I mean, this story happens to be about Apple, but obviously other retailers could be, (obviously are), engaging in the same practice.

Same goes for Steam.

Both Apple and Steam provide discovery and network effects, which help to justify their cut, but, as Jason Fried mentioned[1], you can't opt-out of these discovery benefits with Apple.

[1]:https://twitter.com/jasonfried/status/1273655616897273858?s=...

A better analogue would be that you download WoW free from Steam, then take a subscription at Blizzard. Does Steam allow that?

It's not Apple's _dominant_ position as a delivery mechanism that counts - it's their literal monopoly on it.

The Steam apps are “sandboxed” as in you cant run them without Steam, they use their own executable that is tied directly into Steam.

    Steam keys are meant to be a convenient tool for game developers to sell their game on other stores and at retail. Steam keys are free and can be activated by customers on Steam to grant a license to a product.

    Valve provides the same free bandwidth and services to customers activating a Steam key that it provides to customers buying a license on Steam. We ask you to treat Steam customers no worse than customers buying Steam keys outside of Steam. While there is no fee to generate keys on Steam, we ask that partners use the service judiciously.

It seems like this is not the case.

You mean like every retail store - digital and physical?

Assuming you are in fact in the tech industry, you should know that near-zero marginal distribution cost is one of the core principles underpinning software economics.

I'm also not arguing that Apple shouldn't pass some of the costs it incurs to provide apps (e.g. APN, engineering costs, etc) on to developers and by extension on to consumers. But it should be priced fairly and transparently.

A flat 30% fee without the ability to itemize that for customers or signal the existence of alternative payment methods is just wanton, nefarious extortion.

The 'right' solution would be to charge a specific, itemized "Apple device usage fee" that's separate from and in addition to the primary fee for a service itself. Apple deserves to take a portion of revenue specific to the provision of a service to its users. I can't see an argument where it deserves to take a portion of all revenue developers receive.

But Apple is not permitting this because it would pull back the curtain on their rapacious practices and their customers, having already paid a significant amount of money for their devices, would almost certainly be quite angry about it.

Spotify is a good example of the distortion occurring because of this misguided system. They're charging customers $12.99 if they subscribe through the App Store instead of the $9.99 they would pay outside of it for exactly the same service. So, right now, some Spotify customers are being needlessly pillaged by Apple when, unbeknownst to them, they could get the same exact service at less cost. Spotify apparently had plans to email affected subscribers to alert them about this nonsense situation, but I don't know what became of that.

How many stores actually “transparently” tell you their markup?

> “There’s a rationale for this on console where there’s enormous investment in hardware, often sold below cost, and marketing campaigns in broad partnership with publishers.”

I guess it really just comes down to console makers acting like a partner whereas Apple acts more like a mobster running a protection racket.

1) https://www.theverge.com/2018/8/3/17645982/epic-games-fortni...

I don’t think it’s any different from consoles. The main difference is that with a console you know what the deal is.

With an App Store app, the problem is you don’t know if Apple is going to deny your app on an inconsistently applied rule after spending 2 years making it.

Right now they are double-dipping, not because of value they are adding, but because of the power they have given themselves over the consumer/developer relationship.

The App Store is a service.

If you allow 3rd parties to sell something, you create a market. That market should be free and competitive.

If you want to keep it a service, don't allow 3rd parties in.

With consoles the primary justification was always that the hardware is sold below cost. This is purely to the benefit of the game developers, all the risk falls on the console maker, so they accept it for that reason. The iPhone is not only not sold below cost but its price has never fallen in the entire lifetime of the product, from what I recall.

Game consoles are not general purpose computers and have a much more narrow intended purpose. Apple themselves argue that the iPad is just as capable (or more so) than your typical computer, which means that we expect it to be capable of computer-y things which are inherently flexible and versatile, not hamstrung by Apple’s rent-seeking behavior.

This also isn’t about 100% transparency of Apple’s costs — saying it is misdirects. We don’t know their costs (though it certainly is below 30% of all revenue passing through in-app-purchases), that isn’t the issue. Requiring 30% of others’ revenue and being forbidden to even mention alternatives is another matter.

Again. Just like consoles and the Roku - the console makers get a cut of every game sold - even physical games. At one point, Nintendo limited the number of titles third party companies could publish and force them to use their manufacturing facilities.

No retailer just sells things at a markup that covers costs.

You keep bringing up video game distribution though, so let's roll with it. Pretend all of software was like video game distribution. How much worse would software be for users? Imagine FOSS on that.

And in effect, I did create a editor for scripts to run on the Xbox 360 many years ago so QA could tweak things, so it is possible, but developers just publish games. If the only 'apps' developed for the iPhone were games, would it stop being a general purpose computer then?

Also, didn't the PS3 have an official linux bistro for a while? Blue something?

Software would be better for the average user if PCs (and Macs) had tighter permission models - no viruses, spyware, adware, ransomware, surreptitiously reading your contacts without your permission, etc.

The distinction is video game consoles are not general purpose. Just like nobody is going to write an essay on an Pinball machine, nobody will (ordinarily) do so on a console. If a game developer need to follow special rules to get into the console market, that's par for the course.

In contrast, on Windows/Linux/Mac/Android I can run whatever software I damn well like without talking to Microsoft/Canonical/Google/etc. It is truly 'general purpose'. There is no required gatekeeper for these systems (as much as they are try to make themselves one). iOS stands in contrast to these - it is not 'general purpose' if I can't run whatever. If Apple decides some software is not allowed on the store that is not 'general purpose'. That is something else - gatekeeping. So when they advertise 'general purpose' that is only true until they decide they don't like something. And they can change their rules anytime they want.

To the 30% thing, every retail store has markups they don't advertise and that's perfectly fine. If Apple or a retailer wants to charge me for access to their store, I'm happy to pay.

But when they force a change to a product and company in arbitrary ways to suite their whims that's pretty concerning because it's a sign they are abusing their power in a very historically been-done-before way. Think about it - 50-100% of a target market is controlled by them. You can do whatever you want - why not charge 50%? 70%? There is no competition - it's literally whatever the highest is you think your PR department can get away with. Not sure how you feel about anti-trust, but sure feels like abuse to me.

You mean how Walmart forced the music industry to edit CDs or they wouldn’t sell them or how they force manufacturers to sell crappier versions of their products to meet a price point?

Or do you mean again how Nintendo is infamous about the strict content controls they have on games and have since the 16 bit days and no blood in Mortal Kombat?

Also, see how movie theater chains are saying that they won’t show studio’s movies if they start releasing straight to consumers now even though most movie theaters are closed?

We could also mention GameStop threatening not to sell MS consoles this generation because of their original intention to make games harder to resell.

iOS's app sandboxing and permissions model would work just as well if apps could be sideloaded.

Spotify charges a lower monthly price if you sign up on their website (and then go and sign in on iOS) than if you sign up through the iOS app.

Whether or not this hurts Spotify isn't at issue here; there are Spotify customers who are paying more than they have to because Apple refuses to let Spotify tell them about the lower price.

Of course this would be entirely reasonable if it was a conscious choice by those users, but Apple is intentionally keeping the market non-transparent, screwing their own most loyal users.

It's not the concept of retail is somehow unethical, but certain stores are certainly less ethical (in how they treat employees, customers, environment, etc) than others, and some of those stores are very widespread.

Also the thousands-of-years argument holds up pretty poorly for a lot of things.

I wouldn't mind one bit if there would be a general inquiry for practices of all app stores.

Last time I checked it was not close to 30%

https://www.quora.com/How-much-do-game-companies-make-from-e...

Thus, retailer margin can vary anywhere from negative (doorbusters) to 1000% (i.e., alcoholic beverages).

An app developer is free to charge 43% more to still get their desired amount.

But since we are talking about software. How is all retail more relevant.

Frankly anyone who says this with a straight face is being absurd. Apple's commission isn't for "payment processing", promotion, any particular API, or service they provide on their platform. That they do all of those things makes it an attractive place to develop for and sell your product, but it isn't the reason why they get to charge 30%.

They charge 30% because they've amassed 1 billion extremely valuable users who are willing to spend money on apps in their marketplace.

Apps that are made up to 42% more expensive (NOTE: the 30% fee applies to all in-app purchases and the first year of subscriptions) in a way that's entirely opaque to those users. The fact that you think this is okay is the only thing I find absurd.

You also seem like someone who is for some reason predisposed to be an apologist for Apple's monopolistic business practices. You certainly don't represent what would likely be the average/majority sentiment of Apple's customers, were they sufficiently informed.

Well, maybe not apps, but subscriptions surely.

There's no developer on the planet that would agree to that deal if Apple couldn't use the customers from their phone business as leverage to extort developers on the software distribution side of things.

It's more like a bouncer at a club getting 15-30% of ALL revenue because they control the door.

Why do developers overwhelmingly give Google 30% of their revenue when Android users can sideload?

Should we also complain about the much larger margins that Amazon charges independent authors for Kindle? The amount Google charges for ads?

There are cases where 30% of revenue makes sense. For cheap, purchased apps it's a good deal because the cost of running that infrastructure is comparatively high. However, once you hit a certain volume of sales or move into subscriptions, the value of the services being provided by Google and Apple don't make sense and it would be better to run your own infrastructure.

Seeing what Epic was willing to do to get out of the Play store is a really good indicator of how bad of a deal it is at scale.

And I thought traditional retailers chose their own markup, didn't they?

https://www.cnet.com/news/just-as-critics-feared-fortnite-fo...

Edit:

Most retailers do choose their own markup. Ironically, Apple got sued for working with book publishers where the book publishers set the price and Apple chose the markup.

However, the book publishers wanted this arrangement because Amazon was selling ebooks at a loss devaluing the hardcover and paperback books.

I'm willing to defend Apple because I'm tired of disingenuous arguments from either parties with self-interest or FOSS advocates who have some ideological opposition to Apple's closed nature (and have since the beginning of the App Store and decades before that with Macs).

Apple's customers don't care about the margin structure or costs of app developers. The App Store has massively increased both the supply and demand for apps, and it has actually led to a decline in prices for software. Everyone knows this because they've been complaining about how they can't charge as much for apps as they did in the packaged software days.

I don't know anyone who would like the idea of paying an extra 15-30% for a product because of a do nothing middleman that's managed to monopolize a portion of the market based on demand aggregation.

It's literally the definition of what I've always understood anti-trust to be. Apple is using their domination in the phone market to manipulate the software distribution market.

The current tech companies (all of them) make 90s Microsoft look like a charitable organization. It's unbelievable to wander around the internet and see so many people advocating for systems that are terrible for the average consumer.

Wealth inequality seems to have an inverse relationship with average intelligence.

This is almost the textbook definition of extortion. "Hey, wouldn't it be a shame if you lost access to all these potential customers? You better give us 30% of your revenue."

But you do realize you could also be describing the credit card market?

But the typical credit card fee is ~3%, which is literally an order of magnitude less, and Visa/Mastercard/etc also don't prohibit their merchants from accepting other forms of payment.

They also contractually forbid merchants from taking actions that could make the fee more apparent to consumers, which drives up prices for non-credit customers, although there isn't a direct analog for Apple I can think of.

Has this changed over time, though? I often see a lot of brick-and-mortar merchants advertising different prices for cash/debit vs. credit. I probably see it most often at gas stations, but I see it in regular retail stores and restaurants sometimes as well. I moved to a new house earlier this year and even the movers offered a lower price for cash.

[1] https://www.lexology.com/library/detail.aspx?g=c1069ffd-dafb... (hopefully the link works)

https://9to5mac.com/2019/03/06/microsoft-store-revenue-share...

As far as physical stores, the publisher gets $27 out of the $60 for a typical game. The console maker gets $7 out of the $60. I’ve seen this sane chart other places.

https://www.quora.com/How-much-do-game-companies-make-from-e...

The rest of those seem reasonable to me.

The publisher is basically your marketing budget, right?

Retailers' shelf space has a cost and is limited physically. They could be using the same space to sell literally anything, so I think whatever the price of that ends up being it's probably a result of competition across a ton of industries.

The licensing fee is ok too IMO since the console makers take a huge risk producing and selling the consoles as cheaply as possible. It also sounds like a well known, flat fee, not a cut of ongoing revenue.

The problem for me is when digital stores with a tiny marginal cost of distribution think it's reasonable for them to capture a huge portion of lifetime revenue. They're not doing that much. It's bad value and the only reason they can make it work is because they're in a position that lets them act like an extortionist.

It's the cut of every single transaction for the lifetime of a customer that people think is unfair. Ex: $27 to a publisher is fine if it's a one time fee and they're providing $27 of value by advertising etc.. They could never ask for 40% of revenue for all future transactions like DLC and microtransactions because there's enough competition that no one would use them and they'd go out of business.

And then the publishers also have to pay MS for DLC. I think MS still charges for delivering patches through MS Live. They might have dropped it.

You can grow your customer base dramatically with a smallish team of engineers/recurring engineering costs, but many of the costs surrounding them still grow in a linear way.

The same fate will probably befall Apple, too.