Thirty Percent

As Apple has recently started selling subscription services to applications on their iOS App Store recently, renewed discussion of their business practices has hit the internet. With the rejection of Sony's bookstore application, word is that Apple is demanding that all applications which sell content available on the iPad or iPhone must

  • Allow the sale of the content through in-app processes, using Apple's payment framework.
  • Allow Apple 30% of the sale from in-app purchases
  • The price of the content from in-app purchases must be less than or equal to any sale price outside of the app, such as through websites

Now, I haven't seen any documentation from Apple talking about this, I'm mainly repeating what I've read on other blogs.Now, I'm not entirely sure. Maybe there is content available for sale for which a 30% margin hit is actually possible. This is not always going to be the case.

Book publishers, especially those in niche markets, may be represented in the App store by a common provider. For academic books of a specialized nature, large reference tomes can easily reach into the hundreds of dollars. I don't have any evidence of this, but I rather doubt that there is a 30% cut available to these applications in the first place, let alone that much available for Apple. While sales activity of a $500 electronic copy of a 32 volume print set may not be high, I highly doubt that the application provider is getting a $150 cut. I also really don't see how Apple can justify this much of a cut.

What's the answer? Apple has made their right to control which applications are allowed on their devices quite clear. While my examples are niche sales from a niche market, and certainly isn't representative of the market, I believe that it does show how their policy, if applied blindly, fails to work in all circumstances, and likely hurts consumers, as these application developers will either need to remove their application from the store, or else increase the prices for all.

What service is Apple even providing for these applications? They're not hosting the saleable content. They're basically just processing the charges, duplicating an infrastructure that preexisting software companies already possess.

Does Apple deserve 30% of these sales? I really doubt it. Do they deserve something? I can't really argue against something, but I think it needs to be fairly minimal, and should likely cap at a determined price point. A $500 resource sale likely shouldn't result in much more than $15 to Apple (3%) rather than $150 (30%).