31–40 of 88 posts
Earlier quoted context omitted.
It's not a retail store. The App Store does not purchase, hold, and resell inventory from wholesalers. These are necessary functions to be considered retail.
You do not seem to know how retail works, and have created an arbitrary definition of it to exclude the App Store.
If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold. For the record I don't even really like Spotify that…
30% is not exorbitant when comparing to say, Walmart, who purchase products wholesale for up to 50% less then retail pricing (depending on the product category). In fact, when 30% was announced, it was considered generous compared to what developers were paying Best Buy, CompUSA, mobile carriers, etc before that.
Margins on digital goods are not bound by the same rules of economics as margins for physical retail sales.
If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold. For the record I don't even really like Spotify that…
Keep in mind that, for the vast majority of developers, Apple gets $1.50.
Apple gets $3 only if/when you hit $1 million in annual App Store earnings.
If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold. For the record I don't even really like Spotify that…
Is the work the same for them too? They all charge a percentage of sticker price. Oh and none of those stickers say free.
The tension I see is that Apple’s work is correlated with number of developers and number of users. They very much have a long tail of developers and apps with effectively no users or income, but who still cost Apple money. Maybe this is actually covered by the $99/yr fee but maybe not. Then at the other end, the top 0.001% of apps get so much use (downloads, IAP api calls, support requests) that account for the majority of App Store costs. Apple runs a CDN just for apps like facebook and YouTube to make the downloads faster. Support staff will tell you how many people blame Apple for what happens in apps - famously when Snapchat was A/B testing videos Apple support was swamped with FOMO’d teenagers wondering why they couldn’t download the latest update. Apple probably loses money on the facebook app (ignoring downstream revenue).
My point is that Walmart costs are pretty linear with the number of boxes on the shelf, and none of them are “free”. As long as we have free apps and it’s cheap to be a developer, companies will need to over compensate by using higher fees.
Edit: Spotify is the collateral damages caused by Apple needing Snapchat, but also needing to fund that support costs somehow.
Also Spotify - the company in question - has a terrible price structure where they give their first margin to Apple and the rest of their money - and then some - to record labels. That basically means they’ll always lose money to record labels but they also can’t win if they pick a fight with them - just ask Taylor Swift.
Earlier quoted context omitted.
Because they do the expensive work of marketing and making a phone that appeals to rich people, who actually spend money on stuff. Spotify isn’t giving Apple a cut of revenue per se, so much as it’s spending money on ads for a specific audience in a specific way. I suppose Google too could make Android phones more attractive.
I had no idea Apple advertises on behalf of Spotify. Thanks for this. Do you have any examples?
If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold. For the record I don't even really like Spotify that…
To be precise it is 30% revenue. They have costs. And they allow free apps! Every free app that gets downloads and doesn’t monetize at all is pure cost for them.
15% until you hit $1M in annual App Store revenues. Most developers will only ever pay 15%.
It is also wrong—though in a different sense—for Spotify not to acknowledge the irony of them complaining about Apple being a middleman who takes a cut of the work of creative people when that is also their own business model.
If I write an app for the app store and sell it for $10, apple gets $3. If I sell it for $5, apple gets $1.5. If I sell a subscription for $10/month they get $3 a month. Apple's work is the same for all of these. Their monopolistic position is how they can demand a pretty exorbitant 30% cut. Walmart, Costco, et al wish they had a 30% profit on everything the sold. For the record I don't even really like Spotify that…
> Walmart, Costco, et al wish they had a 30% profit on everything the sold. Is the work the same for them too? They all charge a percentage of sticker price. Oh and none of those stickers say free. The tension I see is that Apple’s work is correlated with number of developers and number of users. They very much have a long tail of developers and apps with effectively no users or income, but who still cost Apple money…