More independent developers more excited about their platform results in increased app quality and quantity, as well as increased platform migration and retention resulting from a stronger ecosystem. All of which results in increased sales of both apps and hardware which means increased profit.
Plus the good PR and generosity you mentioned.
I actually think it's harder to find the downside to the proposal than it is to find upside. This is a good letter and a good suggestion.
More devs, more and new kind of apps, higher quality, and have devs rely less on ads for low income apps ( which means less people in google/admob's long tail).
They already have most of that. The only thing they don't is less apps relying on ads, and that's more of a function of people not wanting to spend money on apps than anything Apple ever did with the revenue split.
1) Apple is the most profitable company in the world, deals like this are why. It wouldn't behoove them to take less money than what is available on the table.
2) It would leverage Apple to promote only high grossing, high selling apps. This would change the way developers market and sell their apps. And provide disincentive to work on it more after it reached a threshold (maybe).
In answer to your points you can argue them to mean the opposite too:
1) No skin really off Apple's nose then is there, minimal change on bottom line and a win for small devs, their ecosystem and they look like a cool company who listens.
2) They only do this now anyway, that's why the App store is so shit and has had so few new features (especially around discoverability) since its inception. No incentive to push smaller indy devs apps (and also because Apple wants to maintain a feel of high quality as opposed to long tail).
It's not a terrible idea, no reason for Apple not to play nice really as it barely affects them.
You might be correct, it can be seen from both sides.
> No skin really off Apple's nose then is there
Ive never known Apple not to care about every penny it can make and keep, I just dont see them giving up on this, but rather push the devs to make software that is better and sells better so the 70% they earn can mean more to everyone's bottom line. Maybe... but I that's not how Ive ever seen Apple operate. The fact that they make developers pay $99/per just to develop apps is indication they dont care about this.
> no reason for Apple not to play nice
They never play nice, they are cutthroat, just like Amazon. It's how they manage to stay on top. They realized that not only are customers a profit center but also content producers they can make money on both ends.
This letter - and the revenue numbers in it - are interesting from a strategy perspective. The conventional wisdom I hear is that Android owns the overall market for smartphones, but if you want to make money as an independent developer, you're better off developing for iOS because iPhone users are more likely to pay for things. There's all sorts of crap in the Android ecosystem, a lot of it is free, but the users are largely the sorts of people who will take what kind of freebies they can get and don't want to pay for a premium product. By contrast, Apple actively encourages their developers to pay attention to fit & polish.
Given this, I wonder if relaxing the 30% rev split might actually be in Apple's interests. In order to build that premium ecosystem, they need developers to be able to work full-time on apps. If they strangle that ecosystem, then the only people building iPhone apps will be folks with other day jobs to support them - which means either the quality bar will go down, or their will be many fewer apps in the app store vs. Google Play.
Then again, perhaps that's Apple's plan anyway: focus on the few things that many customers want, make sure the apps for those are really good, and it's okay if there's not an app for the rest.
How many people pay to use websites? One of my side project Android apps made over $2100 in advertising revenue last month, and my other Android apps made hundreds of dollars in ad revenue. There are a number of ways people monetize Android apps - some games are freemium, and yes, some apps are paid for. I'm not unhappy with how Android monetizes.
> iPhone users are more likely to pay for things. There's all sorts of crap in the Android ecosystem, a lot of it is free, but the users are largely the sorts of people who will take what kind of freebies they can get and don't want to pay for a premium product.
I hear this argument a lot. I'm an Android user and as somebody that received an iPhone 6 as a gift and sold it to buy an Android, plus I also own an iPad, let me give you a counterpoint.
1) I feel the need to block ads. On Android I have Firefox which has add-ons, on iOS I don't have it. Well, you can usually find a shitty shell to iOS's webview that does. And even if the cost is non-zero, it's still shitty, not to mention untrustworthy.
2) I feel the need to view videos in any format. On Android I have VLC, the leading open-source player, OK? On iOS I don't have it (even though an implementation of VLC exists for iOS, a month ago it was pulled from the iTunes Store). Welcome to the dozens and dozens of shitty alternatives from the iTunes Store, many of which demand money for it.
3) I feel the need to listen to streaming radio. On Android I have VLC. Need I say more?
4) I feel the need to block spammy phone numbers, blocking calls, automatically deleting SMSs, plus I want regular backups, like for my SMS messages and so on and so forth. Oh wait, on iOS that's not allowed, whereas on Android I'm a paying customer. Dropbox on iOS is freaking broken, because in order to stay active in the background and sync, it needs to detect movement.
5) On Android I bought Tasker, because it's so useful at times, whereas on iOS such a thing will never be allowed.
6) I have about 8 games that I bought installed on my Android right now, even though I'm not a gamer, but it just so happens that Google Play keeps suggesting me tower defense games - whereas this doesn't happen on iOS because iTunes is restricting reviews to locals and I'm not living in the US, so all I get are suggestions for, you guessed it, shit - to search for iOS apps, I'm actually doing searches on Google.
7) Android's apps for maps are much better in my experience - besides Google Maps, I have about 3 others installed, all of them good, I only keep them around because while in roaming I don't want to be caught with poor area coverage.
You're talking about iOS having "premium products", whereas the way I see it, my basic necessities are not satisfied and if I am to pay for something for iOS, it's usually in the hope that it works. And this happens primarily because of Apple's restrictions. iPhone 6 seemed to me like a really sexy phone, but I sold it anyway because of the ecosystem.
Yeah thanks for the Android vs iOS rundown. We now all know the differences between the two, but none of the things you listed are the signatures of a premium product, merely a product that better fits your desires. Other than that, it's completely off topic.
If you have at any point purchased VLC, you'd still be able to get it even if it was pulled.
There are many varieties of streaming radio apps available, just as on Android. Just because you're used to VLC on Android does not mean it's suddenly impossible because you don't have VLC for iOS.
You can block numbers/emails, which will block phone calls, messages, and Facetime.
Messages (as well as call history, app settings, and more) are backed up to iTunes/iCloud. I switched from an iPhone 5S to 6 a few days ago, and messages came down from the cloud automatically.
I don't even know what you're talking about for 6). Reviews are per-country, but I believe they also display US reviews if you click a link or something, and my store experience was pretty much identical when I used a Canadian account, when I used a US account, and when I used each account in the other country. Hell, "Apps Near Me" would give me whatever city-specific apps were available in the Canadian store, it didn't care that I was in a US city with a Canadian account, nor would it care that I was in a foreign city with a US account.
So basically it comes down to you being too used to doing things on Android and then not willing to change even in the slightest when you switched to iOS.
Free Software licenses only apply to the source code, not binaries. And, depending on the license, you might also be allowed to make a closed source UI or shell on top of the software.
Why would you purchase it?
Because you want a nice supported easy to install version compiled and packaged for your platform
Doesn't work, unless you're a registered developer and can sign it by yourself. Personally I haven't felt in the mood to do that just for installing an app. On Android it is way easier - you just click a checkbox in its settings, then download the apk.
A minor relaxation of the 30% cut, to 25 or even 20%, won't change the bottom line for developers all that much, but cuts Apple's take by a third. In the article, the grumpy spouse who thinks $70k is not what they married into? That person isn't going to be much happier with $80k.
How so? If Apple promotes an app it often becomes a high-grossing app, especially for games. That means you cross into 70/30 territory very quickly and Apple still gets the same cut.
Is Apple necessarily the only marketing channel? Ie is there no way to deep link into the app store? I've seen links to iTunes app pages online - and while last I heard you can't download to your device from that page, will it not open in the app store if you open it on an iOS device? Also on Android Facebook for instance advertise apps a lot with a link to the store, is that not possible on iOS? Or do you have to use an Apple ad network on iOS for all advertising?
Sorry for the confused reply, I'm just curious whether they've actually taken steps to force themselves as your only marketing channel or why that would be the case.
Anyone can share an app link. So, you can tweet a link, you can post a link on your own web site (and even use an appropriate app store graphic from Apple) or any way you want to share the link. Plus, you get a set of promo codes you can share to give to reviewers. So, there's many ways one can advertise an app.
Now, Apple has started a deal with Pinterest as well so people can pin apps so that's another avenue.
Relying on Apple promotion generally means that you'll end up in the long tail. Occasionally, apps break out (then they often get Apple promotion after this happens) like Flappy Bird, but that's uncommon.
Maybe it would be better to have a choice about what your marketing channels are.
I'm selling software on eBay! For just a little over 10% I get to be super lazy and not develop a marketing website. eBay queues up requests for pre and post sales help for me. And they have me at the top of google results for queries related to my products: anyone facing the problems my software products solve will easily find me with a web search. I am shipping physical media and documents, which is boring work and is a pain. I really like not having to worry about marketing because it leaves me more time for development. My market is not very large, it's a rather specialty niche, and I think that I'm close to reaching the whole universe of interested people through eBay.
eBay is probably not going to tell me my software products violate any arbitrary rules or are not fashionable. I have heard so many negs about Apple Store that I want nothing to do with it.
This would basically turn Apple from a payment processor (relatively straightforward) into a global tax collector (extremely complex).
Think about how you would handle corporate entities. Do you handle pass-through entities like LLCs differently than S-Corps?
Now imagine designing a split structure that would make sense for a developer in Vietnam / Mexico / Spain. It would have to be different for each country. $5K for Vietnam? $20K for Mexico? $50K for Spain? Good luck.
Oh, what if you have multiple people writing one app? With a 60/40 split between them?
Okay, let's say you ignore all the previous points. Just imagine the kind of infrastructure you'd have to build out to verify identity globally, to ensure that people aren't using frontmen -- having their friend register an account and passing the money through their account.
I don't think you've thought this through very well.
Apple already sets pricing tiers per country, based on exchange rates and other factors. Just apply the same adjustment to the $100k figure.
There is no need to be concerned with the entity type. The first $100k per year for all developers accounts gets charged 0%, everything thereafter gets charged the standard rate. If you're building an app with a partner, oh well. The vast majority of people this would help are individual devs.
And registering other accounts is pointless; the app belongs to one dev account and that's the account that accrues revenue. There's no way to share it, other than by transferring the app to someone else's account. A simple fix for that is to require 30% after X numbers of transfers for the same app, or just require the 30% cut if you do a transfer. Again, the target for this is individual indie developers working on their own.
Sure, but you lose your position in the rankings, all of your ratings, everything. You also wouldn't be able to update the original any more. I think you would lose a hell of a lot more in revenue that way than a 10% bump in profit split.
You could try, but getting traction on the new app probably wouldn't be worth the hassle. It's not trivial to earn $100k from an app, doing it twice would be extremely difficult.
I see a lot of idealism in this post. Apple is for profit company that is very aggressive in pursuing it. While I agree with poster rationale and I think tiered pricing would be other way around, lower as you sell more.
Anyhow, I don't think it's going to happen, it looks to me that as far as Apple is concerned, he have you/us where it wants and don't want to change anything.
I think you have your percentages skewed. 93 + 9 = ...
Secondly how much as a percentage does Google make from mobile? Clearly it's not all about the take from people's pockets.
I don't know the exact figures I've seen before but definitely similar - Apple and Samsung between them make more than 100% of the profit under that measurement - everyone else totalled is at a loss.
Agreed about Google though, I highly doubt these figures consider their profits as a result of their position in mobile - though I guess that'd be difficult to accurately calculate.
"I think it would be a big win for independent developers targeting Apple platforms, and by extension a big win for Apple, if the App Store revenue split used a tiered rate."
It's interesting to see someone give Apple advice on how to make a "big win" financially. They're literally the biggest winners financially of any company in the world right now.
Apple's history has a lot of successes stemming from them ignoring stated preferences from customers. Ditching the floppy, a phone without a hardware keyboard, refusing to build netbooks, etc.
As the probably apocryphal Henry Ford quote goes, "if I'd asked people what they wanted, they'd have said a faster horse".
I know those stories, and yet they switched from motorola to intel back in the days, they created a larger screen iphone which proved to be a best seller, and they've recently announced that ios 9 would be a "hardening" release with no major new breakthrough features.
I think we shouldn't confuse marketing studies ( which they may not like), with customer feedback.
The barrier to entry is the annual $100 developer fee, not the percentage of sales. I honestly wouldn't mind this fee being much much higher if the eliminated a lot of the crummy apps from the store.
From a aspiring indie developer perspective, I've never worried about the 70/30 split.
I've been much more concerned with getting my apps visible to anyone. The app store is so flawed when it comes to discoverability (even as a user it is frustrating to find apps that solve a need) I would give up even more share if people could find my app to begin with.
Agreed: The terrible discovery is the worse problem, it leads to a market of hits, with no long tail.
Whereas if you open the play store on an android phone, it suggests apps your friends have, and many other 'discoverable' things. It leads to a better long tail, eg supports indies.
I know more indies making a living out of android, and i know far more ios developers, being one myself.
+1, completely agree. Might as well throw complete itunes connect overhaul into this. It's an absolute nightmare working with itunes connect, managing users, working with beta and internal testers.. the whole process is completely disconnected and really demonstrates the launch of a rushed product.
> Might as well throw complete itunes connect overhaul into this.
Funny considering the current iTunes connect is a complete overhaul, which only came out recently with iOS 8.
The new iTunes Connect acts like someone's first attempt at an Angular app (which it is), with a complete disregard from doing things in a performant way.
Well, then they chose the wrong ones, or widely failed at defining something that works. Working with this new website (which about 30% of the time still uses old pages... Bug reports anyone?) is a huge chore.
I remember being locked out of an important project for an entire week because their buttons for adding people to projects was broken. One day, it started working again, no communication from Apple at all.
There's also this usability issue where you have to try to validate your new version of an app and only then being welcomed by an error. No pre-validation of the input fields, hello Apple?
There are myriads of small annoying issues like:
- can't share 1 email with multiple teams in iTunesConnect and Developer portal. You have to have a unique email in iTunes Connect for each of your projects. This is just ridiculous, especially when you know that on the Developer portal this works fine. I have now tens of myname+theproject@mycompany.com accounts in iTunes connect, and managing passwords is simply... damn..
- can't delete a version of an app when you have created it (but not yet uploaded a binary). WTF? I was trying to test the "beta" service, and was forced to create a new version of the app. Once created, you cannot remove it for any reason. I was stuck there with a version that I deemed was "beta", and couldn't create a new one, or remove this one.
- Seemingly random crypto export renewal. Sometimes, when issuing a new version of our app, the website will ask for the crypto documents, whereas they are in their database. Othertimes, they won't be asked.
- Once the crypto export documents have been provided, you cannot submit another one. This bit me once, because there was only _one_ "upload" button. So I sent the US Gov. crypto document, and then the page moved on, not letting me upload the French one. Afterwards, impossible to get back to this page, and Apple support kindly told me I was to drop the deployment to the French store if I wanted to continue using the App Store... The correct solution would have been to ZIP the entire set of documents, then upload them as 1 file.. which is not intuitive. Or the Apple team could have asked for the french document through their support interface, which they never did. I got out of this by uploading a dummy binary, then dropping the version entirely, and creating a new one. Bizarrely, the export documents were not asked for the next submission.
This website really sucks. I usually brag about how the iOS distribution system is superior to Android's in terms of security and separation of roles, but last month I submitted an app to the Android Play store and I was baffled by the web UI. Drag-and-drop the APK, AJAX-enhanced buttons, very quick, not fiddling with two accounts (developer and iTunes connect), overall ease of use..
Man, Apple seems to have been too busy shoveling the cash.
I know more indies making a living out of android, and i know far more ios developers, being one myself.
Really? Can you elaborate on this at all? What kind of apps? I know the Pocketcasts guys have said that they now get the bulk of their revenues from Android but the conventional wisdom is still that iOS is where the money is for indies.
As an indie developer with no platform allegiances I'm willing to go wherever the customers are.
I'd rather not have my purchases/interests being broadcast to my "friends", thank you.
What are these "friends" anyway? Everyone in your contact list?
The last thing when buying an app I want to do is to worry about "What if X sees that I got this app?"
My purchases are my business. Not theirs. If I want to recommend an app I can do so through a variety of way in this communication age. I do not need some automated snitch for that.
Even basic filtering like "hide all apps that haven't been updated for iOS 8", or something along those lines would help with discoverability (and in this example, reward the developers who are stay on top of their updates).
There are a bunch of other filters that would be useful too.
There's also the issue of the filter's they do us now. The "Essential" apps on the Front Page of the App Store don't even seem that essential. Why is an app to teach kids to spell considered "Essential" for an Apple device?
Our iOS game has been featured a couple of times under "Best New Games" when it's been out for a year and was actually an update. Could be Best Games, Best New Games, and Best Updates to keep things more accurate.
Not going to gripe about any feature too much, but I wonder how many App Store visitors find that sort of thing annoying?
I looked in the list of "iPad Air 2" apps the other day, expecting to see a list of apps that I'd consider upgrading for, but half the list is already installed on my old iPad 2. Very strange.
Yes but, in light of that, this would be a simple solution apple could implement overnight if they wanted. I'm sure they won't for political reasons but I hope they think about it.
It's always interesting to me how simplistic significant changes to a product seem to outsiders. "Overnight" was the key word here. What most people don't consider is that the UI may need to undergo a serious revamp (with nearly unlimited possibilities to evaluate in order to find what Apple's design team believes best), the testing that QA has to perform to catch edge case bugs from the revision, not to mention that these changes may only be deliverable through an update to iOS itself (something that is already considered to be an unwelcome burden by some users).
If you don't think that Apple and its competitors genuinely want to deliver the best experience that they can within the time and cost budgets that they have to adhere to if they want to remain competitive then you severely underestimate the people who put in the long hours required to get these products into your hands.
Apple has made many changes to iTunes Connect already.
Xcode, OS X, iOS, and iTunes have been getting regular updates for years now.
Apple took the time to design a whole new language for app development, a whole new framework for game development, and another new framework for low-level graphics.
So any suggestion that the company doesn't have the time or resources to do a better job on the frontend doesn't square with reality.
Apple has no competitors in this category. There is no other app store you can use with an Apple product. All they have to do is achieve the bare minimum functioning product.
Yes. Since 2010, I've been begging in forums on Android and iOS to use a heavily layered category system or tagging system that would allow me to narrow and filter my search as much as I need to. I want this as a consumer. I want this as a developer. Why it doesn't exist makes absolutely no sense to me. Especially for games.
I should be able to go to action games, then platformers, then side-scrolling, endless, speed run, leveled, then filter out only those with boss battles, or powerup-ups, or 8-bit graphics, etc, and so-on.
The only thing I figure is that the developers will abuse the ability to tag their own apps, making the fine-tuned results even more ridiculous than general results.
Sadly, yes. There's no evidence that Apple has any interest in improving the App Store experience for devs or for customers.
In fact, I'm not convinced that Apple knows how to improve the experience. No one in Cupertino seems to be acting as dev or consumer champion, and upper management are apparently too removed to understand what's needed.
I think what you want could be solved by a better search. If there was a better search you could search for an 8-bit platformer game and find a list of them. Tagging doesn't really add anything that a better search couldn't provide. Plus, a better search in descriptions means that the terms still have to make sense in a description. I guess you could load the description up with terms, but I suspect that it is more likely that one would get caught gaming the system that with tags.
In my opinion, it's in Apple's best interest to improve discoverability as it could result in more apps being sold.
The problem with a lot of categories is that it makes navigation cumbersome as you'd need many taps to get to an app.
Oh, and if you want change (at least in the iOS case), send feedback to Apple and/or a bug report. Complaining on forums does nothing.
There is an idea I described in a blog post a few years back which would potentially improve discovery from top charts.
Have a switch which would remove apps already installed by the user so that others would bubble up
I've brainstormed a discovery model where your content gets seen by say, 100 people. If X% {buy|pay|like} it, then another 100 people see it. And so on. Rotating.
Ironically, this is effectively what Blizzard's Battle.net custom game list screen did. (every time someone joined, it would bump up a hosted game to visibility)
I'm pretty sure this is referring to the operating profits on hardware sales, which would be a pretty silly factor in deciding what platform to write software for. Third party software devs make precisely none of that profit. Samsung also doesn't, afaik, make any of whatever Google's cut of Android software sales are, so even if it does include app store cuts that just turns it into an apples and oranges comparison.
This is not to say the conclusion is wrong, just that the data here is not relevant to it.
Agreed, I'm using total hardware profits by ecosystem as a proxy for willingness of consumers in those ecosystems to spend money. Actual revenue from each store isn't easy to come by from what I've seen (esp. since the various Android stores are fragmented).
But I think we already know the conclusion: the iOS store has more money spent in it than the Android one.
Most of Apple's profits come from hardware. In software, you should really go by software revenues. There's an installed base (units), but the installed base isn't the market, just the potential market. The market consists only of people spending money...
Having said that, you need to account for all the revenues, ie not just the purchase price of an app in the store. That's an area where not everybody is happy with Apple.
It's a good idea. It would give small developers a chance to get on their feet financially. But the author assumes most of the revenues come from big-selling apps. I don't think we actually know how long a tail the app sales distribution has or what effect it would have on Apple's revenues.
And, unfortunately, it wouldn't have any effect on, e.g., Amazon being unable to sell books on Apple products because Amazon's margins are too low to allow them to eat the 30% and jacking up their prices 43% to cover the Apple tax would make them uncompetitive with Apple's book store. Apple's plan, maybe, but damned inconvenient for users.
This would be a great win for the top developers, a little extra rope for the borderline-sustainable developers, and nothing for everybody else. I'd rather they do something to lift the average.
That 30% isn't for nothing - it's for payment processing, reach, marketing, infrastructure, testing/approval (you may or may not like this, but users probably do like it), app delivery, etc. Like it or not, those things all are more valuable to smaller developers than bigger ones. Microsoft can do a lot of that stuff themselves, if they really want to - Joe the ordinary developer can't.
Apple is already being nice to small developers by giving them the same rates as big developers - in any other business, doing 100x the sales of the little guy would get you a better rate, not the same one.
And "payment processing" doesn't even tell the whole story; Apple is effectively collecting and passing on sales tax for you, and dealing with all the other bullshit that comes with being a merchant.
That's huge, especially for solo developers who just want to make stuff and not actually run a business. 30% may be a little steep, but I'd say it's worth it.
In some cases, Apple is even taking on the burden imposed by tax laws. In the recent changes to EU VAT, both Apple and Google took on the added cost burden.
To be more specific, Apple and Google are assuming VAT liability for paid apps.
If an app is a paid app in the stores, there’s relatively little decision making to be done; a developer can adjust prices based on the VAT in each country in order to maintain current revenues. The transaction between a developer and an app platform is considered a business-to-business transaction and is subject to the existing VAT rules.
If an app offers in-app purchases, a developer must consider whether allowing a platform to handle the micro-transactions (thus sacrificing the 30% revenue share) outweighs the time and costs necessary to collect and store sales information (including location) and VAT payments. This can be quite a large undertaking for an indie developer or small development studio.
I agree that its not for nothing and does help cover legitimate expenses Apple incurs. That said- its not a one-way street. The app ecosystem is one of several key drivers for iPhone/iPad sales- that alone probably justifies the cost to Apple.
Also- the point of this pitch is that the extra revenue means much more to smaller developers than it does to Apple, and that Apple in fact wouldn't lose that much revenue from such a scheme.
payment processing, reach, marketing, infrastructure, testing/approval (you may or may not like this, but users probably do like it), app delivery, etc.
The problem is that the value of these things goes way down the more crowded the app store gets. Seriously, what good is approval in light of the endless legions of crapware and clones? How useful is marketing when discoverability is almost nil?
And how about free apps? It seems to me that paid apps subsidize free ones but that's a whole other ball of wax.
> it's for payment processing, reach, marketing, infrastructure, testing/approval,... app delivery, etc.
But if your app is free, then there is no charge for those services. How does it make sense that theit provision only costs Apple money if your app costs >= 1 cent?
This is the opposite of what I was expecting to read. The developers with the lowest income receive the most benefit from Apple as they presumably do not have a large, existing marketing list to convert to sales and so rely on App Store discovery (what exists of it.) If anyone should pay different rates, it should be the more successful developers who convert to an expensive premium developer account subscription. This is the model used by Ebay, Etsy, Shopify, and a lot of other markets.
"At $100K in net revenues per year, you may be a successful independent developer. At $70K in net revenues per year, your spouse could be telling you to get a day job.
Maybe. Depends where one lives. In silicon valley a developer making $70K probably should look for a day job. In some awesome midwest $70K and a working spouse is very good.
True. But keep in mind that we're talking about net revenue here, not net profit. That $70K is after Apple's cut, then you need to deduct all of your expenses, like marketing and hosting, on top of that.
I agree. $30K/yr is a lot of money, but it shouldn't put anyone on the street. Sure, it might not allow you to live a glamorous lifestyle in they valley, but you have the freedom to move somewhere a lot cheaper to live if you're a single developer pulling $70K/yr from an iphone app. If you don't want to make that compromise, then you should be looking for a second source of income, or start living within your means.
Apple can absolutely afford to do this financially, but the 70/30 split is practically the only thing that hasn't changed in the App Store since it launched. So why don't they?
A few possibilities:
- They have a similar split with music labels, so giving more to developers could hurt their music industry relationships
- They have more interest in helping the big app companies like Supercell, simply because of the revenues and brands they create
- They don't want to give additional incentives to creators of crappy apps who never make much money anyway
Whatever Apple's reasons, they haven't changed iTunes music revenue splits in over a decade. So I don't expect them to update developer splits anytime soon either.
Because it's not like fuel. Most people have a fairly inelastic demand for fuel. You kinda have to drive to work. You really don't need apps, and no one needs to make the apps. Running sales can increase consumer demand. Increasing the profit margins for developers could increase supply of quality apps, thereby increasing net revenues for Apple on a smaller cut of the pie. I rather like the current system for it's simplicity and while of course I'd like them to charge less I think their cut is reasonable.
well even if they take 50% cut, developers are not going anywhere else. So, the equation is more like whatever cut apple takes = more developers =...= more revenue
There's certainly a tipping point though. Having the store flooded with more low quality apps doesn't help them, and they seem to be doing pretty well currently.
There's certainly a tipping point though. Having the store flooded with more low quality apps doesn't help them, and they seem to be doing pretty well currently.
> Apple can absolutely afford to do this financially, but the 70/30 split is practically the only thing that hasn't changed in the App Store since it launched. So why don't they?
You missed the "They are making bank and don't see any need to change the payment structure" possibility.
It's a good thought but I think adding this kind of complexity , even with good intent, is exactly the sort of thing the 70/30 split was created to avoid.
There is something nice about just knowing, this is my split. I don't have to worry about it switching and my profit formulas being altered once I hit a certain sales threshold, My take is $.70x, with x being downloads. Period.
Beyond that, I'd have to ask what happens when we take this to its logical conclusion:
Say you start with an 85% split for the first 10,000 sales or something -- what happens if the split then eventually goes below 70/30, say 65/35 or 60/40 or worse, the more copies you sell? How do people react then.
I suppose the counter-argument is that that's how the tax system works -- and that's fair -- but I still don't see developers being happy to have to give up more of their take down the road, just because they have reached "success."
I mean, if you're going to go to tiers, then the next argument becomes about what defines one tier from the next.
Again, it introduces all kinds of complexities that having a straight 70/30 system avoids. And to me, that simplicity ultimately trumps the other arguments, as sympathetic to indie developers as I might be.
that tax argument isn't compelling at all. i don't think apple should use big sellers to cover the costs for indies, it makes no sense as a private company. It does make sense in society as a whole with income.
The point of having tapered rates is well established as being progressive and fair. Governments do this with income tax. The basic premise is that $1 means more to a person with an income of $10,000 per year, compared to a person with an income of $100,000, or a $1,000,000. It therefore follows that developers earning less money are not as able to pay as those earning higher incomes. A flat rate favours bigger developers.
If Apple wants to promote diversity, then they should have a progressive system, and lower the barrier to smaller developers.
This actually may prove to increase Apple revenues ultimately by helping smaller developers stay in the game over the long term because their business would not have been otherwise viable.
yeah but apple isn't a charity or government. they aren't in the industry of solving income inequality. imagine if you went to a restaurant and they checked your income and set the price of your meal based on that. it doesn't make any sense.
Completely OT, but, if you file a Schedule C and are deducting 50% of the cost as a business expense, then effectively the meal actually costs less the higher your tax rate. In CA and at the highest marginal rates the state+federal deduction is worth around 20% the cost of the meal!
> I think it’s safe to say that most independent developers are generating annual revenue in the tens of thousands to low hundreds of thousands of dollars range.
I don't believe this is the case at all. From the linked study, most are making substantially less than that.
A key point that many developers miss is that IF you are marketing your own apps, the split is not 70/30, but 77/23.
In explanation, you join the iTunes affiliate program, which gives you a 7% cut on sales in the app store. I really don't understand why this isn't more widely known.
If I could sell it directly from my website the cut would be 100/0. I hate the indentured servitude imposed by the Apple App Store, and have opted out of mobile development thus far because of it.
It's like shooting off my nose to spite my face, I guess, given the growth of the mobile market, but I truly hate the shape of our industry these days, when it comes to how indie developers are able to connect to their users...yes, it's better than it's ever been, but not because of Apple. It's better because of the open web, and Apple and Google are using their near-monopoly powers to impose the old gatekeeper model long past when it should be relevant.
Not likely... I actually do sell direct on my site, and even there the cut for the ecommerce provider (fastspring) is 8.9%. Also, I have to manage the distribution chain myself, which is a surprising amount of overhead.
I sell software for servers directly on my site, as well. I do pay merchant service fees (which I'm also somewhat grumpy about how high they are), but the total amount of "fees" I pay is remarkably lower than 30%. If I factor in colocation costs, server costs, etc. I end up with ~11% total. (But, we're also supporting Open Source projects with a million+ users, so we have a lot higher infrastructure costs than we would if we only had to serve our few thousand paying customers.)
Even if I add advertising costs (because some people allege the app stores provide a customer base), it's still less than 20%. But, I could distribute dozens of times the amount of software I'm selling with the same hardware and colo (if the market wanted to buy dozens of times the amount of our software currently sold).
So, it's true that there are costs no matter how you sell your software to customers. And, I might be willing to pay more for things that would make my customers lives easier. But, 30% is...it's just outrageous, to me. Apple and Google are among the richest companies in the world. Their margins on running these stores is obscene.
Is it possible to take advantage of the affiliate program for sales on in-app purchases? Our app (like many) is free with in-app purchases, so I don't think we can generate affiliate revenue from our sales, but I'd love it if I were wrong.
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[ 3.4 ms ] story [ 237 ms ] threadPlus the good PR and generosity you mentioned.
I actually think it's harder to find the downside to the proposal than it is to find upside. This is a good letter and a good suggestion.
1) Apple is the most profitable company in the world, deals like this are why. It wouldn't behoove them to take less money than what is available on the table.
2) It would leverage Apple to promote only high grossing, high selling apps. This would change the way developers market and sell their apps. And provide disincentive to work on it more after it reached a threshold (maybe).
1) No skin really off Apple's nose then is there, minimal change on bottom line and a win for small devs, their ecosystem and they look like a cool company who listens.
2) They only do this now anyway, that's why the App store is so shit and has had so few new features (especially around discoverability) since its inception. No incentive to push smaller indy devs apps (and also because Apple wants to maintain a feel of high quality as opposed to long tail).
It's not a terrible idea, no reason for Apple not to play nice really as it barely affects them.
> No skin really off Apple's nose then is there
Ive never known Apple not to care about every penny it can make and keep, I just dont see them giving up on this, but rather push the devs to make software that is better and sells better so the 70% they earn can mean more to everyone's bottom line. Maybe... but I that's not how Ive ever seen Apple operate. The fact that they make developers pay $99/per just to develop apps is indication they dont care about this.
> no reason for Apple not to play nice
They never play nice, they are cutthroat, just like Amazon. It's how they manage to stay on top. They realized that not only are customers a profit center but also content producers they can make money on both ends.
Given this, I wonder if relaxing the 30% rev split might actually be in Apple's interests. In order to build that premium ecosystem, they need developers to be able to work full-time on apps. If they strangle that ecosystem, then the only people building iPhone apps will be folks with other day jobs to support them - which means either the quality bar will go down, or their will be many fewer apps in the app store vs. Google Play.
Then again, perhaps that's Apple's plan anyway: focus on the few things that many customers want, make sure the apps for those are really good, and it's okay if there's not an app for the rest.
I hear this argument a lot. I'm an Android user and as somebody that received an iPhone 6 as a gift and sold it to buy an Android, plus I also own an iPad, let me give you a counterpoint.
1) I feel the need to block ads. On Android I have Firefox which has add-ons, on iOS I don't have it. Well, you can usually find a shitty shell to iOS's webview that does. And even if the cost is non-zero, it's still shitty, not to mention untrustworthy.
2) I feel the need to view videos in any format. On Android I have VLC, the leading open-source player, OK? On iOS I don't have it (even though an implementation of VLC exists for iOS, a month ago it was pulled from the iTunes Store). Welcome to the dozens and dozens of shitty alternatives from the iTunes Store, many of which demand money for it.
3) I feel the need to listen to streaming radio. On Android I have VLC. Need I say more?
4) I feel the need to block spammy phone numbers, blocking calls, automatically deleting SMSs, plus I want regular backups, like for my SMS messages and so on and so forth. Oh wait, on iOS that's not allowed, whereas on Android I'm a paying customer. Dropbox on iOS is freaking broken, because in order to stay active in the background and sync, it needs to detect movement.
5) On Android I bought Tasker, because it's so useful at times, whereas on iOS such a thing will never be allowed.
6) I have about 8 games that I bought installed on my Android right now, even though I'm not a gamer, but it just so happens that Google Play keeps suggesting me tower defense games - whereas this doesn't happen on iOS because iTunes is restricting reviews to locals and I'm not living in the US, so all I get are suggestions for, you guessed it, shit - to search for iOS apps, I'm actually doing searches on Google.
7) Android's apps for maps are much better in my experience - besides Google Maps, I have about 3 others installed, all of them good, I only keep them around because while in roaming I don't want to be caught with poor area coverage.
You're talking about iOS having "premium products", whereas the way I see it, my basic necessities are not satisfied and if I am to pay for something for iOS, it's usually in the hope that it works. And this happens primarily because of Apple's restrictions. iPhone 6 seemed to me like a really sexy phone, but I sold it anyway because of the ecosystem.
If you have at any point purchased VLC, you'd still be able to get it even if it was pulled.
There are many varieties of streaming radio apps available, just as on Android. Just because you're used to VLC on Android does not mean it's suddenly impossible because you don't have VLC for iOS.
You can block numbers/emails, which will block phone calls, messages, and Facetime.
Messages (as well as call history, app settings, and more) are backed up to iTunes/iCloud. I switched from an iPhone 5S to 6 a few days ago, and messages came down from the cloud automatically.
I don't even know what you're talking about for 6). Reviews are per-country, but I believe they also display US reviews if you click a link or something, and my store experience was pretty much identical when I used a Canadian account, when I used a US account, and when I used each account in the other country. Hell, "Apps Near Me" would give me whatever city-specific apps were available in the Canadian store, it didn't care that I was in a US city with a Canadian account, nor would it care that I was in a foreign city with a US account.
So basically it comes down to you being too used to doing things on Android and then not willing to change even in the slightest when you switched to iOS.
How? I purchased VLC but I can't find it for download in appstore anymore.
Update: Oh, I see. http://www.macrumors.com/2015/02/16/vlc-returning-app-store/
Why would you purchase it? And who gets the money when you do?
Why would you purchase it?
Because you want a nice supported easy to install version compiled and packaged for your platform
And who gets the money when you do?
The person who compiled and packaged it.
http://get.videolan.org/vlc-iOS/2.3.0/vlc-iOS-2.3.0.ipa
Is it just for users who want a one click install? (I have never used the app store)
Look at the 30% fee as a marketing cost. Surely you want the owner of your only marketing channel to be well compensated?
Sorry for the confused reply, I'm just curious whether they've actually taken steps to force themselves as your only marketing channel or why that would be the case.
Now, Apple has started a deal with Pinterest as well so people can pin apps so that's another avenue.
Relying on Apple promotion generally means that you'll end up in the long tail. Occasionally, apps break out (then they often get Apple promotion after this happens) like Flappy Bird, but that's uncommon.
I'm selling software on eBay! For just a little over 10% I get to be super lazy and not develop a marketing website. eBay queues up requests for pre and post sales help for me. And they have me at the top of google results for queries related to my products: anyone facing the problems my software products solve will easily find me with a web search. I am shipping physical media and documents, which is boring work and is a pain. I really like not having to worry about marketing because it leaves me more time for development. My market is not very large, it's a rather specialty niche, and I think that I'm close to reaching the whole universe of interested people through eBay.
eBay is probably not going to tell me my software products violate any arbitrary rules or are not fashionable. I have heard so many negs about Apple Store that I want nothing to do with it.
Think about how you would handle corporate entities. Do you handle pass-through entities like LLCs differently than S-Corps?
Now imagine designing a split structure that would make sense for a developer in Vietnam / Mexico / Spain. It would have to be different for each country. $5K for Vietnam? $20K for Mexico? $50K for Spain? Good luck.
Oh, what if you have multiple people writing one app? With a 60/40 split between them?
Okay, let's say you ignore all the previous points. Just imagine the kind of infrastructure you'd have to build out to verify identity globally, to ensure that people aren't using frontmen -- having their friend register an account and passing the money through their account.
No thanks.
Apple already sets pricing tiers per country, based on exchange rates and other factors. Just apply the same adjustment to the $100k figure.
There is no need to be concerned with the entity type. The first $100k per year for all developers accounts gets charged 0%, everything thereafter gets charged the standard rate. If you're building an app with a partner, oh well. The vast majority of people this would help are individual devs.
And registering other accounts is pointless; the app belongs to one dev account and that's the account that accrues revenue. There's no way to share it, other than by transferring the app to someone else's account. A simple fix for that is to require 30% after X numbers of transfers for the same app, or just require the 30% cut if you do a transfer. Again, the target for this is individual indie developers working on their own.
Plus, it could easily be countered by another article in apple's tos to check at validation.
Anyhow, I don't think it's going to happen, it looks to me that as far as Apple is concerned, he have you/us where it wants and don't want to change anything.
Not only would it let more devs work full time on their project, but it will also make new niche markets interesting.
Agreed about Google though, I highly doubt these figures consider their profits as a result of their position in mobile - though I guess that'd be difficult to accurately calculate.
Apple makes $93, Samsung makes $9, MSFT/LG/HTC/Nokia have losses of $2.
It's interesting to see someone give Apple advice on how to make a "big win" financially. They're literally the biggest winners financially of any company in the world right now.
As the probably apocryphal Henry Ford quote goes, "if I'd asked people what they wanted, they'd have said a faster horse".
I think we shouldn't confuse marketing studies ( which they may not like), with customer feedback.
I've been much more concerned with getting my apps visible to anyone. The app store is so flawed when it comes to discoverability (even as a user it is frustrating to find apps that solve a need) I would give up even more share if people could find my app to begin with.
Whereas if you open the play store on an android phone, it suggests apps your friends have, and many other 'discoverable' things. It leads to a better long tail, eg supports indies.
I know more indies making a living out of android, and i know far more ios developers, being one myself.
Funny considering the current iTunes connect is a complete overhaul, which only came out recently with iOS 8.
The new iTunes Connect acts like someone's first attempt at an Angular app (which it is), with a complete disregard from doing things in a performant way.
Huh, it sure is. Is that surprising to anyone else?
Also, while it may be Apple's first attempt as a company I'm sure they managed to find a few devs who had shipped an angular app to work on Connect.
I remember being locked out of an important project for an entire week because their buttons for adding people to projects was broken. One day, it started working again, no communication from Apple at all.
There's also this usability issue where you have to try to validate your new version of an app and only then being welcomed by an error. No pre-validation of the input fields, hello Apple?
There are myriads of small annoying issues like:
- can't share 1 email with multiple teams in iTunesConnect and Developer portal. You have to have a unique email in iTunes Connect for each of your projects. This is just ridiculous, especially when you know that on the Developer portal this works fine. I have now tens of myname+theproject@mycompany.com accounts in iTunes connect, and managing passwords is simply... damn.. - can't delete a version of an app when you have created it (but not yet uploaded a binary). WTF? I was trying to test the "beta" service, and was forced to create a new version of the app. Once created, you cannot remove it for any reason. I was stuck there with a version that I deemed was "beta", and couldn't create a new one, or remove this one. - Seemingly random crypto export renewal. Sometimes, when issuing a new version of our app, the website will ask for the crypto documents, whereas they are in their database. Othertimes, they won't be asked. - Once the crypto export documents have been provided, you cannot submit another one. This bit me once, because there was only _one_ "upload" button. So I sent the US Gov. crypto document, and then the page moved on, not letting me upload the French one. Afterwards, impossible to get back to this page, and Apple support kindly told me I was to drop the deployment to the French store if I wanted to continue using the App Store... The correct solution would have been to ZIP the entire set of documents, then upload them as 1 file.. which is not intuitive. Or the Apple team could have asked for the french document through their support interface, which they never did. I got out of this by uploading a dummy binary, then dropping the version entirely, and creating a new one. Bizarrely, the export documents were not asked for the next submission.
This website really sucks. I usually brag about how the iOS distribution system is superior to Android's in terms of security and separation of roles, but last month I submitted an app to the Android Play store and I was baffled by the web UI. Drag-and-drop the APK, AJAX-enhanced buttons, very quick, not fiddling with two accounts (developer and iTunes connect), overall ease of use.. Man, Apple seems to have been too busy shoveling the cash.
Really? Can you elaborate on this at all? What kind of apps? I know the Pocketcasts guys have said that they now get the bulk of their revenues from Android but the conventional wisdom is still that iOS is where the money is for indies.
As an indie developer with no platform allegiances I'm willing to go wherever the customers are.
The last thing when buying an app I want to do is to worry about "What if X sees that I got this app?"
My purchases are my business. Not theirs. If I want to recommend an app I can do so through a variety of way in this communication age. I do not need some automated snitch for that.
Even basic filtering like "hide all apps that haven't been updated for iOS 8", or something along those lines would help with discoverability (and in this example, reward the developers who are stay on top of their updates).
There are a bunch of other filters that would be useful too.
Not going to gripe about any feature too much, but I wonder how many App Store visitors find that sort of thing annoying?
Putting money behind discovery at the outset is key. If you had that 30% back, you could invest it into ads, promoted posts, etc.
If you don't think that Apple and its competitors genuinely want to deliver the best experience that they can within the time and cost budgets that they have to adhere to if they want to remain competitive then you severely underestimate the people who put in the long hours required to get these products into your hands.
Xcode, OS X, iOS, and iTunes have been getting regular updates for years now.
Apple took the time to design a whole new language for app development, a whole new framework for game development, and another new framework for low-level graphics.
So any suggestion that the company doesn't have the time or resources to do a better job on the frontend doesn't square with reality.
I should be able to go to action games, then platformers, then side-scrolling, endless, speed run, leveled, then filter out only those with boss battles, or powerup-ups, or 8-bit graphics, etc, and so-on.
The only thing I figure is that the developers will abuse the ability to tag their own apps, making the fine-tuned results even more ridiculous than general results.
What matters is whether you want this as the operator of a walled garden.
In fact, I'm not convinced that Apple knows how to improve the experience. No one in Cupertino seems to be acting as dev or consumer champion, and upper management are apparently too removed to understand what's needed.
In my opinion, it's in Apple's best interest to improve discoverability as it could result in more apps being sold.
The problem with a lot of categories is that it makes navigation cumbersome as you'd need many taps to get to an app.
Oh, and if you want change (at least in the iOS case), send feedback to Apple and/or a bug report. Complaining on forums does nothing.
http://blog.goolamabbas.org/2012/01/11/mockup-to-demonstrate...
Any sites that do this?
This is not to say the conclusion is wrong, just that the data here is not relevant to it.
But I think we already know the conclusion: the iOS store has more money spent in it than the Android one.
http://www.businessinsider.com/chart-app-revenue-android-ios...
Having said that, you need to account for all the revenues, ie not just the purchase price of an app in the store. That's an area where not everybody is happy with Apple.
And, unfortunately, it wouldn't have any effect on, e.g., Amazon being unable to sell books on Apple products because Amazon's margins are too low to allow them to eat the 30% and jacking up their prices 43% to cover the Apple tax would make them uncompetitive with Apple's book store. Apple's plan, maybe, but damned inconvenient for users.
Apple is already being nice to small developers by giving them the same rates as big developers - in any other business, doing 100x the sales of the little guy would get you a better rate, not the same one.
That's huge, especially for solo developers who just want to make stuff and not actually run a business. 30% may be a little steep, but I'd say it's worth it.
If an app is a paid app in the stores, there’s relatively little decision making to be done; a developer can adjust prices based on the VAT in each country in order to maintain current revenues. The transaction between a developer and an app platform is considered a business-to-business transaction and is subject to the existing VAT rules.
If an app offers in-app purchases, a developer must consider whether allowing a platform to handle the micro-transactions (thus sacrificing the 30% revenue share) outweighs the time and costs necessary to collect and store sales information (including location) and VAT payments. This can be quite a large undertaking for an indie developer or small development studio.
See: http://www.appdevelopersalliance.org/news/eu-value-added-tax...
Webinar: https://pollen.vc/#/vat-seminar/
Also- the point of this pitch is that the extra revenue means much more to smaller developers than it does to Apple, and that Apple in fact wouldn't lose that much revenue from such a scheme.
The problem is that the value of these things goes way down the more crowded the app store gets. Seriously, what good is approval in light of the endless legions of crapware and clones? How useful is marketing when discoverability is almost nil?
And how about free apps? It seems to me that paid apps subsidize free ones but that's a whole other ball of wax.
But if your app is free, then there is no charge for those services. How does it make sense that theit provision only costs Apple money if your app costs >= 1 cent?
Every free app in their store is one more reason for you to buy an iPhone.
Paid apps, while also adding to the ecosystem, do not offer the same value to Apple.
It's also just plainly logical. You can't charge people to give something away. You can charge money if you're helping them make it.
"At $100K in net revenues per year, you may be a successful independent developer. At $70K in net revenues per year, your spouse could be telling you to get a day job.
Therefore,..."
Apple can absolutely afford to do this financially, but the 70/30 split is practically the only thing that hasn't changed in the App Store since it launched. So why don't they?
A few possibilities:
- They have a similar split with music labels, so giving more to developers could hurt their music industry relationships
- They have more interest in helping the big app companies like Supercell, simply because of the revenues and brands they create
- They don't want to give additional incentives to creators of crappy apps who never make much money anyway
Whatever Apple's reasons, they haven't changed iTunes music revenue splits in over a decade. So I don't expect them to update developer splits anytime soon either.
It makes sense.
You missed the "They are making bank and don't see any need to change the payment structure" possibility.
There is something nice about just knowing, this is my split. I don't have to worry about it switching and my profit formulas being altered once I hit a certain sales threshold, My take is $.70x, with x being downloads. Period.
Beyond that, I'd have to ask what happens when we take this to its logical conclusion:
Say you start with an 85% split for the first 10,000 sales or something -- what happens if the split then eventually goes below 70/30, say 65/35 or 60/40 or worse, the more copies you sell? How do people react then.
I suppose the counter-argument is that that's how the tax system works -- and that's fair -- but I still don't see developers being happy to have to give up more of their take down the road, just because they have reached "success."
I mean, if you're going to go to tiers, then the next argument becomes about what defines one tier from the next.
Again, it introduces all kinds of complexities that having a straight 70/30 system avoids. And to me, that simplicity ultimately trumps the other arguments, as sympathetic to indie developers as I might be.
If Apple wants to promote diversity, then they should have a progressive system, and lower the barrier to smaller developers.
This actually may prove to increase Apple revenues ultimately by helping smaller developers stay in the game over the long term because their business would not have been otherwise viable.
Adding income tiers is not that more complex.
I don't believe this is the case at all. From the linked study, most are making substantially less than that.
In explanation, you join the iTunes affiliate program, which gives you a 7% cut on sales in the app store. I really don't understand why this isn't more widely known.
It's like shooting off my nose to spite my face, I guess, given the growth of the mobile market, but I truly hate the shape of our industry these days, when it comes to how indie developers are able to connect to their users...yes, it's better than it's ever been, but not because of Apple. It's better because of the open web, and Apple and Google are using their near-monopoly powers to impose the old gatekeeper model long past when it should be relevant.
Even if I add advertising costs (because some people allege the app stores provide a customer base), it's still less than 20%. But, I could distribute dozens of times the amount of software I'm selling with the same hardware and colo (if the market wanted to buy dozens of times the amount of our software currently sold).
So, it's true that there are costs no matter how you sell your software to customers. And, I might be willing to pay more for things that would make my customers lives easier. But, 30% is...it's just outrageous, to me. Apple and Google are among the richest companies in the world. Their margins on running these stores is obscene.