Is the 30% AppStore tax fair?

The AppStore is a software aggregator. It’s not the first, it won’t be the last.

About 100 years ago, in the early 2000s, I was buying software for my phone and Palm Vx. I used various software aggregators (Handango being one) and I remember what a rigmarole it was. You really had no idea what you were buying, sometimes a “sticker” set was nothing more than clip art and there was zero recourse if it didn’t work or if you wanted a refund. What’s more, Handango was a revolution in itself as it only took 40% of the cover price. Other aggregators for other mobile operating systems took 40-90%. You’re reading that right. If you got significant success, you ended up paying 90% of cover price to the aggregator. It was like the sliding tax rate but you were really just lining pockets rather than paying for roads and schools.

Then Everything Changed

The AppStore came along and everything changed.

It was hailed as a revolution. A single point of access, installed on every device, taking only 30% and people could trust the vendor – it was the same vendor they’d spent the last few years buying music from. What could be better. Developers would get access to millions of customers overnight, for a small fee which included a code-signing certificate and there were all these dev tools. Sure, it wasn’t perfect by any means and it still isn’t but it’s a damn sight better than it was.

So what’s the fuss?

Some vendors who rely on tight margin subscriptions aren’t happy with the 30%. They’re just pissy with it. It’s hitting on an underlying business model of tight margins. (I’m talking mostly about Spotify and Amazon but it would equally apply to anyone). Their models don’t work if Apple takes 30%. But even then they adapted to while I can’t buy a Kindle book through the Amazon app or the Kindle app, I can just pop onto the web site and it works fine. But it is a little bit of friction.

So, what’s to be done for sharecroppers who are happy to give away an app for free and then use the platform for promotion and distribution without contributing to the baseline? Surely most developers who charge a reasonable amount for their apps would be thinking “No….Amazon shouldn’t be getting a free ride at all!”. But instead it’s really focused the camera on whether Apple’s 30% is reasonable in this day and age.

What percentage would mollify the masses?

There’s really no right answer for this. Some people would only be content with 0%. Thinking that they bring so much to the Apple ecosystem that Apple shouldn’t be making money off the ecosystem. Others might think that 20% or 10% is a good number considering that storage, network costs and compute costs have dropped considerably in the last 12 years. Some folks are happy enough with the 30% but would like the option to offer their own stores, with their own payment systems or the ability to side-load content. There will, like Brexit, be no one single solution that would make everyone happy (and by everyone I include Apple here).

But it does feel like the time is ripe for Apple to rethink the model. To re-evaluate what makes developing on their platform so compelling and to reward those who have made great apps. Maybe it’s dropping the percentage for those who support universal binaries? Or who have switched to Swift 100%. Or those who stick to some other set of rules? Maybe those who do well should get a sliding scale?

Gruber and Gassee used to agree with the Apple Store but have things changed?

Betteridges Law Applies. As Ever

I’m a fan of Betteridges Law. This rule of thumb decrees that the answer to a headline question is always “no” and so I’ll have to apply it here.

Times have changed. Costs have changed. The market has changed. So maybe it’s time to cut developers a bit more slack.