Apple's 30% Dilemma

Apple Logo eating 3 dimes like Pac-man
Back in the day when Palm handhelds ruled, the major app stores were PalmGear and Handango. While it's become common knowledge the cut Apple takes from its App Store, the cut taken by PalmGear and Handango wasn't as well known. Regardless, we developers weren't exactly happy then either.

Comparing Apple to Palm risks comparing apples to oranges, but there are insights to be had. While the App Store is part of Apple, PalmGear and Handango were simply online software stores, and were not affiliated with the device makers Palm and HandSpring. Developers were free to sell elsewhere online, but PalmGear and Handango pulled in the majority of clicks. Unfortunately, these stores were as entrepreneurial as the developers and behaved like a startup -- that is, they spent aggressively for rapid growth. As a result, what started as a 30% cut slowly rose to 35% to 40%, with talk of 50%. And to make matters more painful, some developers were paid late.

I soon set up my own website and online store through Digital River, a now defunct payment processor. Asking for a 10% cut, they occupied the sweet spot between signing up with credit card company which took between 2% to 5% but with hoops to jump through, and the 30% plus cut from PalmGear and Handango. Traffic and sales didn't come close to that of PalmGear or Handango, but customers who came to my site were mine, and interestingly, they required less support. My guess is that they, being serious enough to find my site, were also resourceful enough not to need much help.

Apple's App Store is more than an online store and payment processor. The company creates the tools -- Xcode and Swift -- to write apps. Apple also prescreens submissions to defend against malware, although the process sometimes can be opaque and contentious, as in the case of the Hey email app

Google's app store, Google Play, works similarly for Android devices. Google makes the tools for app development which include Android Studio and Kotlin, prescreens for malware, and also takes a 30% cut.

So, is 30% fair? History shows that it could be a little lower, but for the most part, it's reasonable.

Is 30% wise? A deep dive into Epic v. Apple can be found at Stratechery: Rethinking the App Store. The article starts out acknowledging that both Epic and Apple make fair points.  In the end, the author hopes Apple rethinks its store:

. . . I hope the company will at least consider the possibility that this isn’t the 1990s, they’re not about to go out of business, and that being perceived as an asset to developers and not a tax opens up the possibility of growing the pie, not simply taking their slice. If that is the outcome of this summer of App Store turmoil, it will be a win for everyone: developers, Apple, and the users that want both security and innovation.

As a small independent developer, I agree!


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