Comment by pornel | Hacker News Reader

Comment by pornel | Hacker News Reader

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Bandwidth for app distribution is cheap. Marginal cost of developing App Store is nearly zero per app.

99.999% of apps don't get any marketing from Apple at all. Apps get lost in the crowd and the poor search that still struggles with obvious keyword spamming and rip-offs. Actual app ads are charged separately.

Apple doesn't increase your reach. They merely let you through an artificial barrier they themselves have created. I hate it that as an iOS user, I'm sold to you as Apple's product.

I can see manual app review getting costly, but Apple somehow doesn't wage war against free-to-user apps, nor they put limits or fees on excessive app releases. They're only upset when someone else makes money without giving them a cut. It's not about recouping Apple's costs, but increasing Apple's profit.

Pretty much nobody prices software or digital services by looking at how much they cost to provide and adding some margin, which is how this implies Apple should be reasoning. The common model is to price on value. Taking a percentage of revenue is a pretty good proxy for that.

And Apple absolutely does increase your reach. Not in any important technical sense, but by creating a low-friction, high-trust environment, which results in a much larger market for apps than would exist if purchasing required users to type their credit card numbers into your web site and download and run an installer. This is a huge part of why native apps even emerged as a major phenomenon on mobile, against the tide of webification that's swept the desktop over the last 20 years.

A percentage works fine, but you need a competitive market for that percentage.

> And Apple absolutely does increase your reach. Not in any important technical sense, but by creating a low-friction, high-trust environment, which results in a much larger market for apps than would exist if purchasing required users to type their credit card numbers into your web site and download and run an installer.

Plenty of companies will charge 5% or less for low-friction high-trust payment processing, and the auto-install is trivial.

Centralization significantly contributes to reducing friction and increasing user trust. Note that even on platforms that do allow competing app stores, market leaders can command similar percentages (e.g. Steam on Windows). This is why.

If Apple opened up the platform, developers wouldn't be paying 5% to Uncle Bob's Discount App Store instead of 30% to Apple, selling just as many units, and pocketing the difference as profit. They'd quickly discover that users preferred to buy from one or two trusted app stores, and that the better move was to pay whatever they had to pay to be present in those stores.

Centralisation, aka natural monopoly.

The minimum transaction cost for a 99 cent purchase is much higher than 5%. It’s likely over 10%, even for Apple.

Traditional pricing, including value-based, only works in an actual competitive market where customers have more than two realistic options. In the case of the app market, it's basically cartel pricing where both providers charge the exact same amount.

Is it? I mean almost everyone is at least somewhat familiar with cloud services, SaaS, DBaaS etc. All of those services have established pricing models and it isn't based on X% of what your business charges.

Apple could easily charge $100 for an app to be reviewed the first time and $50 an update to cover review, and the rest is very marginal. What Apple is doing is rent seeking on other people's work, plain and simple... it isn't even based on the profit margin against that work.

Not every application is a game on a console that will see millions in sales to make up for development costs. Consoles only see dozens of games as competition, the Apple store sees thousands. It's not an Apples to Apples comparison (pun intended).

I can see manual app review getting costly, but Apple somehow doesn't wage war against free-to-user apps, nor they put limits or fees on excessive app releases. They're only upset when someone else makes money without giving them a cut.

This is exactly where most of the cost of operating the app store comes from. I'm not going to comment on how much of Apple's fees go to paying this, but testing software to release standards is expensive.

I remember 20 years ago, just to get started on a PS2 title, you had to pay sony a crazy dev fee just to get your SLUS code (I remember someone telling me it was about USD$50k). Then all of the devkits cost about USD$20k, and then sony still took a big chunk of your sales price.

How exactly would you like Apple to handle free apps, which still need to be tested and vetted? What if there was a $10k dev charge for each round of testing? How many free apps do you think there would be in the app store? Its true - all of the paid apps are subsidizing the free apps in the app store. If Apple didn't squeeze out other payment processors, every paid app would turn free, they'd use Square or something to sell people in-app purchases instead, and then the whole ecosystem would fall apart.

I guess another question we can ask is what are they testing for? Sony was exacting - there were strict rules about stability and content that had to be met. Your title couldn't stall on a waiting screen for longer than a period of time (I remember having to optimize our start-up on one title to meet this requirement). Even the terminology you used had to be correct - there was a list of acceptable names you could use to refer to the console parts like the controller - like you could call it "PlayStation 2 Dualshock Controller" but not "PS2 Dualshock" and stuff like that.

On the one hand, Apple isn't as exacting, but on the other hand presumably they're testing for other things you wouldn't have to worry about on a PS2 like calling dlopen on forbidden dylibs or sending the addressbook contents to a server. I'm sure that a lot of this is automated, but some of it will require a human to interact with.

The PS2 apparently saw 3800 release titles. This is compared to 957,390 games in the Apple Store. That is a lot more to compete against to recoup development costs.

Personally, I'd be okay if Apple charged a nominal fee ($100) to do an initial review to add to the app store, another fee for updates ($50) and say 5-10% of margins on a sliding scale... that would hinder some indie dev, but not be outrageous and cover some of that review cost, while not squeezing everyone out like a cartel.

But you’re still stuck with a collapsing ecosystem. $100 isn’t even close to the cost of testing an app in the App Store. The App Store doesn’t scale - you need humans inspecting the program and using it and they need a bit of time to do that. For decent testing you’ll pay $100/hr and it’ll take a few hours at least. I don’t know how you’d do an all-in customer-protecting test round of an app for less than $2000. Which means no more free apps. Or, you continue to subsidize free apps with income from non-free apps which means taking a cut of things like in-app purchases.

I’m not saying that 30% is the right number - it’s probably way too high (maybe?) - but if you want free apps, you can’t let anyone use their own payment processors because it’s a revenue hole and you literally won’t have any revenue that doesn’t go down it.

Do you really believe that Apple is doing much more than automated testing of applications submitted, especially with the many thousands of "free" apps that apple isn't getting any revenue for?

Yes - they have to, at least just to navigate around in the app.

> Marginal cost of developing App Store is nearly zero per app.

And the marginal cost of copies of software is nearly zero, and yet developers still want to get paid, no?

> Apple doesn't increase your reach. They merely let you through an artificial barrier they themselves have created.

The important bit is they created it. And the barrier exists because things are better inside than outside. They made the iPhone, got people to add their card info and normalized paying actual money for 0s and 1s. The BATNA for developers is not "Apple opens their platform", it's "try getting customers to hand you CC info to buy your app on the WWW".

Yes, 100% agree with you. Even the user experience of the App Store seems deliberately crippled - it sometimes won't even show a specific app you search for by name! The idea seems to be force developers to spend even more money with Apple to promote their app on the App store.

That sort of accounting has never worked. Countless internet companies have gone bankrupt because they thought the marginal cost of supporting customers was zero, multiplied that by their customer base and thought that meant their cost base was zero. Turns out that’s not a convincing argument to use to people you owe money to.

A coupe of years after the App Store launched I’m pretty sure one of Apples execs said it cost over a $billion a year to operate. That will only have gone up since then.

App store absolutely does increase your reach. Find me another way to sell software to 175 countries in local currencies with full local tax compliance.

> Apple doesn't increase your reach.

That's nonsense - your app may not get presented on the front page of the app store but it appears in search results, in similar apps and depending on your category can appear in top 100 lists. I've published apps that got consistent downloads from a little App Store SEO - far more than any internet SEO and marketing did.

> I hate it that as an iOS user, I'm sold to you as Apple's product.

I disagree. As a user, Apple has, over the last decade-plus, earned my trust that the software I decide to run on my device won't...

* brick the device * stay on the device in any manner if I delete it * access my private data without my consent * intrude upon the experience of any other app(s) except by way of easily-managed notifications

... etc.

As a developer, the App Store is how you explicitly inherit that inbuilt trust from users. One can't put a price on that, because there's no fungibility in trust. It must be earned.

Apple can, and does, however put a price on sharing that trust, as well as the ongoing infrastructure, tooling, and processes needed to maintain it: a flat cut of revenue.

Data does stay on iOS devices after deletion via keychain, and if the developer so chooses, they can sync your data at all times on their server to make sure it never, ever, goes away.

There is a rich tradition of extracting private information off of mobile devices. It's one reason why free apps are pushed more than equivalent websites all the time (ex: reddit, imgur) , because the dataset for adtech is far more richer. Some databases and system APIs are under a user alerted permission, but that isn't unique to an app store or review, it's an OS implementation detail. Same with sandboxing apps.

You have little access over running a network filter on iOS devices, and apple has had a history of rejecting VPNs that act as so.

You can still have all that you put on your list, but without an app store.

> Apple doesn't increase your reach.

it does, but via restricting others' reach due to the barrier of the app store.

It's like a lottery ticket - if apple decides to feature your app, you will get a lot of business and have a lot of success (provided your app is actually any good).

I can distribute terabytes of my free apps every month without paying a penny to Apple. And all the time getting support, tools, etc from them.

And Apple has thousands of highly paid employees providing all those services to us, it’s misguided to assert its just the cost of bandwidth and servers.

The $100 is a screaming deal for us iOS developers.

> I can distribute terabytes of my free apps every month without paying a penny to Apple.

Very few apps do that.

> it’s misguided to assert its just the cost of bandwidth and servers.

Good thing they didn't make that argument.

Apple does increase your reach, the vast majority of customers would have no idea where to look for an app if they even had the desire to find one outside of those the big social sites create.

We don't know Apple's investment in the app store, from maintaining it to enhancing it. To blow it off as marginal is disingenuous at best.

I take no issue with app developers creating and selling an app off the app store. I don't think Apple should be able to interfere with that. I do believe they have the right to restrict another app distributed within the app store from being able to sell apps itself. That would be like Steam allowing Epic to install from its app to sell additional games/apps through the Epic store.

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