App Store changes look like a free ride to some developers
Developers can now direct users in-app to pay for subscriptions outside of the App Store, but the road is not smooth, and there are some pitfalls.
The App Store is the only global business anyone expects to be run for free - image Credit: Apple
Apple in the US now has to allow developers in the App Store to direct users to their own websites, or other third-party payment systems. While its conclusion seems exaggerated so far, The Information, claims that there is a gold rush as developers seize the change to avoid paying what they call an Apple tax.
"We work so hard to build this product, giving value to customers, and then Apple takes away 30% of our subscriptions," Otter CEO Sam Liang said. "It's completely insane."
Call it insane if you like, call it an Apple Tax if that makes you feel better, but this is really nothing more than wanting a free ride. Let's ask Laing when we can expect to put ads for AppleInsider on his Otter.ai transcription website for free.
It's also not clear if they call the difference between what they get from, say, Microsoft in the Xbox Store, a Microsoft tax. Or for folks selling boxed software or gift cards at WalMart a retail tax.
Apparently the makers of Cameo, which lets users buy personalized messages from celebrities, worked until 2 A.M. one night to get alternative payment options ready. Let's ask them what hit their bottom line would take if there were no celebrities using iPhones, and no starstruck fans either.
In fact, by this logic, it's insane that fans would pay Cameo anything when they could just go straight to these celebrities. Except of course, other than in photo lines jammed with fans and paparazzi, fans can't do this easily or privately without the iPhone and the App Store that Apple makes.
And Otter's CEO is complaining about having to pay more and more to Apple, but what that means is his business is growing because of the App Store.
This is not a matter of perspective. There is no other company in the world that is required to give away a business it has grown, in a market that it literally created.
There is no other business in the world that is expected to run a global business providing a store to more than two billion active users, and do it for free.
Certainly Stripe won't perform payment processing for free. Reportedly, the company has been approaching app developers since the App Store mandated change, and offering to take over setting up these payment options.
It's only going to charge a 30 cent fee and a 2.9% cut of every transaction. That is unquestionably lower than Apple's 15% or 30%, but it isn't free.
There's also the question of just what Stripe or other payment processing firms count as part of their deal. Apple manages support, for example, and payment processing firms are not going to do any marketing for developers.
Apple created today's app market
If you were a developer before Apple launched the App Store, its top-level 30% fee is laughably small. With no costs of producing physical media, no boxes, no paying stores to stock your app, no transport costs whatsoever, you're retaining 70% of your retail fee.
And you're able to sell worldwide, which was unthinkable just a few years ago. Today it's easy, except for when it isn't -- Apple handles all of the international tax requirements so you don't have to.
It isn't insane that there is a cost to doing business. Instead it's insulting that CEOs think we'll swallow this and instead of paying Apple our money, run to pay them instead.
Even The Information does accept that there are developers who are hesitating about third-party app stores, and it's partly because of user resistance. Reportedly, an unspecified percentage of users who click an external payment link will not complete the transaction because of the extra steps this requires.
Apple would argue that it's also that users can trust it, where they may not know exactly who they are paying if they use alternative systems. They certainly have less security over any personal credit details being sold on.
There's also a fear that Apple will punish such apps by burying them in the App Store, or simply never featuring them in its various highlight features or promotions. If that doesn't tell developers that Apple is how they get customers, nothing will.
What happens next
Separate research says users would need a big discount if they were to be persuaded to move subscriptions out of Apple's App Store payment system. Some developers are doing exactly that, with yoga app Down Dog using discounts to incentivize users to move.
Down Dog already had an existing online payment option, but says it had been getting 70% of new subscribers paying via Apple. Now it's already down to 30%.
So it's working for some developers and consequently, all developers want the same rise in income -- and to keep all of the benefits of being on the App Store.
That's not entirely fair, since there are developers who instead argue that Apple should just reduce its fees. Maybe there's an argument to be made there, or maybe it's just a hope for at least a cheaper ride instead of a free one.
Developers need Apple and Apple needs developers. App companies can't expect Apple to support their businesses with only the hope that they might sell a few more iPhones to pay for it.
Note that Apple has tried to stop this through an appeal to pause the injunction that has forced external linking on it, but it has failed.
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Comments
to refunds. Apple App Store refunds occur within 48 hours.
Third party requests for refunds take forever and it’s hard to deal or find their customer service department.
That all being said, Apple SHOULD make money from providing the platform, the tools, the support, the marketing, and the market. Every other company gets paid when they do these things. The app store is NOT a monopoly. Nor is the iPhone. You have a choice to buy an iPhone, or a different phone. When you make that CHOICE, you agree to the rules that come with buying the product. Just as the developer shave a choice to produce apps for the iPhone or not. If the business terms are so terrible dealing with Apple, then don't develop for Apple products. Develop an app so good that users will switch platforms to buy your app.
Perhaps they start charging developers based on downloads, active users, API calls, etc…
In which case Apple could earn billions of dollars from free apps like META
Apple doesn't give away a business it has grown nor do provide a store to two billion active users for free. I paid $1299 for my iPhone and Apple's hardware margins are extraordinary! I love having the choice to potentially pay less directly to a developer! Rather than frame as choice between Apple's ridiculous 15%/30% tax or unsecure/scary/horrible links to third parties, it would be great if this publication could advocate for what's in the consumer's best interest. I'm guessing there is a more optimal way that is secure/easy for the consumer, fairer to the developer considering I'm subsidizing the app store with my iphone purchase, and fair to Apple (maybe a minimal (low single digits) fee on top of transaction costs).
Nonsense really. You bought a high tech iPhone for a price you felt was worth it and I am pretty sure that like most of us, you never really thought of the App Store as part of your purchase price. By your logic, you should get 'all' of Apple's services because after all... 'you subsidized it all' with your iPhone purchase. Apple should get a return for inventing, developing and maintaining the App Store and it should be market forces that dictate what companies want to charge for products or services. If Apple charges too much... well we can move on.
As a developer, I wholeheartedly concur with the arguments presented by the OP. The intricate tax and regulatory frameworks that Apple must navigate across diverse geographical regions justify the substantial 30% revenue share.
How much does EPIC charge developers to be on their stores? (12% on games sales and in-app purchases)
Where is the outrage over all of these platform providers 'gouging' developers, while arguably providing much much less than Apple...
On PC you can directly sell and market your game without a game store involved, or you can find a smaller alternative store, or multiple sales channels. Your Windows or Linux PC doesn’t come pre-installed with these stores and they don’t block you from installing whatever store you want.
Other arguments are that the console market is much smaller than the mobile phone market. The current regulatory focus (e.g., EU DMA) is on mobile platforms, not game consoles. Consoles are also subsidized hardware, where the business model expects exclusivity and commission on digital sales to recoup costs. But the argument remains weaker and I think the same regularity focus should be on these platforms.
Another nonsense analogy. Did I have a choice in buying this apartment? There were no other apartments? I would be with you if Apple had a monopoly on phones. But it doesn't.
For my most successful app, an electronic voting system, the app makes only sense it is available on all platforms: my customers, which are NPO organisations, are only interested in a voting app if all common platforms are supported, so their members can use any devices during the general assembly. For the voting app, roughly 75% of the users use Windows or Android, but without an iOS version (or a macOS version) I would a very limited number of customers. And concerning the marketing: a survey among my customers clearly revealed that no customer was acquired via the App Store.
So I don't win any customers because I have an iOS version, but I would lose customers if I didn't.