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kapowaz 721 days ago | link | parent

Whilst I can see the reason why people baulk at giving Apple a cut, what doesn't ever seem to be widely discussed are the reasons why that cut might be justified or even well worth it.

The user experience of in-app purchasing on iOS is very good. Compared to the myriad online purchasing systems I've experienced in over a decade of buying things online, it's easily the most reliable and satisfying I've encountered. Case in point: I've had two separate third-party apps crash or stall during in-app purchase (one because of a loss of network connectivity, another where the app just crashed). Upon relaunching, iOS was able to work out where I'd gotten to with the in-app purchase and reassure me that I wouldn't end up paying twice.

This kind of reassurance is invaluable to consumers who aren't tech-savvy, and will almost certainly lead to higher conversion rates. In fact, it means that the user experience of a customer buying in-app purchase with a completely different product makes them more likely to use in-app purchase with your product! Where else can you benefit from this kind of self-reinforcing behaviour? Apple realises that providing this seamless experience is important, and so does what it can to discourage alternatives where a worse experience (an experience which might lead a customer to erroneously blame Apple or the device) might be the result.

Another important point to remember is that Apple targets the iTunes store to run at break-even (http://www.appleinsider.com/articles/12/02/23/tim_cook_addre...), so accusations that this is motivated primarily by profit are wide of the mark. Yes, that 30% cut helps run at break-even, but let's not forget what other benefits you're getting as part of the deal. And if you're certain those benefits aren't worth it, go try the Android Marketplace, and let us know how that works out for you.



Tsagadai 721 days ago | link

Well we can all see the benefit to Apple. Apple are making a killing with the App Store, this much is easily visible in their earnings reports. However, I think you are way off the mark with the value that 30% generates for users.

What Apple are doing with the App Store is not expensive for Apple. They hire a few people to run some servers and a couple more to filter apps. It's incredibly cheap and as many of us know you can run a content vending business pretty cheaply as it is. Sure, the benefits of using Apple's UI are nice but they are not, in my humble opinion, worth 30% of every purchase.

To put this another way, I read an excellent article about iTunes (http://thetrichordist.wordpress.com/2012/04/15/meet-the-new-...). Apple takes on zero risk in its iTunes business and nets 30% minus trivial operating costs for vending out some files over the internet. What do you call a business model that asks for money without taking risks? Rent seeking. The App Store and iTunes are both examples of rent seeking behaviour.

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astral303 721 days ago | link

It's not true that Apple is making a killing with the App Store. Where is it visible in their earnings reports? Are you sure that you're not confusing revenue with profit?

The App Store runs at just above break even: http://www.macobserver.com/tmo/article/apple_app_store_runs_... http://news.cnet.com/8301-13579_3-20008540-37.html -- figures of less than 1% or 2% of gross profit. That is not "a killing."

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smackfu 721 days ago | link

Percentage of Apple's overall revenue doesn't matter here.

It is amazing Apple somehow spends so much money on reviewing apps and providing the app store that they can't make much money on a 30% cut.

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kapowaz 721 days ago | link

What I find amazing is that people find it so easy to dismiss the cost of running an online store with almost no downtime, delivering music, television episodes, movies and apps to customers all around the world, with fast download speeds, with all the recovery facilities that iCloud offers for past purchases. Apple's famous North Carolina data centre cost about $1 Bn to construct (http://arstechnica.com/apple/news/2011/02/apples-nc-data-cen...). At that price, you'd need to collect 30% of $3.3 Bn in revenues just to break even.

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smackfu 721 days ago | link

Yeah, but who spends a billion dollars on a datacenter??? Only a company with more cash than they know what to do with.

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