Hey email CEO says App Store policy dispute is not about the money
Basecamp CEO Jason Fried, who also serves as chief executive of the firm's standalone email app Hey, on Friday said the dustup surrounding developer response to the tech giant's enforcement of in-app purchases is less about money than it is customer service.
In a blog post published to Hey's website, Fried noted that an outsized proportion of recent discussion surrounding App Store policies has centered around fees. Depending on the purchase, the tech giant takes a 15% or 30% cut of all App Store transactions, purchases and subscriptions.
While an important, and for some crucial, facet of the argument, Apple's forced revenue sharing is only part of the problem. At a more basic level, the policy inserts Apple into critical developer dealings with their users, suppressing user choice and creating a rift that can be detrimental to customer service, Fried says.
"Does the world's largest company really get to decide how millions of other businesses can interact with their own customers? In fact, Apple's policy distances you from your customer," Fried writes.
According to Fried, the App Store's in-app purchase requirement limits the capacity at which developers can help their customers.
"It can flat out ruin an interaction, damage your reputation, and it can literally cost you customers," he writes. "It prevents us from providing exceptional customer service when someone who uses our product needs help."
When a customer signs up for a subscription through the App Store, they "aren't technically your customer anymore," Fried says, noting users pay Apple which, in turn, pays out developers. The system restricts companies from assisting with a range of payment related issues including refunds, trial extensions, partial payments, non-profit discounts and hardship exceptions.
Fried argues that freedom from Apple's restrictive payment practices equates to a better customer experience. Companies willing to interface one-on-one with users and act on billing concerns can do so without Apple's approval. Further, forcing developers of cross-platform apps to adopt a separate billing system can cause confusion and add unnecessary complexity to the process.
"Apple's payment policies create two classes of customers for us: 'The can-helps' and 'The can't helps,'" Fried writes. "Apple has no right to force this on us, on our customers, or on any business - big, small, freelance, independent, whatever."
Fried ends the post with an entreaty to Apple.
"Apple, please just give your developers the choice! Let us bill our own customers through our own systems, so we can help them with extensions, refunds, discounts, or whatever else our own way. It's our business, not your business," he says. "And Phil Schiller's suggestion that we should raise prices on iOS customers to make up for Apple's added margin is antitrust gold."
Apple's iron fist App Store policies made headlines this week when the company refused to approve updates to the newly released Hey because the app failed to integrate in-app purchase options for its mandatory $99 per year subscription. Made available on Monday, Hey can be downloaded though the App Store, but requires activation to use. That means users must first subscribe to the service through an outside network -- Hey's website -- before the app is made functional.
Basecamp co-founder and CTO David Heinemeier Hansson tweeted his concerns over Apple's decision on Tuesday, sparking a heated debate over App Store fees and Apple's application of developer guidelines.
As controversy mounted, Apple marketing chief Phil Schiller in an interview Thursday said the company has no plans to change App Store policy or make an exception for Hey.
"Sitting here today, there's not any changes to the rules that we are considering," Schiller said. "There are many things that they could do to make the app work within the rules that we have. We would love for them to do that."
In a blog post published to Hey's website, Fried noted that an outsized proportion of recent discussion surrounding App Store policies has centered around fees. Depending on the purchase, the tech giant takes a 15% or 30% cut of all App Store transactions, purchases and subscriptions.
While an important, and for some crucial, facet of the argument, Apple's forced revenue sharing is only part of the problem. At a more basic level, the policy inserts Apple into critical developer dealings with their users, suppressing user choice and creating a rift that can be detrimental to customer service, Fried says.
"Does the world's largest company really get to decide how millions of other businesses can interact with their own customers? In fact, Apple's policy distances you from your customer," Fried writes.
According to Fried, the App Store's in-app purchase requirement limits the capacity at which developers can help their customers.
"It can flat out ruin an interaction, damage your reputation, and it can literally cost you customers," he writes. "It prevents us from providing exceptional customer service when someone who uses our product needs help."
When a customer signs up for a subscription through the App Store, they "aren't technically your customer anymore," Fried says, noting users pay Apple which, in turn, pays out developers. The system restricts companies from assisting with a range of payment related issues including refunds, trial extensions, partial payments, non-profit discounts and hardship exceptions.
Fried argues that freedom from Apple's restrictive payment practices equates to a better customer experience. Companies willing to interface one-on-one with users and act on billing concerns can do so without Apple's approval. Further, forcing developers of cross-platform apps to adopt a separate billing system can cause confusion and add unnecessary complexity to the process.
"Apple's payment policies create two classes of customers for us: 'The can-helps' and 'The can't helps,'" Fried writes. "Apple has no right to force this on us, on our customers, or on any business - big, small, freelance, independent, whatever."
Fried ends the post with an entreaty to Apple.
"Apple, please just give your developers the choice! Let us bill our own customers through our own systems, so we can help them with extensions, refunds, discounts, or whatever else our own way. It's our business, not your business," he says. "And Phil Schiller's suggestion that we should raise prices on iOS customers to make up for Apple's added margin is antitrust gold."
Apple's iron fist App Store policies made headlines this week when the company refused to approve updates to the newly released Hey because the app failed to integrate in-app purchase options for its mandatory $99 per year subscription. Made available on Monday, Hey can be downloaded though the App Store, but requires activation to use. That means users must first subscribe to the service through an outside network -- Hey's website -- before the app is made functional.
Basecamp co-founder and CTO David Heinemeier Hansson tweeted his concerns over Apple's decision on Tuesday, sparking a heated debate over App Store fees and Apple's application of developer guidelines.
As controversy mounted, Apple marketing chief Phil Schiller in an interview Thursday said the company has no plans to change App Store policy or make an exception for Hey.
"Sitting here today, there's not any changes to the rules that we are considering," Schiller said. "There are many things that they could do to make the app work within the rules that we have. We would love for them to do that."
Comments
"But personally, as the owner of a business, this isn’t just about money. Money grabs the headlines, but there’s a far more elemental story here. It's about the absence of choice, and how Apple forcibly inserts themselves between your company and your (the developer's) customer.
Does the world’s largest company really get to decide how millions of other businesses (ie: developers) can interact with their own (again, referring to developers') customers? In fact, Apple’s policy distances you from your customer."
His implication is, is that with respect to the app or service, the consumer is the developer's customer not Apple's and that the developer has the right, without interference, to manage the relationship between the developer and user of the app or service. And he has a good point. And you can bet that the coming investigation or hearing will take this into account. The major issue is not the 30% cut although no doubt that will play a part in it as well.
And here his argument is less convincing. I have no trouble in getting touch with developers on the App Store, so I’m not even sure what this even means.
I'm dubious about the "need" for his product in any case. The hey.com homepage blurb claims:
"It feels great to get an email from someone you care about. Or a newsletter you enjoy. Or an update from a service you like. That’s how email used to feel all the time.
"But things changed.
"You started getting stuff you didn’t want from people you didn’t know. You lost control over who could reach you. An avalanche of automated emails cluttered everything up.
"And Gmail, Outlook, Yahoo, and Apple just let it happen."
Well, I've been using Mail.app for well over a decade, and have never received spam on my mac.com account. Other accounts, yes (though not many, thanks to SpamSieve), but that's the ISP's job not the mail client's. (I know this service is going to "disrupt" that model.)
Flash: I never got excited about receiving an email message, particularly after management at my former employer caught on to the idea in the 1990s, and decided to spam me from the corporate server. And boy, was it ever spam, the directorate secretary's "Who stole my scissors?" missive to all ~ two thousand employees and contractors in the unit included.
But more to the point (if say, I were a potential VC): who under the age of 40 uses email (other than communicating with Mom and Dad?
And it appears there are more expensive plans for the unwary.
Wake me up when you've built a $25+ million a year business from scratch. Those users paying for the app / service are as much as his customers as they are of Apple's he's entitled to the control the end-to-end relationship of the customers of his app. Every business is entitled to that other wise they won't be around long enough. But you would know that if you accomplished such a thing.
$999/year
for a basic email service.
If he uses Apple’s payment system then he is actually being denied the opportunity to explain his eye-watering pricing to customers before they show up on the App Store and see them in the drop down.
But look at this from Hey's point of view:
Someone comes to the app store, looking for an email app. They sift through all the free ones, and then come across Hey. They pull down the subscription drop down and see:
$999/year
That's his problem. When you're used to wandering around the app store and seeing $1.99, $2.99, $4.99 … you're going to spit your cappuccino when you see $999 against any app, especially one that is just a front end for a basic email service.
Apple is doing nothing NOTHING to stop him communicating directly to his customers. That is not his problem. His problem is that under Apple's system, he cannot frame his pricing in a more favourable light.
He's just straight up delusional.
Or maybe they have. Hey only takes Visa, Mastercard, and American Express -- no invoices, no cash, no crypto. But, Apple "forces" them to also allow Apple Pay, Cash, and whatever Apple eventually accepts. How Draconian.
Of course, Hey also wants to charge $999/year for [email protected] email address, or [email protected] for $$349/year -- price gouging on a grand scale.
There is no limit on any businesses interaction with their customers -- none! A developer's website posted with the App. Each company can have as much interaction with customers as they want. Also those contacts can be embedded in the app itself -- code those interactions up anyway they want.
I own lots of apps, and lots of books from Apple. I've got licenses galore with each of these developers. Each has EULA's which I implicitly signed with each company, not with Apple.
There's nothing different between my relationship with Apple and the app they vend, than my relationship with Staples and the HP with my Laserjet, or Ace Hardware and my EGO chainsaw, and mower, or my relationship with my EGO snowblower and Home Depot. Or my washer and dryer.
30% markup is not outrageous -- they just don't hide it. And what better way to keep costs down than by having a flat markup. You don't have to double your staff to deal with negotiations, fighting for a prominent place in the display case, deal with customer relations unless you want to.
Jewelry stores have 1000% markups (they do most of their business in December), grocery stores run at 3% (maybe Hy-Vee is 10%? -- too expensive for my taste).