FWIW brick and mortar stores usually take 40%.

Doesn't seem a fair comparison given the far more substantial costs of brick and mortar. Brick and mortar retailers do not, traditionally, have very large margins when all is said and done, whereas I think the App Store has quite significant margins for Apple.

Dumb question, but why is a vendor's cost a relevant input to evaluate fairness? Isn't a common theme around here to price based on value, not on cost?

Last I looked, Apples gross services margins were around 66%, which implies a break even for the store at a 10% fee.

I think Apples service margins include an unspecified amount from Google for being the default search engine on iOS.

And that’s a big fraction of their services. https://www.thestreet.com/investing/google-pays-apple-billio... estimates that at $9.48 billion over 2018.

That implies that App Store margins are lower than I estimated, and it’s costs higher.

I used to work stock at a bunch of retail stores for a decade and could see what percentage the markup was. It was almost never above 20%, and usually closer to 3-5%.

Back when CompUSA/Circuit City were where most people bought software, it was more like 50-60%.

The infrastructure cost is 100000x than that for the storage and network of one file.

Downloadable is nominal outside of store. I had millions of downloads back in 2005 timeframe and we never even looked at file hosting cost.

Brick-and-mortar stores provide useful services and have high costs. Neither applies to the Apple App Store in this case.

not sure what the brick and mortar equivalent is. what does that mean?

retailers pay suppliers some wholesale cost for their goods. doesn’t seem like an analogous situation to a marketplace that takes a fixed cut of every sale.

In the olden days of game stores shelf space was at a premium so the power dynamic was on the side of the retailer, particularly with the larger chains who had a lot of room to negotiate their cut rather than buying wholesale.

If the wholesale cost is too close to MSRP, retailers will generally either refuse to carry the product or sell it above MSRP.

It’s so strange to me that after all this time they’re sticking with the high fee. The App Store is a major feature of the iOS platform and Apple benefits greatly from a healthy app ecosystem and user lock in. I would argue the 30% fee may not be a net gain for Apple.

Doesn't like every online "platform" take 30% cut? Google play, playstation store, steam, xbox store, nintendo store?

Epic Games Store is 12%: https://www.polygon.com/2018/12/4/18125498/epic-games-store-...

Steam changed a while back: https://www.theverge.com/2018/11/30/18120577/valve-steam-gam...

It's now 30% for the first $10 million, 25% for $10-$50 million, and 20% thereafter.

Also relevant here would be Epic Games Store, which is 12%. Also relevant here, is payment processors are way, way less than 30%, which is all that's used/needed for in-app purchases.

Paynent processors are entirely irrelevant to this discussion, given app stores do far more than just payment processing.

Given publicly reported financials for Apples services gross margins imply a break even around 10%, I doubt any successful App Store offering similar services could survive on less than 15%.

> Paynent processors are entirely irrelevant to this discussion, given app stores do far more than just payment processing.

Not for in-app purchases they don't, which is why I specifically called that one out. The game provides all the UX there to find & purchase the items, the game "delivers" the resulting purchased goods, etc... All the app store does in that case is facilitate payment. No different than, say, Square.

The store facilitates discovery of your app, secure installation of your app, world wide distribution of your app, and offers customers a safe, trustworthy, consistent and easy to use purchasing system complete with refunds, subscriptions cancellation for all purchases.

One of the biggest developer benefits is Apples app reviews process. While not perfect for devs, it helps ensure customers feel safe buying my apps free of the risk of viruses, malware, and fraud ware. That sells more of my apps.

If you don’t understand these things, you don’t understand your customers.

I'm sure Epic would be willing to forgo all those things, if they could have iOS visitors to their own site click a download button, up pops the ol' install app OS dialog (same as now), face ID / passcode, bam, Fortnite is installed.

Of course they would but that’s parasitical. That’s how iOS turns into the Android dumpster fire.

You can avoid Google Play on Android by sideloading. You can avoid Steam on PC by distributing your game yourself. You can't avoid the App Store on iOS unless you tell all of your customers to jailbreak.

bad argument since Apple set the precedent and everyone else followed.

Apple set a new lower precedent versus J2ME, Symbian, ringtone app stores.

Negative on that. See Sony, MS, Nintendo gaming consoles.

On the contrary, it is quite low versus what previous app stores for J2ME, Symbian, ringtones used to charge for.