Apple Should Reconsider Exorbitant App Store Commission Rate

in OCDlast year (edited)

Recently, Apple has faced criticism on a variety of fronts. First, European regulators are looking into their monopolistic practices when it comes to Apple's ubiquitous App Store. Developers are essentially forced to pay a 30% ransom to the Big Fruit just to play on their platform. That number not only includes a cut of paid downloads but also subscriptions and other in-app purchases. Second, Basecamp's David Heinemeier Hansson recently called Apple "gangsters" in reference to what he claims is unfair treatment of his email productivity app Hey.

Hence, in my own recent piece on China Plus, I argue that it may be time for the most richly valued company in the world to reconsider its 12-year-old pricing policy for the App Store.

App Store pic from The Verge

Developers the world round are not wrong. They pretty much have to get their app listed on the App Store or are faced with a classic "if a tree falls in the woods and there's no one there to hear it, does it make a sound?" problem. But 30% is an awful lot of money to take from startup tech geeks who are typically bootstrapping their app dream with credit card debt and coffee-fueled nights.

While Apple understandably wants to protect shareholder interest, it is entirely possible that a win-win compromise could be arranged where the current $15 billion revenue stream increases AND developers get more money. For sure, a little extra scratch for their efforts could go a long way towards promoting a sustainable economy for decades, not years, to come.

Who knows? Experimenting with rate reductions could actually increase revenues for Apple corporate. The firm known for its innovation should at least try this on select categories before rolling out permanent changes. Their reticence to do so does not align with the history of their corporate culture. Steve Jobs was all about experimentation and fostering innovation and, so far, the Apple stance demonstrates neither.

Now that the App Store ecosystem has a half-trillion dollar global economic impact, according to a recent Apple-sponsored report, the lure to disrupt the Big Tech behemoth with a different business model for the app economy grows larger every day. Apple should be proactive about addressing this potential attack on their revenue stream and treat the developers responsible for it better. After all, 30% was okay back in 2008, but now that the app economy has scaled massively, wouldn't it be in the best interests of everybody to give some back to the developer community?

If Apple does not come up with an acceptable solution, they risk becoming just as fat & happy as Ballmer's Microsoft was when it successively missed out on the iPod, iPhone & iPad and all their Halo Effect goodness that lifted Apple from also-ran to lead technology dog.


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#posh for the OCD set - Read more on Twitter!

I also think the 30% would act exactly like a tax on developers: in that way I believe if it were cut or were subject to some kind of sliding scale it would stimulate more activity and bring in more money as almost always happens with tax cutting.

If that was down at or close to credit care payment processing levels up to 10% I think, it would be a no brainer to have subscriptions collected through the app store for things like Basecamp's new email system Hey.

Seems insane that forward-thinking "innovative" company like Apple wouldn't at least experiment with this, ya know? It's exactly the kind of incentive design mechanism we deal with in crypto. So maybe we're just seeing something that most people don't.

It's hardly an unknown branch of economics: change tax rate, watch what happens.

I don't touch anything apple. I just hate their whole agenda and operating procedures.

Android all the way and less dependancy on one company for all of your products.

I like Apple products, but they should be more flexible here. Businesses gotta be constantly disrupting yourself or they die.