Apple releases study defending App Store's 30% cut ahead of testimony

You don't get any increase in margins for porting to iOS if the percentage changes for the Play Store because you can't sell to iOS customers via the Play Store.

One can have a range of perspectives on this.

30% of nothing is nothing. Seriously, for a large number of developers the App Store is a big pile of nothingness.

Apple accelerated a race to the unprofitable bottom rather than to create a bottom that could actually deliver a financial return for developers. I mean, they could have established a $1 minimum price for apps, rather than $0. They could have created minimum business models that would deliver benefits to both developers and users. They chose to got to zero because a bunch of developers killing themselves to fill the app store with apps is good for Apple and users and developers are a dime a dozen (or at least that's the level of importance Apple seems to assign to them).

App discovery has sucked for years, which means that having an app found and noticed requires either luck, a tremendous amount of external marketing, a very large pile of cash or all of the above.

We've had apps on the App Store, about a dozen of them, it was a big waste of time and resources. Still, I am not holding that against Apple, they provided everyone with opportunities and many benefited from this greatly.

That said, I think they could have done a far better job of preventing the ecosystem from becoming a race to the bottom. This is where the optimization of the hardware sales vs. number of apps for free curve likely drove a decision that was not favorable for developers and entrepreneurs.

Early in the day we worked on an app for a client. Before they came to use they had already invested hundreds of thousands of dollars on the app. They needed a large rewrite due to Apple forcing code updates on everyone. This cost them a pile of cash. They made nothing with the app before engaging with us and still made nothing after we got done. They were in a segment dominated by the likes of Disney, who put millions of dollars into apps, gave them away for market share and, if that wasn't enough, poured real money into marketing.

This is where app discovery challenges and the race to the bottom truly hurt a lot of entrepreneurs. We abandoned all of our apps eventually. It just didn't make any sense to expend resources update code for zero return on investment.

I do think that 30% is high, yet that never really bothered me. I'd be glad to pay 30% if there was a real shot at app discovery and the entire ecosystem wasn't --using the term for dramatic emphasis-- tantamount to voluntary slavery for the benefit of Apple hardware sales. Sorry to be so negative, I imagine a wide deep path of entrepreneurial destruction created by Apple as a result of what the App Store devolved into. Apple sure made billions of dollars and lots of entrepreneurs did well. However, nobody ever gets a peek at what lies beneath the portion of the iceberg that protrudes through the surface. That portion, I am certain, is deep, wide and full of sad stories.

Put a different way: You can go sell products on Amazon for about the same 30% cut and have a FAR better chance of your products being found and making a profit.

The "everyone does it" is true in console gaming though, so the argument actually could apply them. Apple is the only mobile platform that it doesn't do the same as others (Android)

You started with “most relevantly” and my initial reaction to this follow up is “how is that relevant at all”?

The costs of porting are relevant to value of the new audience. The value to the old audience is negative (what are we losing while they are focused in something else). The value to the team is complicated, has to be weighed, and big changes like new APIs or new revenue structures tip that balance.

It’s not just the 30% cut, it’s the “loan” that stores get by withholding payments to developers for arbitrary amounts of time.

If you have a poorly-performing app, it may take months for a few “purchases” to even reach you! Meanwhile, all expenses (web hosting, $99/year developer fees, etc.) don’t stop, and any downsides (e.g. supporting “customers”, or reviews from “customers”) still affect you.

Apple loves to boast about its thousands of “developers” but imagine the size of the slush fund Apple can maintain if there are tons of poorly-selling apps not being paid out for awhile? It’s a large, interest-free loan to Apple. Meanwhile, discoverability and other features that could actually improve sales are entirely up to Apple (and most of these suck).

So if you devote most of your time to a poorly-discovered app that no one buys, you can’t make money. Thus, it isn’t surprising at all that lots of apps start to be “shoveled” into the store, in the hopes that the poor sales of all of them combined will be sustainable. Rinse and repeat.

Apple is directly responsible for huge problems with the app economy, and there is really no defense of their tactics at this point.