for android, which gave attackers unlimited access without the need for any user interaction; only precursor is carrier enabled MMS service.
Treating users like idiots that need to be placed in the "pillow room" and building these app platforms under the pretext of security and convenience/ease of use is the reason we're in this swamp where your awesome pocket hardware has been reduced to an ad client which you have 0 control and ownership over.
Everyone's parents have survived the earliest days of computing where security was as its lowest, lack of common knowledge at its highest.
But yes, there is a "supervision required" subset of users. Still, shouldn't calibrate the level of big brother involvement for everyone based on this.
"The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases."
No, absolutely not.
"I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes."
This is ridiculous.
Apple is printing money hand over fist, the richest company in all of history.
The 'alternative' to 30% cut is a 0% cut!
Developers would get 30 percent increase which is might probably 2-3x their profits.
The user pays good money for the phone. The price of the phone pays for certain expectations of service: software updates, Siri, Maps, etc. (this is even reflected in the way Apple books revenue in their public filings.) There's no reason the app store couldn't work that way as well. It's not selfish to expect that if you pay $1,000 on a phone that there isn't a hidden and unavoidable tax on third party apps purchased for it.
Honestly, I suspect zero. My app is on the major stores and literally zero downloads come from simple organic listing. It's pretty clear we need to invest considerably in our own channels/marketing.
In all fairness, though, while a Store listing doesn't guarantee users, the absence of a Store listing does guarantee no users. Epic found this out with Fornite when they tried to get users to sideload via their own website. So a Store listing is a necessary-but-not-sufficient condition.
The user funnel seems to be awareness via non-Store marketing channels -> search on Play/App Store -> install. Remove the second step and your funnel disintegrates.
On the other hand, it's also possible that Fortnite's Android woes were due to artificial hurdles (e.g. requiring users to first navigate menus to allow "unsafe" side-loading). I suspect they don't have this difficulty on PC where it's just a simple go to website->download->install.
> On the other hand, it's also possible that Fortnite's Android woes were due to artificial hurdles (e.g. requiring users to first navigate menus to allow "unsafe" side-loading). I suspect they don't have this difficulty on PC where it's just a simple go to website->download->install.
I suspect this is a big part of it. I chickened out installing a 3rd party App Store once because Google’s warnings sort of make it sound like you’ll lose the permission prompts on individual apps. Even side loading a single app I think it might be a bit ambiguous.
No matter what the details are, side loading is always an intentionally degraded experience regardless of platform based on my experience.
I don't think that's comparable. Major apps will get prominent first-page listing on the App Store and will show up frequently at the top of searches, and Apple does not charge for that. Random indie app won't get this level of promotion.
I'm not sure how to account for that fairly, it seems wrong to charge for prominent listing, but on the other hand it seems wrong to charge small indie devs the same as the majors while shuffling them in deep in the catalogue. Maybe the discount for small publishers Apple announced recently will help with this, though that system does seem to have it's own flaws.
>Major apps will get prominent first-page listing on the App Store
Major apps don't really need that anyways. One of the promotions on the iOS App Store is "If you love indoor plants". The first three apps in that story are "Get some inspiration: Instagram, YouTube, Pinterest". I sincerely doubt any of those three needed any additional promotion in order to get App Store downloads. The apps that actually would benefit from getting promoted, and also the Ebay app, are further down in the article.
Merely being available on the app store doesn't meaningfully constitute marketing and there is absolutely no reason to suppose that they saved anything whatsoever.
I know little about the apple store but there is a lot of content on the play store with most of it bring drek and the search is terrible.
Zero. Appstore gives no exposure whatsoever to 99.99% of the apps and games it contains. Say you are a book publisher and a library buys your book and stocks it on a shelf in their basement - do you think you’ve saved anything in marketing?
I think that is a difficult question to answer as so much has changed but there is value to being listed on the app store just as is there is value on having your product on a birck and motors shelf.
It’s not crazy. They are aggregating and organizing the buyers as a retailer. It is the same as if you sold a phone case in the Apple Store. Apple demands a margin for their value.
A more apt point of contention is whether or not you should have the right as a customer to install apps outside the App Store retail experience.
You can actually but it isn’t easy.
Another related issue is whether or not customers acquired outside the Apple store should yield a margin once installing an iPhone app.
Essentially the entire question is if the phone is a general purpose computer owned by the end user, the end user ought to have the right to install apps as they please without having to go through Apple.
You can either use up to 100 beta licenses from you developer account or Apple Enterprise to load within a company or use an HTML5 app (is that really what we are talking about?) or jailbreak which isn’t statutorially illegal—just against terms of service.
Between tolls, fuel taxes, annual car registration fees, and other government taxes that go towards paying for roads, I wouldn’t be surprised if it approached 30% for many people already.
> It seems crazy to me that they're allowed to do this. Imagine paying 30% more for software on your computer.
Thankfully nobody buys games on Steam to encourage such awful behavior.
I too long for the low markup over wholesale that we used to enjoy on boxed software before the advent of these predatory app stores.
> At least on Google phones you're allowed to jailbreak it and install whatever you want if you're a power user, but you can't do this on Apple's phones.
It is undoubtely very true that you are allowed to jailbreak Google phones but Apple phones are forbidden. Chalk it up to Apple's absolutely unbreakable security and bug-free OS and the DMCA.
It would be very nice if we could get a DMCA exception to explicitly legalize jailbreaking, like this one from 2018:
>Imagine paying 30% more for software on your computer
I would argue that prices are already as high as the market can bear so that raising prices would not raise total revenue. Instead you would have to imagine publishers making much less in profit, which would still be bad since less people would be inclined to make commercial software.
From Roblox's own website (https://developer.roblox.com/en-us/articles/developer-econom...), the game owner's share after all of the other costs is only 24.5% and Roblox also takes a cut of 24.5%, compared to an App store portion of 25%. So essentially, Roblox charges as much as Apple/Google for their "platform fee".
Who decides what is a right amount of "platform fee" in either case?
If I could play Roblox on Android with a direct APK and bypass Google Play, and another 25% of my money went directly to the Roblox developer I'd do it in a heartbeat. But with Apple I don't even get that choice.
Creators who are making more money off of the thing they make are creators who can keep making the thing they make, or make more things that you might like just as much as what they've already made.
Because I don't wish to participate in a superfluous, rent-seeking, middle-man economy.
I want to support creators as directly as possible while giving a fair amount to those who provide the tooling and infrastructure so that they can keep the lights on.
To not care about this is to be complicit with unethical business practices in the creative industry, ignorance or not.
> Roblox also takes a cut of 24.5%, compared to an App store portion of 25%
I find the graphic even misleading. Roblox takes double that: 50,5%.
If you calculate a share out for hosting and user acquisition you also have to do that for the App Store. And everything Apple does (OS development, new hardware, advertising) could count as “user aquisition”.
IMHO I think with competition the app stores would see fees drop significantly because they’re not really providing that much value. The fee on the roblox side I’m not sure about. I wonder what they do for that 24.5%.
Whoever’s running the game servers, moderating the game, providing new content to keep the game relevant, etc. is doing a lot more to earn their cut, right?
Interesting that Apple/Google don't get sued for this. (I assume other stores like Amazon demand a similar amount.) It obviously is a result of a monopoly and the lack of competition of software stores. I'd assume the price to go down if there were a real competition. On Android, you can at least use other stores if you want to take the risk. But on iOS?
That contention simply isn't reasonable. Apple was charging exactly the same right form the start of the store, when a lot of pundits and industry analysts were still saying the iPhone was a dead end. You can't accuse them of abusing their power as an industry whale to charge more, when they are charging exactly the same as they were when they were a minnow, and are still charging pretty much the same as every other comparable business. That just makes no sense at all.
The contention is absolutely reasonable. It’s in fact currently the subject of major litigation from Epic Games, and there was also a notable US House report on the same subject.
That doesn’t mean it’s settled, or that the opposite argument isn’t also reasonable, but it’s certainly a valid controversy.
Just because it’s a controversy doesn’t necessarily mean it’s a valid or reasonable one. People make controversies on ludicrous grounds all the time, especially in the fake news era. If a local restaurant charges $5 for a milk shake which is very popular, grows to become a National chain and still charges $5 for their shakes, it is not reasonable to claim that they are only able to charge $5 due to their market power. I don’t care how many people disagree with me, I will continue to claim they are clearly full of it.
That doesn’t mean the now National chain isn’t doing other things that are anti-competitive, or that their other business practices must be ok, but clearly the market has decided the shake is worth $5.
Nobody forces you to drink your milkshake at that restaurant. You can go someplace else. You cannot easily go someplace else to install software on your iOS phone. On Android, you could but this makes the phone more insecure. There is no real competition among app stores. People usually use the store that was pre-installed. They don't compare prices in app stores app by app and then install from the store that is cheapest. No competition, no market. Your argument is fake.
Many flagship Android phones have come with multiple app stores installed, typically one from the phone vendor such as Samsung, the Google Play Store and one from the network and yet 30% has stayed as a pretty consistent charge in a situation where there clearly was plenty of competition. It's a market determined price.
Steam, which operates on completely open desktop platforms charges 30%. Even Humble Bundle charges 25%, operates on open platforms and the only thing they do is marketing. Another 5% for running a store client and associated services hardly seems excessive. So nether arguing that open platforms would push down prices, or that app store competition would push them down has actually happened in the real world. 30% is very much validated as a competitive price. If the big stores did cut prices, this would arguably squeeze out the smaller stores and operators like Humble Bundle, reducing choice even more.
That 30% is charged to developers, not consumers so in this case it's developers that are the market.
> Just because it’s a controversy doesn’t necessarily mean it’s a valid or reasonable one.
I would say the fact that the case survived a set of initial hearings before a Federal judge and hasn't been dismissed means that it meets a very clear and precise definition of being valid and reasonable in a legal sense.
Epic isn’t actually claiming the 30% for paid for apps on the store is unreasonable though. After all, they want to be able to charge on a store themselves so that would be self defeating. They are contending two things only. That in-app purchases are subject to a revenue split, and that they aren’t allowed to establish a store of their own on iOS.
Apple and Google will both argue that it's not a monopoly because they're competing with each other. Not sure if they can in any way argue that it's not a duopoly however.
Imagine if the mall where you rent your store takes 30% of your revenue (plus a negligible fee). Now think of visa and mastercard that you use to charge your customers: imagine them also taking another 30% cut. That's basically what is happing here.
Many here pretend that Apple, Google, MS - first layer platform hegemons - and Roblox, unity, Uber etc - second layer platforms - charging 30% is fair because it's result of competitive market dynamics. But there's no true competition between these platforms. Specially when you consider that the longer a user is in a ecosystem, the costlier it is to move away from it.
This depends on one's definition of "true competition".
Specifically, what Judge YGR said on Apple/Epic case seems very relevant:
> “Well plaintiffs always want me to define relevant markets as narrowly as possible. It helps their case. And defendants always want me to define markets as broad as possible, because it helps their case”
Side Note: Judging from Real World examples, the next stage of this so called payment processing ( or what ever you like to call it, rent, Slotting fees etc ) will be to prolong the receivables / payment terms to 60 or may be even 90 days. ( These long term payment are not unusual in many other industries, in some cases it is in fact the norm )
It wont happen now, but in later stage of the cycle where they fail to find new sources of revenue or profits.
One good thing with the current 45 days terms is that customer can ask for Refund of the past 30 days and Apple generally are pro customers. In the Mobile Gaming, Pay to Win Gaming Industry this gives tremendous power to the players / customers, especially those "whales" ( as they are called, meaning heavy / top spenders ) could threaten for refund. But there are also group of people who abuse this system and Gaming Developers have no way to appeal, it is literally Apple took away their's revenue. ( And it is even worst if those people sold their account before the Refund )
I still see Gaming, being 80% of App Store Revenue should be a separate store with separate set of rules. We cant have one size fit all solution to the App Store. And Apple needs to work better to help both its customers and developers.
Yes, Arcade in the old days, you cant expect to refund the game if you didn't like it. You move on to another game.
There are of course some legitimate case for refund. Example I bought a package that has a Value, or Attack / Def Number of 100. The gaming company decide it was too over power and changed it to 80 without compensation. Now of course as a buyer I feel cheated because I bought it with the value of it being 100. And in case of App Store you can immediately ask for refund.
Most developers are now aware of this problem so their solution was to inflate their next package to similar level to the Over Power Package, the problem with that is it devalue the current unit economics too much and player will refund and quit.
Basically "In Game Economics" ( especially mobile gaming ) is not a well understand problem. ( And they dont seems to care since most mobile games has a very short life span ) Apart from very big companies like EA which has Data Scientist running and monitoring, most gaming company just goes by the flow. It is a bit like giving Games designers the job of Central Bank and they just keeping print money. Sometimes the balance is right, sometimes it is wrong and they destroyed the whole game.
I wouldn't compare it with a central bank, more like a Casino that makes its own games and rules (except, as you say regarding refunds ;)).
Yes, I have a very bad opinion of mobile games.
And if you don't like those terms, there are other locations that can and, as long as your business is legal, provide you a location to rent or buy in which to conduct your business.
Edit: Also, equating the rent of a physical space with what amounts to a webpage and checkout seems ludicrous to me. Physical space, especially one suited to a particular business is limited asset, not to mention the taxes and other costs to the owner of the physical space incur which don't exist for an app store.
There are many mechanics in commercial agreements; they amount on average to similar outcomes. It’s all rent whether it is a percentage of the till or a fixed cost over a term; where the landlord raised costs upon renewal as the business value rises.
Rent can be negotiated (although not usually done for residential leases, is for commercial ones) and the length can be, and often is, for more than a year. There isn't even the pretext of being able to negotiate the appstore cut.
As I added in my edit, equating the rent of a physical space to an app store seems absurd to me, as well.
The app stores perform payment processing, asset distribution/CDN work, malware detection and some minor tasks that AIUI have O(1) cost to them. They charge for only one of those, and make that charge high enough to cover all of the costs.
What is it that you're unhappy with — are you unhappy with the payment processing fee but feel that the price level would be acceptable if structured as a sum of three fees, or are you saying that the total fee is too much for the total work they do?
I simply find it hard to believe that such a fee would be fair if alternate app stores were available and as capable (as in capabilities allowed by the device) by default.
Even on Android, where it is possible, side loading is a pain and without root the play store has capabilities that cannot be duplicated, I think the fee is only acceptable because of the iOS appstore's fee being the same.
In that case you'll be interested to hear about the situation in China, where the biggest of the many android app stores has less than 30% market share. And what are the prices like? Bloomberg headline is "China's App Store Fees Make Apple's Look Cheap" and describes 50% as a typical rate.
Whether or not the landlord is willing to negotiate isn’t a legal right. They are fully allowed to set their own terms.
Your own feelings don’t make a basis for law. You’ll need to find a meaningful difference here that constrains the rights of the private parties to draft contracts as they wish.
I never said that a landlord _has_ to negotiate. I said rent, just like purchase price of property, can be negotiated. The appstore fee cannot be negotiated. There is no pretext that parties here will draft a mutual contract.
I'm also not sure why you're attacking me and "my feelings" here, especially when it's not that I "feel" that commercial rents should be negotiated, but that they can be and often are negotiated.
You’re arguing a situation seems absurd to you and then working backwards. However we want to live by the Rule of Law so you need to put aside your commitment to your sentiment that this is absurd and investigate what is really happening, and then form a constructive rules-based case that would be fair even to companies that aren’t Apple.
The problem with committing to your sense this is absurd is that you are neglecting to check if it is absurd. Perhaps your own assertions are the problem.
For instance the Apple App Store fee can also be negotiated. There is nothing preventing Apple or an app developer from negotiating prices.
Famously they did with Amazon for instance.
The crux of the Apple case is whether they may legitimately control what apps you may install on your own general purpose computer. That element is critical to not just Apple but how much power any computer manufacturer now and into the long future may possess.
The shopping mall analogy doesn't hold because both sellers and buyers have access to the entire free market. It's not controlled by the landlord.
I would guess your sense the situation is absurd is based on this, but you haven't been able to articulate it. However, it is very common to argue digital freedoms based on what we want and feel rather than what rules make sense, and that is necessarily critiqueable as a bad habit.
Yes, because being able to negotiate with apple is an option for the vast majority of developers, whereas negotiating rent is very common.
I find the comparison to rent absurd, because as I've said elsewhere, the risk and marginal cost of a property to rent is much higher than the cost of an appstore selling another app.
Right, I agree. If we followed the logic to the root cause here, we'd get to the problem. It doesn't matter how much Apple limiting supply in their app store. Stores have the ability to limit what inventory they shelve.
However, this is only an issue because there is only one app store allowed on the iPhone that is controlled by Apple.
That's the rule-based point of contention that won't cause collateral damage to other retailers who don't have a similar singular point of control.
I'm not sure what your point is, as that's literally impossible for someone to do on an Apple device.
At least with Android, it is possible and does happen. The play store still gives the most reach as it's pre-installed and has special permissions. I still think 30% is ludicrous, but at least it's possible to have competition.
Aren't you paying for access to the customer base, rather than just a webpage and checkout? Not many people would be willing to side load apps from third party websites.
Paying for the _only_ access to a customer base kind of comes off as extortion to me? There are often more then 2 options for landlord (including purchasing your own space) in any particular geographic area.
Moreover, while location (e.g. access to customers) is a good portion of what makes rents in the same locale different, the costs and risks of providing the physical location are higher than providing a webpage and checkout (of which the marginal cost is basically $0).
>As a user of Apple ecosystem, I absolutely like that Apple is the curator and arbiter for the ecosystem. I knowingly pay a premium for that.
IMO your argument is NULL, if there were alternatives like an Open source store, a Google, Microsoft and Amazon store on iOS you would not be forced to use them. Check the Android model, most people are using the Google store and the GIANT benefits is that if Google decides or is forced to not allow an application you are not screwed, you can go around that.
Again, if you want to consume ONLY Apple approved content then nobody would force you to not do it, see Android.
While you can sideload apps on Android (last time I checked), that's not much better for developers. Most of their potential customers won't bother side loading.
Is not that great for users either since most developers link to the iOS and Google store and do not let you download the installer directly and it sucks if you have a phone that does not run the Google Play stuff and the developers are incapable of linking to the installer but on the other hand some developers complain the people are not using alternative stores.
Epic tried to go round the Play Store with Fortnite and rely on side loading, but gave up and listed on the Play Store. Then they sued Google. Their argument is precisely that not going through the Play Store screwed them commercialy.
I actually agree with you on the fact that having other stores on iOS would not stop people from just sticking with the App Store. That’s true. My concern about forcing Apple to support other stores is the ‘forcing’ part.
People, throw around the term ‘forcing’ companies to do this and ‘forcing’ consumers to do that very liberally in situations where nobody is forced to do anything, but this is different. Apple doesn’t want to implement the APIs, security controls and services to support third party stores. Mandating that they do so would literally be forcing them to do development and testing work, and support features they don’t want to support. Presumably such a mandate would also have to specify exactly how such features must be designed and implemented in order to be compliant, so now we’d have government specified features and UIs. To me, that seems a few steps too far.
Apple already has mechanisms in place to allow side loading so there is no new work they need f to add. People that jail-broke iOS and side load apps also prove that technically is possible.
When companies do anti-competitive things they are forced by the society with laws to stop, without this kind of laws we would still have mobile phones that are locked forever to a network, still have a big tax when you call someone on a different network, still have a big tax when you would transfer to a different back or use other bank ATM(this examples are from EU not sure about other regions).
For example the laws related to preventing fires also FORCE companies to add more exit doors, use the correct materials, add fire suppression equipment etc. A few years back some night club bribed the fire department and opened without respecting this laws, around 100 young people died because some greedy bastards didn't want to do the correct thing.
Anyway, my comment was about the argument "I love Apple to protect me" that argument is NULL.
We can attempt to debate the actual market share of Apple, to define the actual markets, to decide if Apple and Google are actually competing or have an hidden agreement, to define how we measure the damage by the market abuse (if any), to determine fixes for this abuses (if any).
The way you phrase it sounds, to me, that you knowingly pay for OTHER (consumers) to not have a choice rather than you having the best option possible.
A lot of restaurants would probably prefer a contractual split, actually, assuming there is no base fee. If the rent price scaled up and down depending on demand, you’d see more openings and less closings.
Rent is for a real brick and mortar building where cost is a major factor. Rent in Internet terms if mostly a price gauging scheme in this case. Calling this "rent" is like calling a drug dealer a pharmacist.
As I said, I get the point. I'm just pointing out that it's not a great analogy because the scenario described is normal. I think a better analogy would make the point in a clearer way.
Imagine the phone company taking 30% of revenue for every purchase (over LTE) on phones locked to their network. After all, without the network that sale wouldn’t have existed, so developers and retailers should just be happy for anything they get at that point, right?
If that 30% includes the rent and maintenance of your store, as well as the checkout employees. And imagine that you are selling goods with almost zero marginal cost. Does it still sound that bad?
Anyway, metaphors fail to help understand this situation in my opinion.
Problem is, the maintenance was for the entire mall with only very little done to your store, and the checkout employee that you mentioned can only do the one job with probably of taking your money as hostage.
Also, in a real word mall, the rent and maintenance fee will not increase as you makes more money. Yes, they can try to sell you a better location for a higher price, but it's a mutually beneficial sell (You get a better location from the sell).
My point: 30% was too much for what Google/Apple is providing.
Let me also add:
> And imagine that you are selling goods with almost zero marginal cost
First of all, developing a product costs money, you need to pay everybody including yourself. After all that, advertising, user support etc all costs money. So even if Google/Apple wants other people to treat this service as a mall, it's not a mall, they don't even provide lighting, long bench, air conditioning and free toilet (all of these are inescapably expensive to maintain). Instead, it's more like a searchable list + content delivery service where people can search the item and then download it. They should design their fees more close to that.
Now, imagine saying this to your user: "Hey dear user, yes, that 30% increase in price won't give you any advantage compare to those who directly purchased it from our website. Yes, it's expensive just because you brought it from Google/Apple, nothing else, because we end up receive the same amount of money.... yes, 30% every month for your subscription, and this is the only approved way for Google/Apple to allow us to provide our service to you."
Franchises also take 15%+, and that is excluding card processing fees and chargeback costs. In a highly demanded location, it’s possible you’re paying a percentage of revenue to the land owner, the franchisee, the card networks, and of course the various governments.
>Also, in a real word mall, the rent and maintenance fee will not increase as you makes more money.
Not exactly true, Mall will raise rent if you are making more sales, knowing you are making lots of money they want a bigger piece of it. And in many cases, they are taking a fix rent as well as percentage of sales. It kind of depends on your business segment and brand. For example Food Court and Restaurants operate on different terms, Super Market and Jewellery shops will have different arrangement.
Now imagine that the mall has 100,000 other stores in it as well. Your store is in the middle of some random other stores. It's not in a prominent position.
Our company’s distributor for B2B physical products takes about 50%. For products that we just buy and sell rather make ourselves we have about a 40% margin. This is all quite normal.
Additionally in my industry about 80% of the value chain is taken by the retail outlets. 30% would be pretty awesome for us.
30% is way less than a lot of other industries pay to have their products distributed to a market full of waiting buyers. I’ve read that writers of books only get about 10%.
At least if you find the mall price extortionary you could move somewhere else or even buy your own commercial space and manage the whole thing yourself.
As you said, there's no competition on iOS, and a slight window of opportunity on Android with sideloading.
I think it's more similar to a McDonalds franchisee paying the mall 30% for unit rental security and utilities (Apple/Google), and paying McDonalds 30% for the franchise and rental of all the equipment, uniforms and training (Roblox).
This title is silently reframing the issue to change the discussion in a way that favors the viewpoint of the poster.
“for payment processing and worldwide store distribution” is a more accurate headline, and specifically highlights that they’re not just paying a payment processor. This is, however, more complicated and no longer permits the easy comparison with card processing fees, and so I see many headlines show up that try to dodge this.
It’s fine to disagree with app store fee structures, it’s fine to disagree with how they manage their distribution models or handle approvals or whatever — but it’s totally uncool to lie-by-omission that it’s about credit card processing fees alone.
Yeah, every time I look at Roblox I get a bad taste in my mouth.
The game's business model is basically "like these Korean whale-milking RPGs, except we're outsourcing the development to 12-yo kids".
The games themselves are usually ports of popular games (Counter Strike, Day Z, Minecraft, etc) where the quality is... well, frequently amateurish, for obvious reasons. I suspect the reason these ports are so popular is that a huge portion of the audience is made of kids who can't convince their parents to buy them eg Call of Duty, so they play the Roblox version instead.
Which is all fine and good when we're talking about Little Big Planet levels or Minecraft maps, but becomes kind of exploitative when you see that their creators systematically use classic free-to-play tactics to get other players to fork over money. Money which, of course, is wrapped in an in-game currency designed to make players not realize the true value of what they're spending.
And since there's very little curation, almost no dev involvment whatsoever, and the creators are 12-yo kids who are amateur game designers at best, the idea that players get their money's worth is really dubious.
Honestly the whole thing feels like a pyramid scheme of sorts, where kids will be lured by the promise of making money by selling in-game items to other kids, and therefore will try to spread the game to as many people as possible in the hope of making more sales.
If a seller has the ability to sell at a higher price, they will, regardless of their expenses. If the maximum possible sale prices do not result in revenue exceeding expenses, then the seller will go out of business.
As a seller on eBay, this is my seller's fees for YTD. 24.8% of your total sales. I'm not a fan of it, but I do admit they give me the reach and ease to customers.
I worked for a mobile games publisher in my last job. 30% platform fee, followed by a 30/70 split on revenue (70 to the dev, 30 to the publisher). It's a tough market. Combined with less profitable ad monetization and paid installs being less predictable - it was not always a phenomenal business model. You had to really hit to make money.
I don't agree. It is a fair question to ask how much value do both stores contribute to their business. If Apple and Google provide more value to the business than they take away then a lot of the arguments about how fair these charges are, melt away.
When people pretend they are arbiters of what is and isn't valid because they don't consider it fair it stops any avenue of investigation because they consider it forbidden.
As much as I don't like Apple or their store, if they are going to provide value I am going to work with them. Pretend that for a minute that apple gave me a 10 fold increase on revenue. 70% of a 1000 is still more than 100% of 100.
Also number of people sideloading an app on Android I would wager is negligible compared to store purchases and could be considered to be irrelevant.
So again the question is how much of their revenue came from those stores and how much value does that add to the business?
Android isn’t even really a fair comparison because Google really, REALLY strongly recommends you don’t toggle that setting which might cause you’re phone to explode in your hands. You’ve been warned. Are you really sure you want to roll the dice and sideload? Wait! Did we tell you how dangerous this is? Are you absolutely positive? Oh no! This is your last chance to save yourself. Do you want to? Yes/no?
More importantly, Apple doesn't allow using any other payment processor other that their own.
Even if the product/service you are selling is mostly outside of apple ecosystem (like email or cloud storage or something like that, where web users pay only 2-3% payment processor fee), Apple won't allow you to use your existing payment processor via a link to your website. If that's not anti competitive behaviour then what is?
Let's stop using $1 as a bar since it's extremely misleading. The lowest purchase of Robux is $5 USD, which would make the charge $0.46, or less than 10%. This is also Stripe's added-on fee.
Large players also get very little interchange fees charged onto them because they can negotiate.
Really weird how the example was $1. Micropayments is a common problem that is yet to be solved as far as I'm aware, so choosing the worst possible example to paint CC/payment processing companies in a bad light is extremely disingenuous.
99 cents is a very common price point for paid phone apps, and when Apple originally introduced its fee structure, there were some doubts if they'd manage to even run this at break even.
Basically 1/4 is the Apple/Google cut, 1/4 is Roblox profit, 1/4 is what they say is used to run servers etc.
This is not a complaint. I’m a big fan of the platform and think they provide huge value to developers. Just thought some might find the economics of it interesting.