Discussing Apple's App Store with Rogue Amoeba's Paul Kafasis on the AppleInsider podcast

AppleInsider

Following months of drama about Apple's App Store policies and procedures, your AppleInsider Podcast hosts talked to Mac developer and founder of Rogue Amoeba software, Paul Kafasis, to get the developer's point of view.

After the House antitrust hearing, developers have spoken out against statements made by Apple CEO Tim Cook. On this special episode on the AppleInsider podcast, longtime Mac developer and founder of software company Rogue Amoeba, Paul Kafasis joins us for a special interview.

With over 20 years of experience in software development, Paul comments on several claims made by Tim Cook during the hearing, Apple's 30% revenue cut from App Store purchases, and on the opening of iOS and iPadOS to side-loading apps.

Our thanks to Paul for coming on the show. Be sure to check out the incredible audio apps from Rogue Amoeba, including Audio Hijack, Loopback, and others on macaudio.com

If you have questions or comments, tweet at Stephen Robles or email us here. Find us in your favorite podcast player by searching for "AppleInsider" and support the show by leaving a 5-Star rating and comment in Apple Podcasts here.

Links from the show

• Rogue Amoeba - Quality Audio Software for MacOS


• Parsing Tim Cook's Opening Statement from the Antitrust Hearing | Daring Fireball


• Rogue Amoeba's response to the Hey.com situation


• App Store Policies | Brent Simmons


• What Tim Cook Left Out Of His Version Of App Store History

Those interested in sponsoring the show can reach out to us at: [email protected]

foregoneconclusion

Isn't it also misleading to imply that Apple's role with the App Store amounts to payment processing and providing server space? Those are the only two things discussed  in regards to Apple's 30% cut after Tim Cook is criticized for being "misleading" in not mentioning internet software sales as a comparison to the App Store. That's like saying that an independent developer that sells exclusively through their web site only has to think about the cost of payment processing and server space when pricing their app. 

melgross

Yes. Developers are conveniently “forgetting” that it costs Apple to run the store. It costs to have all of those in-house developers to write the software for the store to keep up to date. It costs to advertise and market the store and their products. Apple gives software away at times, for free, but pays the developer their 70% cut of the normal price, while receiving nothing themselves. Apple has several thousand people checking apps for malware and other problems. They lower the cut for subscriptions after the first year to 15%. This is addition to the services he mentioned.

i remember when Apple came out with the App Store and announced the 30% cut, and what Apple was doing for that cut, and developers were dancing in the streets because they knew the cut was so low. Other online stores were charging 40%. And brick and mortar stores charged up to 60%.

while I don’t agree with every store policy Apple has regarding competing products, most of what Apple does is correct. As an owner of businesses, I understand that you have to make a profit off pretty much everything you offer. It’s been said, by financial people, that Apple makes five cents profit off every dollar in sales from the App Store. That just five cents out of the thirty they take, and that’s not much.

EsquireCats

This developer has already vocalised his views through multiple channels. Presenting this as an average developer viewpoint is insincere, we already know he has grievances.

The core issue is that developers fail to see the partnership aspect of the various online stores Apple run, they largely come from an era where digital sales are the norm and fail to understand that the work involved in making such a marketplace goes well beyond simple transactional duties.

A developer with a team of 20 staff simply has no concept of the internal machinery of a large company, it's one of the key advantages of running a small business - the overheads are truly minimal. The flipside of that coin is that a small business is not able to launch and scale to the level needed to provide these kind of services.

A few vocal developers consistently fail to see beyond themselves in the equation. They hate the idea that a cut of each sale is going to support a huge range of other developers, they also fail to understand that that richness and variety is why people keep coming back to the stores.

Even just looking at your local supermarket, you'll see App Store gift cards, they'll be 10-20% off their redemption price. Where do they think that discount is coming from? Who do they think is paying the store to stock them? The 15 to 30% they pay in a cut is used for a staggering, almost mind blowing number of marketing initiatives. Then of course we can get into the technical costs of running such a massive server farm, or the cost of developing green power for that farm, or the cost of bandwidth and distribution networks, the cost of hiring people to review apps so the store isn't a mess of malware, and so on: 30% suddenly becomes a steal for the developer. In comparison ordinary retail chains would take more than that, and the developer would still be stuck with additional boxing and distribution costs.

It's actually disgusting to hear these developers fap on like they're being hard done by, its ensures that I won't buy anything from them again and that they lack the creativity to turn their perceived lemons into lemonade. They think Apple need to get with the times, I argue they need to get with the times.

dewme

melgross said:

Yes. Developers are conveniently “forgetting” that it costs Apple to run the store. It costs to have all of those in-house developers to write the software for the store to keep up to date. It costs to advertise and market the store and their products. Apple gives software away at times, for free, but pays the developer their 70% cut of the normal price, while receiving nothing themselves. Apple has several thousand people checking apps for malware and other problems. They lower the cut for subscriptions after the first year to 15%. This is addition to the services he mentioned.

i remember when Apple came out with the App Store and announced the 30% cut, and what Apple was doing for that cut, and developers were dancing in the streets because they knew the cut was so low. Other online stores were charging 40%. And brick and mortar stores charged up to 60%.

while I don’t agree with every store policy Apple has regarding competing products, most of what Apple does is correct. As an owner of businesses, I understand that you have to make a profit off pretty much everything you offer. It’s been said, by financial people, that Apple makes five cents profit off every dollar in sales from the App Store. That just five cents out of the thirty they take, and that’s not much.

Data Centers don't build themselves, the land to build them on wasn't free, the power to run them isn't free, and the maintenance and security needed to keep them running 24x7x365 has a big price tag on it. So there's a massive outlay in non-recurring costs and continuing support costs even before you start to talk about what's happening around the content that's kept in those data centers.

I'm always amazed when people complain about what any manufacturer (not just Apple) charges for a product compared to its bill of material (BOM) cost. Do they realize the engineers, designers, planners, managers, and those who figure out how to manufacture the product, and the equipment and resources needed to carry out the industrial process costs a ton of money? Real people are getting paychecks and suppliers and contractors are sending in invoices that must be paid even before widget #1 rolls off the assembly line. You'd think that most people would see this as clear as day, but somehow it slips through the cracks of human thought for way too many.

robin huber

My first thought was that he was supporting Apple’s position by making it clear that developers not only have a choice, but a superior one at that. So much for Apple monopoly. 

InspiredCode

Everyone talks about the 30% which isn't the major issue.  If there were multiple App Stores these wouldn't be issues, but they are since there is only one place for apps.

Generally these are the issues:
- No ability for developer to directly help their customers when they pay on the AppStore.  
- If you decide to acquire customers yourself, you can't advertise that in your app. Your app may be rejected since it has no utility when using external signup.
- Apps that work with digital content may not have the ability to markup the content enough to pay Apple 30%.
- Apple doesn't need to absorb the 30% fee that competing services need to.  Therefore you can't compete with Apple services.  In fact Apple doesn't want you to compete with them.
- Apple doesn't want you to access competing platforms that can run apps or games from your Apple device.
- Store fees are unbalanced.  Ad supported apps pay nothing.
- No market pressure for App Store pricing (minor issue)

Beats

It's an agenda. If we allow the U.S. to hurt our companies nothing will stop them from telling Wal-Mart they're being unfair or that Amazon needs links to 3rd party stores when you view an item.

Nothing is free and no one should be punished for their ideas. Even if Apple loses $0 a year on the App Store it's still their invention and sill their damn store. 
Profit should be irrelevant. If I create an idea that costs me 100 bucks a year to run but makes me 1 million, I should not be punished for my idea.

The App Store has leveraged developers across the globe, never in the history of man could a kid in his basement create a product that will be offered to a billion people instantly.

SpamSandwich

InspiredCode said:

Everyone talks about the 30% which isn't the major issue.  If there were multiple App Stores these wouldn't be issues, but they are since there is only one place for apps.

Generally these are the issues:
- No ability for developer to directly help their customers when they pay on the AppStore.  
- If you decide to acquire customers yourself, you can't advertise that in your app. Your app may be rejected since it has no utility when using external signup.
- Apps that work with digital content may not have the ability to markup the content enough to pay Apple 30%.
- Apple doesn't need to absorb the 30% fee that competing services need to.  Therefore you can't compete with Apple services.  In fact Apple doesn't want you to compete with them.
- Apple doesn't want you to access competing platforms that can run apps or games from your Apple device.
- Store fees are unbalanced.  Ad supported apps pay nothing.
- No market pressure for App Store pricing (minor issue)

By the way, some developers are responsible for refunds on app purchases (as opposed to Apple). I’ve had at least 2 experiences trying to get refunds for apps that did not perform as advertised and I was told by Apple to contact the developer. Neither developer refunded me.

tundraboy

I've never heard of Honda allowing Toyota to advertise their products in Honda dealers.  Or Walmart allowing Target to advertise in Walmart stores that the product they are looking at is available at a lower price at Target.  Or Walmart online allowing Procter and Gamble to advertise on Walmart online that the detergent they are looking at is currently on sale at Amazon at a lower price.  Or even that it's available at Amazon.

Why do these developers think that Apple is obliged to inform app buyers that the app they are looking at on the Apple App Store is available elsewhere?  What in heavens name possessed them that they think this is a reasonable ask of Apple or any other company?  Would these developers put on their websites information that would directly help their competitor apps?  Would they even say on their website, our app is $40 if you buy it here but it's $35 on Amazon?

Seems a lot of people think "free enterprise system" means "free-ride enterprise system".

mcdave

This developer has absolutely no clue about CX. That is why we paying customers need Apple to run the store & platform customer experience. Developers should just stick to the manufacturing element of the supply chain.

mcdave

Sorry, that last point about monopolies just made me angry. Did it ever occur to this person that Apple only has a ‘monopoly’ on smartphone profits because their approaches appeal to their paying customers? That the failed interoperable models are not some kind of a human right to be stupid (because choice is, sadly, how we control the stupid)? That forcing Apple to adopt the practices of the other platforms that failed to be profitable/successful will not benefit the customer in any way?
Perhaps it’s time for the Dinosaur that is Rogue Amoeba to end as their intent is a threat to what we like about Apple’s platform.

melgross

dewme said:

melgross said:

Yes. Developers are conveniently “forgetting” that it costs Apple to run the store. It costs to have all of those in-house developers to write the software for the store to keep up to date. It costs to advertise and market the store and their products. Apple gives software away at times, for free, but pays the developer their 70% cut of the normal price, while receiving nothing themselves. Apple has several thousand people checking apps for malware and other problems. They lower the cut for subscriptions after the first year to 15%. This is addition to the services he mentioned.

i remember when Apple came out with the App Store and announced the 30% cut, and what Apple was doing for that cut, and developers were dancing in the streets because they knew the cut was so low. Other online stores were charging 40%. And brick and mortar stores charged up to 60%.

while I don’t agree with every store policy Apple has regarding competing products, most of what Apple does is correct. As an owner of businesses, I understand that you have to make a profit off pretty much everything you offer. It’s been said, by financial people, that Apple makes five cents profit off every dollar in sales from the App Store. That just five cents out of the thirty they take, and that’s not much.

Data Centers don't build themselves, the land to build them on wasn't free, the power to run them isn't free, and the maintenance and security needed to keep them running 24x7x365 has a big price tag on it. So there's a massive outlay in non-recurring costs and continuing support costs even before you start to talk about what's happening around the content that's kept in those data centers.

I'm always amazed when people complain about what any manufacturer (not just Apple) charges for a product compared to its bill of material (BOM) cost. Do they realize the engineers, designers, planners, managers, and those who figure out how to manufacture the product, and the equipment and resources needed to carry out the industrial process costs a ton of money? Real people are getting paychecks and suppliers and contractors are sending in invoices that must be paid even before widget #1 rolls off the assembly line. You'd think that most people would see this as clear as day, but somehow it slips through the cracks of human thought for way too many.

As someone who was a manufacturer (and designer) of electronics in the past. I understand it, and am frustrated by the talk of those who have no understanding of it. BOM is generally between 1/2.5 to 1/3.5 of the actually selling price of a product. Some people think it’s 80% or some other nonsense number. Yeah, you’re right, I forgot to mention the cost of the data centers.

but these developers are trying to convince people, that the 30% cut is all profit for Apple. Shame on them.

but I listened to the hearings. Quite frankly, while I think that Tim did a credible job, and Apple was only mildly hit by the questioning, I think I could have done a better job in explaining what Apple does, why and what the costs are. Long ago, I did testify in Congress about new standards for audio amplifiers. This was when I was in my 20s, with my company. You can get sidetracked by the people up there if you aren’t really focused. The tech companies were allowed, as is the custom, to make opening statements that are long enough to get their points across before questioning.

i think Tim could have made statements that would have shifted the onus back on developers, but he really didn’t.

melgross

InspiredCode said:

Everyone talks about the 30% which isn't the major issue.  If there were multiple App Stores these wouldn't be issues, but they are since there is only one place for apps.

Generally these are the issues:
- No ability for developer to directly help their customers when they pay on the AppStore.  
- If you decide to acquire customers yourself, you can't advertise that in your app. Your app may be rejected since it has no utility when using external signup.
- Apps that work with digital content may not have the ability to markup the content enough to pay Apple 30%.
- Apple doesn't need to absorb the 30% fee that competing services need to.  Therefore you can't compete with Apple services.  In fact Apple doesn't want you to compete with them.
- Apple doesn't want you to access competing platforms that can run apps or games from your Apple device.
- Store fees are unbalanced.  Ad supported apps pay nothing.
- No market pressure for App Store pricing (minor issue)

You post is really screwed up. A number of things you say are just blatantly incorrect.

developers can directly help their customers. If a developer wants to, they can have their own website, and the App Store will have a link to that.

i don’t even know what you mean by your second assertion. Developers can advertise their apps should they want to and can afford to. As I said above, they can also have their own websites too. Many apps are reviewed on various websites, some specifically made to review App Store apps.

its 30% the first year, and 15% after that. It’s not really that onerous. And business is business. Having to buy books out of the Kindle app hasn’t harmed Amazon’s book business, and if you subscribe to their $9.95 a month deal, out of the app, from their website, you can read a vast number of books for free, and link to them from within the Kindle app. Other bookstores can do the same. Movies are already on Apple’s stores as are aTv shows, and they do fine. As far as game subs go, well pricing is up to developers. Gaming is hugely successful on iOS. Microsoft and Adobe offer subs with no problem and so can other companies.

you, like some others have no idea about how the App Store works, or the high costs involved. Estimates as to the profit Apple makes on the store is about 5 cents on every dollar sold. That’s not much. That includes all the subscription fees, which, I see you don’t mention, are lowered to 15% after the first year, which is quite manageable.

what are you talking about here? Accessing competing platforms? You need to explain what you mean here? Do you mean something like not being able to play Nintendo games on the XBox or PlayStation, or visa versa? If so, then of course not. When has that ever happened? Or do you mean like Angry Birds, which is available on every platform?

if your app is free to the consumer, then obviously you get nothing, and Apple gets nothing. How else should that work? But you’re also wrong here, as Apple does get a cut of the advertising fee, as Google and Microsoft do from apps in their stores.

what does that last mean? Developers price their apps where they want to. Price pressure is determined by what competing apps cost, and what the developed thinks their own app is worth. Where is that different from anywhere else? Since all paid apps are subject to the same 30% fee, that has no real relation to competing prices.

you haven’t made any case worth talking about here.