back to article Death by 30% cut: Apple app tax must change

Mobile is no longer about selling devices, but rather about selling ecosystems, and payment services are a critical component of those ecosystems. It's too bad, therefore, that Apple, GroupOn and others may be wrong in their various approaches to getting paid. The ecosystem vendors have been in a mad rush to add payment …

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  1. Chas
    Jobs Halo

    Talk about missing the point!

    Publishers are whinging that they can't get a free ride on Apple's ecosystem - tough! If you distribute your content through the App Store, you pay, just like anyone else has to do. Apple run the iStore at break-even so claims that they're making any profit in the deal is laughable. Publishers aren't interested in content: they want to sell your info to everyone else to the detriment of the consumer.

    Perhaps the author would like to comment on the following article:

    http://counternotions.com/2011/02/16/stores

    This is one of the best analyses I've seen on the whole debate and a cursory search will turn up many more (and as many decrying the whole issue). At least Apple are putting the choice back in the hands of the consumer - and about bloody time too!

    1. Stephen Booth

      Free ride?

      How many times do we have to listen to the argument about getting a free ride from the apple ecosystem.

      The vendors don't want to distribute their content through the app store. All they WANT is to enable their customers to use devices (which the customers paid for) to access the services the vendors supply. They would be quite happy to serve apps and content directly from their own websites never involving apple at all beyone making the hardware but apple insists anything involving an iPhone has to take part in their ecosystem. Yes apple make good hardware but that has already been payed for!

      This is not the case of a fair payment for an essential service, but a a service that apple has artificially engineered to be essential so that everyone has to pay for it.

      1. Giles Jones Gold badge

        Simple

        If they don't want to use the App Store they can avoid it.

        What they are annoyed about is having a chunk of the market unavailable at a price they wish to pay.

        Apple virtually invented the whole App Store on a mobile concept (Nintendo's Wii channels was there first), so naturally their platform will cost more.

        All console-like platforms have royalty fees, if the publishing world was so brilliant why didn't they invent their own store for mobiles?

        1. Dan 92
          Thumb Down

          Apples was certainly not the first mobile app store

          They have been around for about 10 years selling billions of Java apps, just about every carrier in the world has one. There are more Java applications sold for mobile than any other platform, it just doesn't make the press as it's all spread across dozens of app stores.

        2. Gio Ciampa
          Jobs Horns

          "Virtually" is right...

          ...and Nintendo wasn't first either by the way

          We have to go back to our old friends at Nokia - their Download service predates the App Store by a couple of years at least (ok - it failed miserably - and the current Ovi store isn't exactly cutting edge), but what Apple did was to get the user experience right, and with that came the illusion of ubiquity

      2. Anonymous Coward
        WTF?

        Help me here, please.

        Is it the case that the only place I can by an iPhone application is the iTunes store? I can't go to another website and down load an application to run on my iPhone (or Android or Windows phone)? I don't have an iPhone so I've never looked. If so, almost sounds like a restraint on trade - unless this is embedded in the iPhone EULA that the user has accepted.

        If the user is scerwed then sounds like a very good reason for not buying and iPhone to me.... if you want to enhance the functionality of that hand held minicomputer you carry around with you...

      3. Steve Todd
        Stop

        Free ride

        "How many times do we have to listen to the argument about getting a free ride from the apple ecosystem."

        How about until you start listening. Publishers are not forced to produce iOS apps, they can produce web apps which will provide access also, and Apple get no cut at all from web apps. Having written an iOS app they put them in the app store and price them as free. Apple host the app store and get nothing for selling them. If publishers get users to sign up for subscriptions from their own site then Apple still get nothing. So Apple have expenses in the form of running the app store, but no income. Free ride for the publisher.

        Under the revised arrangements Apple gets 30% of subscriptions IF the user buys via in app purchase. They get nothing for selling the original app still, and nothing if the publisher signs the user up outside of the app.

        If Apple discounted subscriptions then the first thing that would happen is all pay apps would go free with subscription. Apple would make less that way (and they don't have big margins already).

        If publishers want to sell their products to customers using Apple products then they have to acknowledge that Apple created the platform and deserve recompense. Apple like to keep their pricing models simple and 30% is rather a low margin for distribution and sales in publishing. Unless Apple offers a model where they discount subscriptions ONLY for paid apps above a certain price point (e.g. $4.99) what would be THEIR advantage in doing so?

    2. Haku

      "At least Apple are putting the choice back in the hands of the consumer"

      So so many fart apps to choose from...

    3. Anonymous Coward
      Anonymous Coward

      Claims that they aren't making profit on the deal is laughable

      Apple know very well that one of the things that draws consumers to their devices is the apps. In fact it's not only Apple that know this, Google, Microsoft, RIM etc ..are very well aware.

      Even if Apple were running the store and just breaking even, which I highly doubt, the number of customers that the vast array of apps draws to the iPhone is huge. This is what pulls a lot of people towards the iPhone over other devices. After all, without the 3rd party apps the iPhone is just another phone with a better screen and less offerings than their competitors.

    4. JarekG
      WTF?

      At least Apple are putting the choice back in the hands of the consumer - and about bloody time too!

      "At least Apple are putting the choice back in the hands of the consumer - and about bloody time too!" - Ha...this is funny...can you tell us what are the other choices for iCrap of your choosing?

      "Publishers aren't interested in content: they want to sell your info to everyone else" - so is crApple.

      "Apple run the iStore at break-even" - so maybe they should stick with what they started, making hardware not a eCommerce.

    5. Anonymous Coward
      Megaphone

      How about the Kindle?

      What I find lacking in this argument is the comparison with Amazon's Kindle, which up until December 2010 was taking 70% of the revenue for these very same subscription services that people are so up in arms about. They dropped it to 30%, but still charge on top of that for delivering content (per Mb), which is why most subscriptions on the Kindle have few pictures...

    6. Anonymous Coward
      Big Brother

      @Chas

      "At least Apple are putting the choice back in the hands of the consumer - and about bloody time too!"

      Which is why your iPhone will go to places other than Apple to download apps.

      You are free to do as we tell you ...

    7. The Fuzzy Wotnot
      Happy

      Apple not making a profit on AppStore?!

      LOL!

      YOU ARE A FUNNY, FUNNY GUY!

      You need to lay off the Apple Kool-Aid bub, if you have 100% proof that Apple haven't made 1c profit from the AppStore I'll eat my kitchen, oven and all!

  2. This post has been deleted by a moderator

    1. Anonymous Coward
      FAIL

      Eh!

      .

      .

      Methinks Ms Stella Artois paid a visit.

      .

      .

      1. Anonymous Coward
        Pint

        "Methinks Ms Stella Artois paid a visit."

        Ms Stella Artois is always welcome round these parts.

        I think I brained my damage.

    2. Chad H.

      Well

      Please highlight for us any other channel where the maker of a product gets 70% of the retail price.

      1. Lewis Mettler
        Stop

        but Apple is not doing anything

        What is Apple doing to earn the 30%?

        Nothing is the answer. If it was promoting the product or even delivering it, they would not have to prevent the maker from selling other ways. And they would gladly allow links. After all a link means Apple does not have to lift a finger.

        But, Apple precludes links. And Apple precludes other channels (which may not cost 30%).

        Apple thinks it gets 30% cut simply because their device is being used.

        Does SONY get a 30% cut because you saw it on your TV? Does FORD get 30% of all the gas money you spend? Does Microsoft get 30% of all software running on your PC?

        Apple is doing the transaction. That is all. 3% to 4% is all that Apple earns. The rest is grabbing ***.

      2. Anonymous Coward
        Anonymous Coward

        Re: Well

        This is just off the top of my head you understand... perhaps one run by the maker of the product runs themselves? You know - the ones that Apple are seeking to get rid of?

        Now perhaps you can tell us what justification Apple has beyond 'because we say so' to force this on people?

        1. Anonymous Coward
          Anonymous Coward

          re: Does SONY get a 30% cut because you saw it on your TV?

          No, but if you want to sell your product in a Sony store, you'd be hard pressed to pay as little as 30% commission to the retailer.

          You don't have to use the app store to make things available on an iphone - safari is always there and you pick up an extra 30%

          If you don't like it, deprive Apple users of your product and push them towards Android.

          Doesn't Apple do more than financial transactions for this? More like Akamai than Visa I think. Doesn't it also vet and host content as well as distribute it? Apple has put quite a bit of effort into the platform. No-one else been able to be quite so successful from a standing start. There might be lots of lock-in on the platform, but this isn't MS leveraging a historical monopoly based on years of dirty tricks, this is a company making a success of a new sector. I would expect some supernormal profits to begin with. The profits will erode over time.

          I'd be interested to know retailer's cut on magazines like vogue. Newspapers may not be able to take a 30% cut to retailers, but newspapers make their money from advertising, not the ticket price, which typically covers distribution costs. The question becomes whether online sales cannibalise paper sales. Distribution costs are unlikely to change (moving a lorry from A to B) but if fewer copies are sold per location, the distribution cost per hard-copy paper sold rises.

          I'd also be curious to know if this is a real problem, or if it is just the normal proceedings of big businesses bickering amongst themselves trying reduce their costs and finding that they can't outsource this one to India.

          It's an interesting case. There aren't too many companies which could pull off something like the ipad. Even when it was launched there were many people who thought it would be a failure. Sony (or in the past, Nokia) Nintendo etc would be the obvious rival to Apple, but they really don't do the more complicated UI's that make Apple's mobile computing successful.

          No-one else does the vertical integration that Apple does. Perhaps Steam would be interested in extending to mobile devices and moving into other media areas than games. They have a content delivery network, a billing system and a windows and mac client. I wonder if someone could add a phone to go with that?

        2. Ammaross Danan
          Coat

          Taxes

          30% for a glorified credit-card processing system is a bit much, any way you look at it.

          As pointed out before, if they lowered the subscription fees, all (most of) the apps would switch to "download for free, but pay a 'subscription'" so they can make a higher profit. However, Apple reserves the right to give such apps the boot, and would be right in doing so. This will preclude (most) said apps from trying to take such an approach.

          The thing that rubs wrong in the whole deal is that content providers, such as normal newspapers, are REQUIRED to use Apple's payment API if they offer subscription services /anywhere/. They can't just provide a reader to view their newspaper that you web-subscribed for. Nor can they even put a link to their website to subscribe. They have to provide an in-app payment API-using method, which gives the 30% fee (naturally). Also, the Apple subscriptions method has to be priced the same as other methods. So no simple 30% markup for Apple users to offset the tax, but also no special website-"today-only" deals.

          Also, in response to the whole user-information hording, the article was about the 30% tax, not user information. If anyone thinks that their information and habits aren't being tracked by every company that asks (or not), they're an idiot. Everything, down to the contents of your shopping cart at Walmart, is tracked, cataloged, and reported on.

  3. David Kelly 2

    Federal Government

    Obama takes a 30% slice right off the top and doesn't provide near the value Apple does.

    1. Lewis Mettler
      Stop

      but Apple is not providing the value

      The value of the subscription is coming from the source of the media, not from Apple.

      Apple is only processing the payment. And perhaps listing the item. But, the source of the media still has to write the app and deliver the service.

      Apple does alost nothing for the 30% cut. Nothing. No inventory. No delivery. No marketing. No promotion. No quarentees.

      They expect to get paid because they try to block access to the subscriber if not paid.

      And they try to raise the price for everyone else buying the same subscription whether or not they buy through Apple.

      Apple is the worse thing that a consumer has ever seen. Raising prices even when Apple is not involved in the least. Forcing others to keep high prices on their own web site. And forcing prices up even for those who do not own any Apple products. That is their stated objective and requirement.

    2. Anonymous Coward
      Anonymous Coward

      Simples

      If you don't like what the Federal Government takes (and it is not just Obama, but W before him so lets not get all partisan) then don't avail yourself of their services. Like roads, national defence, the justice system, welfare, education...

      I like Apple shiney as much as the next person, and incompetent as they often are, the Guv'ment provides a bit more value than an iPhone. Like, you know, services to actually live in what approaches a society.

      1. Goat Jam
        WTF?

        O Rly?

        "If you don't like what the Federal Government takes then don't avail yourself of their services. Like roads, national defence, the justice system, welfare, education..."

        So, how does that work then?

        1. Anonymous Coward
          Anonymous Coward

          Re: O Rly

          That whooshing sound wast the point flying past your head at supersonic speed. Do try and keep up, there's a good chap.

        2. Anonymous Coward
          Pirate

          Simples...

          You move to somewhere that doesn't have a public sector and national infrastructure. Somewhere like Somalia.

          They can bear arms, too, so you should love it there.

  4. Basic
    FAIL

    Epic Fail

    "It turns out that processing payments is a hard problem to solve"

    Seriously? How many of us have implemented payment gateways? I'm assuming we all hate the PayPal API (aka Phase 1 and I use the term API generously). But Seriously, it's "hard" to have a DB table for User_Id, App_Id, PaymentAmount ?

    I recently spent a day at DDD9 and MS was trying to convince us of the benefits offered by their Win Phone 7 marketplace - They utterly failed.

    If they provide a service, I agree they should be paid, but 30% for running some automated tests and writing an interface for a payment gateway is a joke.

  5. famousringo

    It's worth it

    Surely if Zynga thought it could save $30 million dollars a month by offering their social games through some channel other than Facebook, they would do so immediately. That's a lot of money to pay if they aren't getting good value for it.

    It's worth it. That's why these content creators/publishers accept the terms. If it wasn't worth it, they'd find some other way. But they don't have the aptitude for distribution, so they pay a commission to Facebook and Apple and Nintendo and Microsoft, because that's the price of making money. Paying your distributor is nothing new in the content business.

    1. Lewis Mettler
      Stop

      dead wrong

      Apple is forcing the price up even for non-Apple customers.

      Does Facebook require that the vendor charge the same price elsewhere? Or, be kicked off Facebook.

      Apple insists that prices on Android are as high as required by Apples high cut. And a 30% cut will force up prices on iTunes. Apple in turn requires that the same high prices be charged everywhere.

      Nintendo and Microsoft do not do that. They can't. Microsoft can not even force the retailer to charge the suggested retail price for XBox. What Apple is doing is almost the equivilent of Microsoft forcing the retailer to charge a given price for a PS 3.

      Apple specifially wants to force all consumers to pay the high price caused by a 30% forced cut. Regardless of the channel. Even on the vendors home we site.

      None of your examples illustrate a retailer controlling the retail pricefor someone else's product in someone else's store. The idiots at Apple demand that they can do that. Do as we say or do without the stupid Apple customers.

      It is called preventing anyone from competing on price so that Apple customers remain ignorant of the alternative channels.

  6. Franklin

    Apples and oranges

    Comparing an app store to a credit card processor misses the point. The credit card processor handles only one thing--credit card payments. An app store handles distribution, bandwidth, storage, and so on; their expenses are higher.

    Do they need to be 30%? *shrug* Maybe, maybe not. Time will tell. What cut do retail outlets like Best Buy take for sales at THEIR stores?

    1. SuccessCase

      Spot on

      The author's comment "Even the rapacious Credit Card companies" shows he is wide of the mark and has little understanding of the cost of business operations. When I look at the app store and see the quantity of testing Apple do, with continual updates being released for apps, I honestly wonder how they can do it for the 30% fee. Of course it can be argued this cost will be less for content as each release doesn't require testing. But even so the operational burden isn't to be underestimated and Apple are perfectly entitled to turn in a profit from their app store. But of course you are posting a perfectly reasonable business comment to a techie publication. Many readers on here expect the world for nothing.

      1. Anonymous Coward
        Anonymous Coward

        Wait, what?

        Perhaps somebody ought to tell the developers that Apple will do the testing for them. I'm sure they'd be interested in that.

    2. Anonymous Coward
      Anonymous Coward

      Re: Apples and oranges

      Except that in regards to subscriptions there is no bandwidth to pay for, no storage, no distribution.

      Their expenses for users downloading stuff from other sources is nothing. Literally zero.

      What then are people paying for?

    3. Anonymous Coward
      Anonymous Coward

      Re: Apples and oranges

      I have yet to see *any* shop demand that all their suppliers pay an arbitrary fee to sell through them and demand that the price is set at the same level in all the other chains too.

      Perhaps you can name one Franklin?

      1. Goat Jam

        Bookstores

        In Australia at least, a publisher/distributor sets the RRP of a book, the book store gets a 40% cut of the sale. If they don't sell the books within a predetermined period they get to ship them back for a credit.

        They are effectively selling books on commission for a 40% cut

        This is SOP.

  7. E Haines

    How soon we forget

    I guess you don't remember that Apple's 30% cut on the iOS app store was hailed as something of a breakthrough, given that normally the percentages were the other way 'round. Also, comparisons to credit card companies miss the point that there's rather more going on than just a transaction, such as probably a pretty huge amount of bandwidth (which isn't free), not to mention the vast numbers of free apps being transmitted, the support for which is subsidized by the paid apps.

    1. Anonymous Coward
      Anonymous Coward

      Re: How soon we forget

      And in turn you seem to forget that a lot of the purchases now being forced to go through Apple have up until now not gone anywhere near Apple's servers, nor have Apple had to subsidise bandiwdth. Amazon and their Kindle software for example do not use Apple servers to distribute their ebooks.

      With the exception of the Kindle application itself the cost incurred by Apple is exactly nothing. Zip. Zero. Zilch. Nada. I could have a thousand books on my ipad and it wouldn't cost Apple a penny more. I would think that the same applies to pretty much any magazine or subscription.

      Apple are not needed in the process. They are not wanted.

      1. Lewis Mettler
        Stop

        and they add nothing

        Apple adds nothing for their 30% cut. Nothing.

        Listing on iTunes? I can make a list too. Does that mean I get 30%? For a listing?

        Boy, is eBay a good deal. And eBay does not mandate that a seller never charge a lower price for selling the same item through other channels.

        Only the jerkheads at Apple attempt to force sellers to restrict their other channels according to Apple's demands.

        Apple is not only not doing anything for their money. They are the consumers worse enemy.

      2. raiderfra

        OK...

        and you seem to forget that there is still no requirement to purchase content through Apple. Apple are saying that any subscriptions must be available within the app store but can also be available direct from the publisher. So it is possible to never give a penny of your subscription fees to Apple.

      3. SuccessCase

        Nonsense foolish and ignorant

        So the entire app store business operation supporting a subscription service doesn't exist. There are no employees, no hardware, no account management, no product development, no marketing, no office costs, no connectivity costs. Nothing. Nada. Zip. Zilch. You are either a moron who has no understanding of business cost or that a business incurs both marginal and capital costs or you are such a genius you have found a way to a business for nothing. I suggest you set up your own appStore in LaLa economic zone or wherever you can work this magic and you can only be a success. How can you not be when you can implement so much infrastructure, operations, marketing etc at no, cost, nothing Zip. Zero. Zilch. Nada.

        1. Anonymous Coward
          Anonymous Coward

          Re: Nonsense foolish and ignorant

          I'm not a genius, but I do have another way of doing business: Don't use Apple's store.

          However Apple has refused to allow people to do this without paying the same prices as they would trough Apple directly. This basically ensures that people follow the path of least resistance and help make Apple's extortion that much more effective.

          Perhaps you ought to pay more attention before blindly throwing around insults like a 15 year old with too much time on his hands.

  8. Chad H.
    FAIL

    100% of nothing, or 70% of something

    I'm tired of all the boo-hoo-ness in this column. App store sellers get a better cut than retail sellers, and more foot traffic than going it alone. If you don't like it, fine, move on.

    Seems this column is more about fighting a personal crusade than anything else.

    1. nsld

      Really?

      So a magazine/paper/other subscription service which hosts and delivers its own content can take 100% of the money from a web site sign up, or 70% if its done via an app?

      Please do explain how giving 30% to Apple is in some way better value when they have to have all the other infrastructure in place anyway?

      I think the problem is Chad that you dont understand the difference between a 99c fart app and a recurring subscription to a content service delivered over the web through an existing distro channel.

      This new approach by apple is aimed squarely at the big subscription vendors, but ultimately its short sighted, all they are going to do is drop "apps" and move over to a web browser experience for content and sign up, what you forget is that not everyone uses or wants an iPhone/Pad.

      Developers with no distro channel are going to pay, but if your a large publisher with your own clearly established distro channel and content delivery you dont need to have an app, just use a browser.

    2. Anonymous Coward
      Anonymous Coward

      Re: 100% of nothing, or 70% of something

      Source?

      If things were really that much better going through Apple then you would think that the vendors would be desperate to use Apple's store. One has to therefore ask why Apple has to force this on people?

      1. Chad H.

        Well.

        @ NLSD - What does a real estate agent add that I can't do myself? What do they earn for their commission? They get buyers through the door, buyers specifically go to them. Don't like it, yeah, go right ahead and do it all yourself if you don't need the AppStore foot traffic.

        @ Anonymous: Source for what? You either play by apples rules, and get 70% of something, or you don't play, and get 100% of nothing.

        1. Anonymous Coward
          Anonymous Coward

          Re: Well

          From your previous post:

          >>and more foot traffic than going it alone<<

          I think that the Kindle software was downloading books for quite some time without any interference from Apple. I downloaded the Kindle application because I was aware of it. Nothing about the app store encouraged me to download it and I suspect that this is true of most users. Similarly for papers such as the times and sunday times I've been getting papers each day on my ipad without needing Apple's help, nor have I had to use the app store to get them beyond using the core app. And the publishers all get to keep 100% of the subscription, at least until present in any case (and in the case of the times they already have an eminently usable website that can take the place of any app should they choose to drop it).

          It's true that Apple allow people to provide free apps, but if their business model is broken and the cost of free apps is not properly covered then they should either start getting the developers to pay something or get rid of the concept of free apps. They shouldn't act like little more than common thugs and simply take money because they can to make up any shortfall.

          That well known scene from the Godfather comes to mind: because the director wouldn't use the mob's actor he gets a horses head in his bed. Replace actor with app store and horses head with complete oblivion from the Apple ecosystem (gods I hate that term) and you essentially have the same thing.

        2. nsld

          You can take a horse to water!

          Chad, we are not talking low level one man developer fart apps.

          You buy a subscription to GQ (for example) because you like GQ.

          GQ still have to host, develop and deliver the content, an in app sign up is nothing more than another way of paying.

          Apple isnt bring the customer to GQ, the app provider has given a means for an Apple Customer to use the hamstrung bit of shiny they own.

          Thats the difference, Apple are not advertising or bringing new customers to the subscribed content the content provider is actually giving apple a feature for its customers to use.

          Your example is flawed, Apple doesnt act as an estate agent as its not trying to bring you new business or sell your house it just sells the hardware and demands the transaction goes through them regardless of the source of the deal.

  9. Anonymous Coward
    Anonymous Coward

    They will lose its shine

    I have several customers in the pole, yoga and spa markets who have gone down the bargain coupon and other discount site approaches and initially they get loads of "customers" all paying £20 for a months free fitness or yoga or whatever.

    But the problem is the step up to a proper paying product is too great and the conversion rate is less than 3%! The ROI is non existent once you take all the factors into account.

    Bargain website users are loyal to the bargains because they can get a £100 monthly pass to a fitness business for £20, what this does is fill the business up and piss off the existing clients and after they have had there fill, like a swarm of locusts they are off to the next business dumb enough to flog a month for peanuts.

    What people also forget with Apple as Chas manages to show so "elequently" is that Apple products sell because the App store is well stocked, but from a business perspective are you going to sell a high value subscription through an app when Apple are taking 30% of every payment simply because you have an app you advertise yourself that clients can buy online with? On a £100 a month membership thats £360 over the year!

    What has also been missed is that Club members are viewing "subscribed content" on the apps they get from the club/facility so according to the new rules they have to have an option to purchase the same in app as well. YOu have to wonder if that doesnt also apply to mobile phone companies who give free apps to subscribers?

    What will happen and is already happening is that business's with high value of subscriptions wont use an app and wont populate the app store. I have just had several large customers cancel app development due to the in app purchase clause, it isnt worth there while to make life easier for iPhone owners and pay for the privelege at the same time.

    Those projects being canned now mean that an iPhone app developer doesnt get paid and loses work as a result.

    What Chas has missed is that the iPhone ecosystem only exists thanks to the developers and now Apples in app purchase policy is a show stopper for many business, both big and small who had previously supplied apps to Apple for free, end results, less apps and a move back to a web based platform approach and the rebirth of WAP 2.0!

  10. Wang N Staines

    Simple

    charge extra 30% to customers.

    1. Lewis Mettler
      Stop

      costing consumers real money

      But, Apple knows that customers have to be faced with the higher costs elsewhere or they can not get their 30%. That is why they refuse to accept an app that can be sold cheaper elsewhere.

      Consumers may pay some 42% higher prices just because of Apple.

      I guess consumers like to pay higher prices? If they are idiots they do. And Apple customers are idiots and fools.

    2. Anonymous Coward
      Anonymous Coward

      But need to charge

      42.86% extra to make up for the Jobs tax

      70% of £142.86 = £100.00

    3. Lewis Mettler
      Stop

      the price increase to consumers is 42%

      The price increase is about 42% not 30%.

      And to make matters worse Apple INSISTS that all customers pay the higher price. Even when subscriptions are taken competelely independant of Apple products and devices.

      Apple insists upon controlling the price on the vendors own web site. How is Apple providing any value for that demand?

      It is simple. Apple wants to illegally eliminate price competition from everyone else. Or, you can not sell to the idiots that Apple has gathered as customers. After all Apple customers are owned by Apple. If you do not pay the 30% cut to Apple, Apple customers are kept ignorant. If you want to do business with our customers you have to give us the power to set the price for your product in all distribution channels. No exceptions.

      I do not buy from idiots, jerkheads, fools or those that adopt illegal business practices. Apple wants to force prices high elsewhere so that their own customers can remain ignorant.

    4. Anonymous Coward
      FAIL

      and charge everyone?

      It wouldn't just be idevice users that would then have to pay extra, but people who want the service even if they don't have one, 'cause Apple stated that you can't sell the same thing cheaper elsewhere.

      In fact, maybe you have a point. Subscription options would be 1) For an idevice with an inflated charge to cover the new Apple tax, and 2) another option for everyone else with a much lower charge. Implement that and let's see how many people dump their ithings?

  11. SuperTim
    Jobs Horns

    Percentage

    Paypal? Surely you are not comparing the istore with a simple payment system. Why not compare to the who eBay site? If you sell on eBay and take paypal they get over 20% of your sales price in charges and commission. That is a lot for low margin goods. Developers never get anything like 70% when going through traditional sales channels but apple's fee is expensive for the amount they do and they know there is no other channel available for iOS.

    1. Lewis Mettler
      Stop

      exclusive channel is similar to a monopoly

      Apple's exclusion of other markets was the first shoe.

      The second shoe is the attempt by Apple to allow Apple to control the retail sale price of all goods sold through iTunes even when sold through other channels. Apple thinks they can illegal preclude price competition from any other source.

      And if you do not agree to giving them that control, you are excluded from Apple customers. The customes that Apple owns. The fools and idiots that ever bought an iDevice from Apple. Now you pay the extortion money or you can sell to these controlled people.

      The harm goes to all consumers not just the idiots that bought from Apple. Do without Apple customers or allow Apple to control your retail price in all channels.

      Apple is run by a bunch of idiots. And now it is clear that Apple products are bought by idiots and fools. And Apple acts to keep its stupid customers ignorant is vendors do not pay the 30% cut.

  12. Anonymous Coward
    Jobs Horns

    It Sucks

    If Apple was hosting, even processing the sales taking place in the apps then they could deserve a cut, but when apps like the Kindle app use a web page in their app to sell stuff not being hosted by Apple, then it sucks that Apple is trying to get that money for nothing, which is precisely what it is because apart from the sale of the iDevice and iApp, Apple is contributing nothing to the specific sale of the specific item, be it an eBook or whatever.

    Should Ford (or your car's manufacturer) get a cut of every Drive Through purchase you make at McDonald's?

    Should Microsoft get a cut of every eBook I buy using Kindle for Windows?

    Should Apple get a cut of everything you buy from Tesco Online because you're buying your goods on a Mac?

    Apple was about 'think differently'. Now it appears they are wanting to 'rob differently'.

    1. DZ-Jay

      @_RCH_

      >> but when apps like the Kindle app use a web page in their app to sell stuff not being hosted by Apple, then it sucks that Apple is trying to get that money for nothing, which is precisely what it is because apart from the sale of the iDevice and iApp, Apple is contributing nothing to the specific sale of the specific item, be it an eBook or whatever.

      Really? So, an _Apple_ customer, that already has a card on file, and is ready to buy has no value to the vendor?

      These are Apple's customers using an app they downloaded from the App Store; if they were already, say, Amazon's customers, then they would purchase directly from Amazon, since the relationship is already established.

      Apple is not charging 30% per transaction, they are charging only for the _conversion_ from curious shopper to customer. It is clearly explained in the policy that if a user is an existing customer of the vendor, Apple get _nothing_.

      dZ.

      1. Ben Tasker Silver badge

        Missing the point

        You say that if the user was already a customer of Amazon they'd buy directly, but that kind of ignores the fact that an In-App purchase is more convenient.

        Besides which, what makes you think a conversion is worth 30%??

        The reason people are pissed, is because Apple dictates that you can only install apps from the Apple App Store. So yes, they use bandwidth serving apps etc. but they chose to ensure that that was the case.

        Now they want publishers to pay them more?

  13. Anonymous Coward
    Anonymous Coward

    another pointless title

    Dear oh lor, the latest buzzword that everyone seems to be using just to appear cool and happening is really beginning to grate on my nerves. If you must use the word 'Ecosystem', at least try not to scatter it quite so liberally in almost every paragraph.

  14. Anonymous Coward
    Big Brother

    Despite everything

    Apple have some way to go before catching the major robbers of our money - the tax man, who unlike Apple is difficult to avoid and takes a higher cut (with NI, Income Tax, VAT & duty on fuel, beer etc.)

    1. Destroy All Monsters Silver badge
      Big Brother

      I'm with you on that, man.

      You forget inflation - the hidden tax for the money printing service.

      1. Anonymous Coward
        Anonymous Coward

        The title is required, and must contain letters and/or digits.

        "You forget inflation - the hidden tax for the money printing service."

        You seem rather confused, inflation is not a tax, it is a debt reduction mechanism. Provided income rises in line with inflation then to the ordinary man in the street a period of high inflation is a "good thing". Of course business and the scum money lenders despise inflation as it means to the former that they have to increase the pay to their employees (something they are loathe to do under any circumstance) to the latter it is a disaster as it reduces the value of the money owed to them, thereby messing up their income predictions. Governments, being mere agents of banks and business will exact any price on the economy to maintain low inflation and perpetuate the myth that inflation is evil.

        [obviously this applies only to relatively short periods of higher inflation, prolonged periods or hyperinflation are different beasts altogether]

        1. Destroy All Monsters Silver badge
          FAIL

          Read Karl Marx and Gottfried Feder, did we?

          "You seem rather confused, inflation is not a tax, it is a debt reduction mechanism."

          Best Politically Correct description of "stealing" ever.

          If I "reduce my debt" by holding up the neighbor, I go to prison.

          If government "reduces its debt" by inflation, pauperizing the taxpayer and anyone who has outstanding debts, commentards come out of the woodwork and defend the practice.

          Nice doing.

    2. Lewis Mettler
      Stop

      but you can not avoid the high prices caused by Apple either

      Apple specifically requires that any vendor must sell for the same high price as available on iTunes.

      And it does not matter which sales channel you use. And it does not matter whether or not you buy an Apple product either. The vendor has to charge the same high retail price or be kicked off of Apple customers.

      Now we know that Apple thinks it owns its customers. And it will extort its 30% cut or Apple blocks access to the customer.

  15. Anonymous Coward
    Boffin

    Matt, try looking up...

    ... "PROJECT ALESIA" at El Reg.

    1. sT0rNG b4R3 duRiD

      Err... Um...

      "I don't know where Alesia is?"

  16. This post has been deleted by a moderator

  17. Lewis Mettler
    Stop

    don't buy Apple products

    Only fools and idiots buy from Apple.

    It is very clear that Apple is trying to increase costs to consumers so that they can get a 30% cut.

  18. jayp
    Jobs Horns

    my 2cents...

    tbh I have no issue with Apple charging 30% - it is their store after all.

    The problem I have is their insistence that App Store prices must be the same or better then those offered elsewhere. If it weren't for that (and I hope they get a kicking for that clause) then would there be this much of a fuss being made???

    1. Lewis Mettler
      Stop

      yes but

      If Apple does not control the high price for other channels and for other devices, Apple has price competition. And Apple must keep its ignorant customers in the dark about that.

      Charging a high price or forcing a high 30% cut only works if Apple can force the seller to charge the same high price everywhere else.

      So if you buy an Android you pay the same high price as for Apple. If you subscribe directly from the sellers web site, you pay the same high price again.

      Apple causes all consumers to pay about a 42% higher price. No exceptions. Unless the seller is willing to forego Apple customers (owned by Apple). They do without the product or service.

      Or to put it differently if Apple can not force the high price elsewhere they will not get their 30% cut because consumers will go elsewhere. If you don't pay a 42% higher price, you are gone.

      Hint: To cover a 30% hit, you have to increase your price by about 42%. So all consumers pay 42% more. Not 30%. And not just Apple customers. Everyone. That means you regardless of what device you have.

  19. Haku

    Apple is like Marmite

    Either you love it or you hate it.

    Does anyone else find it amusing that whenever there's an article which can put Apple in a negative light, the number of downvotes for people bashing Apple and also the people defending Apple appears to be higher than average for comments on a news piece, wether the posts are straight out ranting or have pure unrefutable facts.

    It seems there's always some very avid Apple fans that take offence to anything slightly negative about their beloved brand and will click the downvote button at the drop of a hat. So no wonder El Reg gave us angel & devil Jobs' icons!

    1. sT0rNG b4R3 duRiD
      Thumb Down

      Marmite?

      Hey, don't dis the marmite, yo!

  20. Destroy All Monsters Silver badge
    Pint

    Here's hoping...

    ...that the whole i* ecosystem suffers radical eutropization and subsequent total collapse with i*-toxified yuppies, teenagers, urban bohemians and armani-dressed marketdroids floating in dead rivers of putrid, stagnant data.

    Because I just can't hear any more about it.

  21. Anonymous Coward
    Paris Hilton

    Strange old world innit?

    I can't see what all the fuss is about.

    A great (international) distribution means great (international) opportunities for the lucky apps that a subset of the public wish to part with cash for.

    I'm sure MS will do it its way, and claim it is the best.

    I am sure Google will do it its way, and claim it is the best.

    And as for the other phone suppliers ...

    Choice is good no?

  22. Nya
    Grenade

    Anti Competitive

    The issue is really not about the 30% (which in itself is over charging by a huge margin). The real anti competitive issue which surrounds all this is the terms and conditions of it, which forces those trying to sell a product to match the price they use elsewhere. And that's the killer, elsewhere they don't face a 30% tax off Apple, and being forced to either use a website or pay Apple's tax to use an app is the point where Apple's greed becomes utterly uncompetitive. If a content producer can (and as they should) add that 30% margin to the price on iOS than they would be fine, the Apple tax is simply a cost to incure which is then passed onto the customer using iDevices. But with Apple forcing providers to use one price, Apple is trying to force providers to up all prices across the board, and thus gain a cut from Android and web sales also. This is manipulating the market.

    Apple is holding a gun to the heads of content providers. They either leave iOS and limit customer choice to Apples own book and music services. Or share the tax everyone not using iOS as well. Frankly with the iOS market dwindling to the juggernaut which is Android the answer is simple. Move to the free market which supports customer choice and leave iOS.

    Re: Haku, the reason you get so many Apple fan's flaming anything negative is because Apple run a PR machine called the Evengelist (beleive it was first created by Guy Kawasaki in the late 80's/early 90's) which basically rattles the cages of the blind faithful who run off and drum up further fanboi's by sending them daily sources of anyone saying anything negative against the company so they can alter public opinion through comments and flame the authors so hopefully they won't do it again in the future.

  23. boatman
    WTF?

    Pass The cost To The Consume

    Why these companys selling through apple do not pass the 30% on to the consumer is beyond me.

    The company would no linger be out of pocket from the sale, and the consumer would have the choice if they want to pay a 30% markup for the convienience of purchasing via apple.

    1. Jedit Silver badge
      FAIL

      Because they can't, you moron

      One more time for the slow of thinking: the terms of the agreement prohibit jacking up your in-app prices to cover the 30% Apple take from you. The choice the company faces is losing 30% of the gross to Das Apfelreich or passing on a 42% price increase to its customers. In the world of the imbecilic fanboi, neither of these choices is bad for companies. In the real world, both these choices will cost companies more money than simply abandoning the App Store.

  24. raiderfra
    Coat

    just what is the problem?

    Apple's cut is 30%, they are upfront about it.

    If they have priced that too high then the result will be a lack of business and content providers (developers, publishers etc) will move on to another platform.

    If they have priced it right then they won't, thats how the free market works.

    Apple does not have a dominant position in the market that is unassailable.

    Because of Apple's development of the App style marketplace along with the necessary hardware to support it we , as consumers, now have a range of strong alternatives, each offering their own unique take on the "ecosystem".

    As other posters have pointed out Amazon have had to reduce their cut from 70% to 30% part of which can be attributed to Apple offering an alternative to book publishers. The field is open for other providers to undercut Apple and influence the market.

    This really isn't an issue people should get so worked up about, there are alternatives to Apple, use them if you wish.

  25. Stuart Halliday
    Thumb Up

    what's the fuss?

    It's normal for shops to charge 30% margin.

    Why can't Apple apps/services cost more than say Android or Desktop equivalent? That is Apple's choice.

    Using this new technology is a matter of choice and it's not like there isn't alternatives on the market. The consumer will go to the cheapest in any case. So some competition can only lead to cheaper prices.

    1. IT veteran
      Thumb Down

      But

      Shops can't insist that if the goods are sold in other shops, they must cost the same or more. That would be illegal in most countries. You forget the T&Cs - other outlets cannot sell the subscription cheaper.

  26. Anonymous Coward
    Anonymous Coward

    30% is too high, but some charge is quite reasonable

    It is perfectly reasonable for Apple to charge something for apps, but 30% is too high.

    For pure payment purposes, the cost would be 15% max via another gateway - but Apple in turn is an aggregator so their cost should be much lower.

    For marketing purposes - it really should depend on the app. An app which otherwise cannot sell - i.e. platform specific, no outside marketing budget, etc etc certainly should get charged for marketing.

    However, apps like for existing brands - no reason whatsoever for marketing.

    Similarly apps which are regional/local - equally no benefit for Apple whole world iPhone marketing.

    A 5% tradeoff - foregoing of which removes you from any possibility of App store highlighting - that'd be much more reasonable.

    If Apple would drop their take down to 10%, or even 15%, then I'd be very happy with it.

    But 30% plus the inability to install an app otherwise (jailbroken phones are a tiny fraction of the marketplace), that's monopoly pricing.

  27. Joerg

    What? Lower taxes to big business groups? Why?

    This is just crazy. So big companies want to pay less than 30% to Apple because they are big and "not as dumb as" smaller publishers and single developers,uh? That's just CRAZY!

    It's small developers that Apple should charge less and it's big companies that should pay more to Apple. Otherwise it's better for Apple to change nothing at all and keep asking 30% to everyone.

    Surely forcing single developers to pay 30% tax and giving discounts to big groups publishing apps on iOS would be the best way to kill single developers completely and turn the Apple App Store into just another shop for big businesses. The big ones can pay more, small developers need to grow in order to be able to afford paying more on royalties and taxes to Apple or any other group. So giving a discount to big groups it's only the best way for Apple to kill their own market quickly.

  28. Anonymous Coward
    Stop

    this is just the kick we need...

    ..to stop all this stupid device specific development and start getting a decent mobile experience delivered to the browser.

    When I started working on mobiles they were crap, could barely browse, WAP was the standard and the user experience was slow, monochromatic and horrid. That's no longer the case. Smartphones and even a lot of fairly stupid ones can render html and css and run javascript with enough speed to provide an app like experience in the browser. With libraries like jquery you can avoid a lot of the cross browser grief too. So why develop the same thing multiple times for many different platforms when a good mobile focussed web experience can be just as engaging as an app, uses technology that many people are skilled in (objective C? eww!) and doesn't require re-writing just because a new device has come out.

  29. Baggywrinkle
    Thumb Up

    Content Providers fight back!!!

    I can see where this is going….. Apple want 30%, Google want 10% …

    Here’s what it will force the content providers to do …

    If you want to consume content on an iSomething and buy it through iTunes or an Apple App then that will be a 30% premium over the normal web subscription.

    If you want to consume content on an Android device and buy it through Android Market or an Android App then that will be a 10% premium over the normal web subscription.

    Everyone else (PCs, Netbooks, Laptops, Kindle, Squeezebox, etc.) pays normal price.

    At the time of subscription you indicate which devices you use (Apple, Android, Other) and will be charged accordingly. A flag in the content will then prevent it being visible on the devices you haven’t paid for.

    For web based content a check will be made to see which type of device you are using to access the content and the ones you haven’t paid for will be blocked.

    Welcome to the new business model for content.

    Wonder how long the average Apple owner will suck up paying 30% extra for their content?

    ... and I wonder what effect it will have on buyers purchsing decisions?

    1. David Evans
      Jobs Horns

      You're not listening

      Under Apple's Ts&Cs you can't differential price, so there's no "price+30% for iOS", "price+10% for Android" etc. This is the crux of the problem, Apple is relying on its current dominant position amongst content providers to introduce the 30% fee, and they're also betting that most will try to absorb the 30% rather than raising prices across the board (in reality content owners will probably have to do a bit of both). As others have said already, there's nothing intrinsically wrong with Apple wanting a fee (whether 30% is appropriate is a separate issue - I think not, because they don't do as much to justify their margin as retail does), but there IS something intrinsically wrong with Apple trying to force price parity across the market; this is profoundly anti-competitive.

      The cynic in me says this is simply a pre-emptive strike by Apple to force ebook and streaming music services off iOS so users are left with Apple-branded alternatives only. NB. Does this mean Rovio will be forced to make the ad-only version of Angry Birds into a paid app on Android? I think it does.

  30. Tim Almond
    Go

    Excellent

    As someone who really doesn't like Apple, I'm looking forward to the damaging effect this is going to have on them. They probably just see all those 30%s and not the fact that some companies will now stop supporting their platform, and that will make Android even more attractive.

  31. The Fuzzy Wotnot
    Thumb Up

    App Store = eBay

    Apple, like the world best known tat market, simply provide mechanisms to sell your goodies.

    Nothing more, nothing less. They don't promote you, outside the app store front page, they offer you nothing more than a wee slot in their shop window for that they cream off 30%. You have to write the app, you have to patch the app, you have to encourage people via your own advertising through ad channels you have to find and promote, to go over the app-store to buy the app!

    30% off every sale? Nice racket if you can get into it!

  32. NoneSuch Silver badge
    Grenade

    Straight forward.

    Apple can charge whatever they want to use their services.

    Users can go wherever they like to buy / sell their apps.

    It is a market economy and if Apple is too expensive then the users will go elsewhere.

    Supply vs. Demand. The ultimate equalizer.

    1. EvilGav 1

      No

      Please read the innumerable comments.

      Apple T's & C's are set to forbid the sale of an item at a more competitive rate if it's listed in the app store at a rate.

      The app store price is *the* price, there is no alternative, except to not list in the app store.

    2. Gio Ciampa

      So...

      Just where do iPhone/Pod/Pad users get apps from, if not via the App(le) Store? And without jailbreaking their devices?

  33. Jean-Luc
    Thumb Down

    Points being missed

    1. If, as some commenters have stated, you believe Apple barely breaks even on their app store and does it for charity... I have a really nice bridge I'd like to sell to you. For one thing, the biz press evaluates the viability of the various ecosystems based on the success of the apps markets. Hard to reconcile that with them being loss-leading concerns.

    2. Apps stores are not payment systems, they are distribution channels. That's why I use Visa to for things on iTunes. Visa presumably takes it cut along the way too. If iTunes == Visa then I would not have to use Visa to pay there.

    3. Groupon <> iTunes either, I don't even get what that comparison was for. By the time the seller cuts her prices to have a Groupon promotion discount, I would guess her remaining margins are slim indeed.

    4. The market will tell, as it should. If iTunes is such a ripoff compared to other app stores, developers will hawk their code elsewhere. IIRC correctly though, the old mobile apps sites took way more than a 30% cut.

    5. If you want an evil Steve story, the Readability app fiasco makes for much clearer guilt on Apple's side.

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