Do you mean to imply that the billing departments of Spotify, Netflix, etc have 30% overhead, so it's a wash whether a user goes through Apple or signs up with the actual provider of the service?
Transaction fees, regulations updates, equipment infrastructure, support staff, training of support staff, buildings to house the support staff, staff to clean the buildings that house the support staff, accountants, auditors, developers, security experts… Now all of this has to cover operations across the globe that takes into account different regulations across the globe.
Now outside of this, there are other costs of running the app store that go beyond credit card processing, and these have to be paid for too. And what's worse is that these costs increase the more countries Apple supports and the more customers they get. There are lots of apps that get hosted for free on the app store too, which somewhere down the line, will incur a cost.
Do I think the billing departments of Spotify, Netflix etc. have a 30% overhead? No, because they don't have as many customers as Apple, do not operate in as many countries in Apple and do not shift as much data as Apple.
And in many cases, their fee processing is handled by Apple.
Are none of these costs built into the price of an iOS device? They're only supported by fees Apple charges 3rd party developers? And what about the $99/yr license fee?
If Spotify and other digital content creators/distributors have to pay a 30% fee on all IAP then shouldn't Apple have to do the same? Is it fair that Apple can charge $9.99 for Music while Spotify charges $12.99 to cover the 30% fee? Or would you say to every digital content creator/distributor to build your own phone and OS if you don't want to pay the fee? I'm sure if Spotify could distribute their app to users directly from their website they would but of course on iOS you can't download anything that doesn't come from Apple's store (you can on the Mac).
Also for people that argue this is a safety/security feature (trusting iTunes billing over 3rd party option) then why doesn't Apple require that all digital content creators/distributors have to offer IAP as an option? And what about all the non-digital content people purchase via apps that doesn't go through iTunes at all? I can buy all kinds of stuff from Amazon, Target etc. with the billing information I have on file with those retailers. Why is digital content different? Again I'm talking purely from this issue of safety/security.
We know once the updated Spotify app is approved there will be no IAP and if you want to sign up you'll have to do it from the browser. To me a workable solution between Apple and Spotify would be that when you launch the Spotify app you get a welcome/login screen that says 'To sign up go to spotify.com' or something. No mention of price, no url to redirect to the browser just a simple message that tells people where they can go to sign up.
I'm assuming that's largely driven by download statistics (it does say Popular above those featured apps)? Both Pandora and Spotify are in the top 20 charts for free apps. Again I think it's a stretch to argue that Apple does marketing for 3rd party apps (outside of ones that get featured on stage during a keynote or on Apple's product pages on their website). And I don't think it's Apple's responsibility to do marketing for 3rd party developers.
Apple is charged by the credit cards companies for each transaction. So each time that a subscription is renewed, Apple is charged a fee. There are also other costs associated with processing credit transactions such as the ongoing cost of developing the software that handles it, and also charges made by third-party agencies for credit check, and organisations that monitor changes in credit rules across the globe. Monitoring agencies charge a hefty sub. Having worked for a credit card outfit a while back, I can tell you that the cost of processing these things goes far beyond a single transaction fee.
If you have a credit card and don't use, the credit card company may withdraw it. Why? Why not let you keep it if costs them nothing to do so? Because it does cost them. It costs them to follow regulations, maintain records, rent infrastructure. Apple is the same.
Do you mean to imply that the billing departments of Spotify, Netflix, etc have 30% overhead, so it's a wash whether a user goes through Apple or signs up with the actual provider of the service?
Do you mean to imply that the only cost for Apple to host the apps in their app store is the cost of any CC transactions? Well, free apps cost Apple money to have in their app stores. Apps that cost money but no one is buying or not enough people are buying is costing Apple money to have in their app store. Apple do not charge rent to be in the app store. Nor do they kick them out because they are not making money for Apple. The only money Apple derive is from the 30% cut they get from the actual sale of any apps or payment to a subscription using an app. So the overhead is more than just cost for the billing department to process the CC transaction of sales from apps.
Plus Apple responsibility of the charge doesn't end as soon as the charges goes through. If a customer has a problem with a charge on their CC, it's Apple that has to handle it. It doesn't matter if the charge was made last month or last year. Apple must maintain a record of it. If a customer has a question about a charge in his/her iTunes account, Apple has to address it. So there's a cost to maintain a department for customer service. And the more customers and charges made to iTunes accounts, the bigger that department has to be and the more it cost to maintain that department.
Then we have security. Not just from viruses and malware in their app store but customer data in their servers. Apple must spend all it takes to make their servers as secure from hackers as possible. They have close to a Billion iTunes account that hacker would love to get their eyes on. Otherwise they will have a Target, Home Depot or Sony on their hands. And then we have back up. Apple must maintain a real time back up of all their customers info on their servers. It's not like they back up every week or month. That takes bandwidth. Bandwidth cost money. So overhead can easily approach 20% before any profit is realize. And for a small company, that overhead can easily be above 30% of the CC charges they take in. For a small developer that might be only taking in $20,000 a year in app sales, they are better off letting Apple handle the charges than to do it themselves. The $6,000 they paid to Apple is well worth it. Even if you think it wouldn't cost much more than the 3-5% cost to process their CC transactions.
Now I know what you're going to ask next, ……. Why should Spotify or any other developer that are making money selling apps or subscriptions through an app, have to subsidize the free apps or apps that don't sell? Because Spotify and all developers also benefit from the free apps. Spotify has a free app in the app store. Spotifiy subscribers that pay for their subscription at their websites are using a free app in the app store that Spotify don't have to pay for. Many developers have free apps that have less features or are time limited free trial versions of the ones they're trying to sell. And it's often people trying out these free apps that results in a sale.
Plus, having many free apps draws people into the app store. The more people in the app store, the better chances developers like Spotify have in some one seeing their Free Spotify app, downloading it and later subscribing to their Premium service. It's the free and cheap apps that attracts iOS users to the app store and browse around and that benefits every developer that is trying to make money selling apps or subscriptions.
Free and low cost apps in the app store are like the "Anchor" or now of days "Apple" stores in a mall. They bring in foot traffic for all the other stores in the mall. And giving them giving them a break by subsidizing them to have them there is not bad for business if you are trying to make money by selling apps in the same app store.
Do you mean to imply that the billing departments of Spotify, Netflix, etc have 30% overhead, so it's a wash whether a user goes through Apple or signs up with the actual provider of the service?
Transaction fees, regulations updates, equipment infrastructure, support staff, training of support staff, buildings to house the support staff, staff to clean the buildings that house the support staff, accountants, auditors, developers, security experts… Now all of this has to cover operations across the globe that takes into account different regulations across the globe.
Now outside of this, there are other costs of running the app store that go beyond credit card processing, and these have to be paid for too. And what's worse is that these costs increase the more countries Apple supports and the more customers they get. There are lots of apps that get hosted for free on the app store too, which somewhere down the line, will incur a cost.
Do I think the billing departments of Spotify, Netflix etc. have a 30% overhead? No, because they don't have as many customers as Apple, do not operate in as many countries in Apple and do not shift as much data as Apple.
And in many cases, their fee processing is handled by Apple.
Thanks. It's clear you have no idea what any of this stuff costs, and how could you? I could give a laundry list of expenses, too. So what? However, I will reiterate that Apple isn't providing value for Spotify, Netflix, etc, who already have their own billing departments and can handle all their customers who don't sign up through iOS devices. Some people are fond of pointing out that Apple has a small market share in actual unit terms.That incremental iOS customer is already paid for, and it makes no sense for companies like these to pay Apple an obscene, ongoing tax. The only way Apple is providing value to these companies is if Apple can bill customers these companies can serve but cannot bill. Do you have any evidence that bizarre hypothetical situation exists anywhere in the world?
Transaction fees, regulations updates, equipment infrastructure, support staff, training of support staff, buildings to house the support staff, staff to clean the buildings that house the support staff, accountants, auditors, developers, security experts… Now all of this has to cover operations across the globe that takes into account different regulations across the globe.
Now outside of this, there are other costs of running the app store that go beyond credit card processing, and these have to be paid for too. And what's worse is that these costs increase the more countries Apple supports and the more customers they get. There are lots of apps that get hosted for free on the app store too, which somewhere down the line, will incur a cost.
Do I think the billing departments of Spotify, Netflix etc. have a 30% overhead? No, because they don't have as many customers as Apple, do not operate in as many countries in Apple and do not shift as much data as Apple.
And in many cases, their fee processing is handled by Apple.
Thanks. It's clear you have no idea what any of this stuff costs, and how could you? I could give a laundry list of expenses, too. So what? However, I will reiterate that Apple isn't providing value for Spotify, Netflix, etc, who already have their own billing departments and can handle all their customers who don't sign up through iOS devices. Some people are fond of pointing out that Apple has a small market share in actual unit terms.That incremental iOS customer is already paid for, and it makes no sense for companies like these to pay Apple an obscene, ongoing tax. The only way Apple is providing value to these companies is if Apple can bill customers these companies can serve but cannot bill. Do you have any evidence that bizarre hypothetical situation exists anywhere in the world?
So now you're admitting that it does cost Apple more than the CC transaction cost. Even if we don't know how much that cost is. You saying you can provide a laundry list of expenses means you know there are expenses other than the CC transaction fee. And we would like to see that list, in case we miss some expenses that you are aware of.
What Apple is really providing is access to iOS users that don't want to pay for their subscription by going to a website and wants to pay for it by using his/her iTunes account. This makes it simple for them. And they feel more secure paying for it this way. How hard is that to understand? Apple do not have to let Spotify or any other app developer have access to these iOS users, without paying a percentage of what they make from these users paying for an app or subscription. Those are the rules if you want to place an app in their app store.
It's no different that Amazon requiring their MarketPlace sellers to pay Amazon a percentage of their sale, in order to have access to customers like me. Customers that would rather pay for items with an already existing Amazon account than to sign up for another account and give out their CC at the venders website. One doesn't not gain access to Amazon account holders by just paying Amazon the cost of the CC transaction. You actually think that all these sellers (selling on Amazon Market Place), that can process CC on their own, are not getting any value for what they have to pay Amazon to sell stuff at Amazon Market Place, just because Amazon is charging them more that what it cost to handle the CC transaction? Something they can do themselves. Amazon account holders belongs to Amazon. If you want access to them, you have to pay.
And this is really no different than Google. Google keeps data on all the people that uses their services. And a lot of their services are free. Even if Google refer to people that uses their services as their "customers", they aren't really their customers, the advertisers are their customers. But anyways, if you want to place an ad through Google, you will pay a premium for ads directed at people at your target audience. Google knows who these people are and have access to them, you don't. So you have to pay Google extra to have access to these customers that are more likely to buy your products. Is Google being greedy because they will charge you more for access to their "customers" that are your target audience? It doesn't cost Google any more to gather and keep the data on these target "customers" of yours than it did to gather and keep the data on any of their other "customers". Customers that are not your target audience. So why should you have to pay Google a premium to have Google direct your ads to your target audience?
So do Spotify have access to these customers that wants to use their iTunes account to pay? NO. It doesn't matter if they can handle the billing, these iOS users don't want them to. It's that simple. If Spotify don't see any value in getting these iOS users as subscribers, then they shouldn't put a subscription app in the app store. They can still have their free apps in the app store.
Spotify offers a 50% discount for students. That's $5.00 that they are losing to student subscribers. If they can afford to do this, then they can afford to absorb the $3.00 it takes to get an iOS user that don't want them to handle their CC charges? They would be making $2.00 more than what they are making with student subscribers.
Now I can use your silly augment and say this. If Spotify can offer students $5.00 off on their Premium service, then why don't they offer other subscribers, that aren't students, the same discount? Surely, by your standards, it doesn't cost Spotify any more, specially 100% more, to supply a $9.99 Premium account subscriber with their music service, than it does to student Premium subscribers. What do Spotify see in student subscribers that is worth $5.00 to have them as subscribers, that they don't see in iOS subscribers that is not worth even $3.00. And Spotify saves the CC cost with iOS subscribers for that $3.00. Something they don't with their student subscribers. So my silly augment now, as silly yours are, is that Spotify is being greedy by charging non student Premium account subscribers $9.99, when surely they can charge much less. As proof by the $4.99 they charge to students with Premium accounts.
I'm assuming that's largely driven by download statistics (it does say Popular above those featured apps)? Both Pandora and Spotify are in the top 20 charts for free apps. Again I think it's a stretch to argue that Apple does marketing for 3rd party apps (outside of ones that get featured on stage during a keynote or on Apple's product pages on their website). And I don't think it's Apple's responsibility to do marketing for 3rd party developers.
I think you are beginning to mix "marketing" with endorsements. Apple should not be endorsing any apps in their app store. And not even if the developer wants to pay for such endorsements. All app store developers should feel assure that they are playing on a level playing field with other developers when trying to complete for sales. They should not also have to compete with the owner of the store because other developers makes enough to pay Apple for an enforcement. If Apple is ever paid to endorse an app, they should have to mention that it was a paid endorsement.
The marketing the Apple should be doing for all developers is to spend what it takes to promote the Apple App Store as the first and best place to shop for software, in order to attract shoppers. If they mention any app at all, it should be only to showcase what the Apple App Store has to offer and should not come across as an endorsement for the app. And any search tools should show results based on criteria that was used for the search and any empirical data. Category, free, cost, rating, features, etc. or based on apps that you already have or have looked into. Just like how the Genius in iTunes recommends songs and movies based on the songs you have in your iTunes library or movies you have rented. It should not be based on whether Apple makes the most money from it or that someone paid to be on top of the list, like they do with a Google search.
So the marketing that Apple can do for any app or app developer is limited to promoting the app store as a whole, which benefit all apps and apps developer. And Apple spends a lot of money in advertising to do this. Spotify or any other developer that makes money for Apple by selling apps or subscription apps should not expect any more from Apple, in terms of marketing. If Spotify wants to use how much of percentage they have to pay Apple per subscription as a means of getting special services, they better be prepare to explain why they are any more special than Microsoft or Netflix or the Wall Street Journal.
Well, to begin with, Apple has decided not to charge if you're not making money themselves. They could charge 'rent' for being on the Apple store, whether you make money or not, but that wouldn't go down very well, and I'm sure that Spotify would still complain.
Secondly, as I mentioned earlier, the cost of processing credit cards doesn't begin and end with the transaction fee. (I used to work for a credit card company that went bust because it didn't realise this.)
Thirdly, if Apple is charging too much then they'll be punished for it because that's how the market works.
Spotify would prefer not to use iTunes billing (and thus pay Apple 30%) but Apple gives you no other option so you either use it or force people to sign up outside the app. What's consumer friendly about me having to pay $3/mo more for a service or in the case of, say, books, having to go to the browser every time I want to buy an ebook? On Android you can buy books directly from the Kindle app. Seems to me that's a better user experience.
Then, use an Android phone...your problem is then solved.
Comments
If Spotify and other digital content creators/distributors have to pay a 30% fee on all IAP then shouldn't Apple have to do the same? Is it fair that Apple can charge $9.99 for Music while Spotify charges $12.99 to cover the 30% fee? Or would you say to every digital content creator/distributor to build your own phone and OS if you don't want to pay the fee? I'm sure if Spotify could distribute their app to users directly from their website they would but of course on iOS you can't download anything that doesn't come from Apple's store (you can on the Mac).
Also for people that argue this is a safety/security feature (trusting iTunes billing over 3rd party option) then why doesn't Apple require that all digital content creators/distributors have to offer IAP as an option? And what about all the non-digital content people purchase via apps that doesn't go through iTunes at all? I can buy all kinds of stuff from Amazon, Target etc. with the billing information I have on file with those retailers. Why is digital content different? Again I'm talking purely from this issue of safety/security.
We know once the updated Spotify app is approved there will be no IAP and if you want to sign up you'll have to do it from the browser. To me a workable solution between Apple and Spotify would be that when you launch the Spotify app you get a welcome/login screen that says 'To sign up go to spotify.com' or something. No mention of price, no url to redirect to the browser just a simple message that tells people where they can go to sign up.
Do you mean to imply that the only cost for Apple to host the apps in their app store is the cost of any CC transactions? Well, free apps cost Apple money to have in their app stores. Apps that cost money but no one is buying or not enough people are buying is costing Apple money to have in their app store. Apple do not charge rent to be in the app store. Nor do they kick them out because they are not making money for Apple. The only money Apple derive is from the 30% cut they get from the actual sale of any apps or payment to a subscription using an app. So the overhead is more than just cost for the billing department to process the CC transaction of sales from apps.
Plus Apple responsibility of the charge doesn't end as soon as the charges goes through. If a customer has a problem with a charge on their CC, it's Apple that has to handle it. It doesn't matter if the charge was made last month or last year. Apple must maintain a record of it. If a customer has a question about a charge in his/her iTunes account, Apple has to address it. So there's a cost to maintain a department for customer service. And the more customers and charges made to iTunes accounts, the bigger that department has to be and the more it cost to maintain that department.
Then we have security. Not just from viruses and malware in their app store but customer data in their servers. Apple must spend all it takes to make their servers as secure from hackers as possible. They have close to a Billion iTunes account that hacker would love to get their eyes on. Otherwise they will have a Target, Home Depot or Sony on their hands. And then we have back up. Apple must maintain a real time back up of all their customers info on their servers. It's not like they back up every week or month. That takes bandwidth. Bandwidth cost money. So overhead can easily approach 20% before any profit is realize. And for a small company, that overhead can easily be above 30% of the CC charges they take in. For a small developer that might be only taking in $20,000 a year in app sales, they are better off letting Apple handle the charges than to do it themselves. The $6,000 they paid to Apple is well worth it. Even if you think it wouldn't cost much more than the 3-5% cost to process their CC transactions.
Now I know what you're going to ask next, ……. Why should Spotify or any other developer that are making money selling apps or subscriptions through an app, have to subsidize the free apps or apps that don't sell? Because Spotify and all developers also benefit from the free apps. Spotify has a free app in the app store. Spotifiy subscribers that pay for their subscription at their websites are using a free app in the app store that Spotify don't have to pay for. Many developers have free apps that have less features or are time limited free trial versions of the ones they're trying to sell. And it's often people trying out these free apps that results in a sale.
Plus, having many free apps draws people into the app store. The more people in the app store, the better chances developers like Spotify have in some one seeing their Free Spotify app, downloading it and later subscribing to their Premium service. It's the free and cheap apps that attracts iOS users to the app store and browse around and that benefits every developer that is trying to make money selling apps or subscriptions.
Free and low cost apps in the app store are like the "Anchor" or now of days "Apple" stores in a mall. They bring in foot traffic for all the other stores in the mall. And giving them giving them a break by subsidizing them to have them there is not bad for business if you are trying to make money by selling apps in the same app store.
http://www.wsj.com/articles/apple-gets-sweet-deals-from-mall-operators-1426007804 ;
So now you're admitting that it does cost Apple more than the CC transaction cost. Even if we don't know how much that cost is. You saying you can provide a laundry list of expenses means you know there are expenses other than the CC transaction fee. And we would like to see that list, in case we miss some expenses that you are aware of.
What Apple is really providing is access to iOS users that don't want to pay for their subscription by going to a website and wants to pay for it by using his/her iTunes account. This makes it simple for them. And they feel more secure paying for it this way. How hard is that to understand? Apple do not have to let Spotify or any other app developer have access to these iOS users, without paying a percentage of what they make from these users paying for an app or subscription. Those are the rules if you want to place an app in their app store.
It's no different that Amazon requiring their MarketPlace sellers to pay Amazon a percentage of their sale, in order to have access to customers like me. Customers that would rather pay for items with an already existing Amazon account than to sign up for another account and give out their CC at the venders website. One doesn't not gain access to Amazon account holders by just paying Amazon the cost of the CC transaction. You actually think that all these sellers (selling on Amazon Market Place), that can process CC on their own, are not getting any value for what they have to pay Amazon to sell stuff at Amazon Market Place, just because Amazon is charging them more that what it cost to handle the CC transaction? Something they can do themselves. Amazon account holders belongs to Amazon. If you want access to them, you have to pay.
And this is really no different than Google. Google keeps data on all the people that uses their services. And a lot of their services are free. Even if Google refer to people that uses their services as their "customers", they aren't really their customers, the advertisers are their customers. But anyways, if you want to place an ad through Google, you will pay a premium for ads directed at people at your target audience. Google knows who these people are and have access to them, you don't. So you have to pay Google extra to have access to these customers that are more likely to buy your products. Is Google being greedy because they will charge you more for access to their "customers" that are your target audience? It doesn't cost Google any more to gather and keep the data on these target "customers" of yours than it did to gather and keep the data on any of their other "customers". Customers that are not your target audience. So why should you have to pay Google a premium to have Google direct your ads to your target audience?
So do Spotify have access to these customers that wants to use their iTunes account to pay? NO. It doesn't matter if they can handle the billing, these iOS users don't want them to. It's that simple. If Spotify don't see any value in getting these iOS users as subscribers, then they shouldn't put a subscription app in the app store. They can still have their free apps in the app store.
Spotify offers a 50% discount for students. That's $5.00 that they are losing to student subscribers. If they can afford to do this, then they can afford to absorb the $3.00 it takes to get an iOS user that don't want them to handle their CC charges? They would be making $2.00 more than what they are making with student subscribers.
Now I can use your silly augment and say this. If Spotify can offer students $5.00 off on their Premium service, then why don't they offer other subscribers, that aren't students, the same discount? Surely, by your standards, it doesn't cost Spotify any more, specially 100% more, to supply a $9.99 Premium account subscriber with their music service, than it does to student Premium subscribers. What do Spotify see in student subscribers that is worth $5.00 to have them as subscribers, that they don't see in iOS subscribers that is not worth even $3.00. And Spotify saves the CC cost with iOS subscribers for that $3.00. Something they don't with their student subscribers. So my silly augment now, as silly yours are, is that Spotify is being greedy by charging non student Premium account subscribers $9.99, when surely they can charge much less. As proof by the $4.99 they charge to students with Premium accounts.
I think you are beginning to mix "marketing" with endorsements. Apple should not be endorsing any apps in their app store. And not even if the developer wants to pay for such endorsements. All app store developers should feel assure that they are playing on a level playing field with other developers when trying to complete for sales. They should not also have to compete with the owner of the store because other developers makes enough to pay Apple for an enforcement. If Apple is ever paid to endorse an app, they should have to mention that it was a paid endorsement.
The marketing the Apple should be doing for all developers is to spend what it takes to promote the Apple App Store as the first and best place to shop for software, in order to attract shoppers. If they mention any app at all, it should be only to showcase what the Apple App Store has to offer and should not come across as an endorsement for the app. And any search tools should show results based on criteria that was used for the search and any empirical data. Category, free, cost, rating, features, etc. or based on apps that you already have or have looked into. Just like how the Genius in iTunes recommends songs and movies based on the songs you have in your iTunes library or movies you have rented. It should not be based on whether Apple makes the most money from it or that someone paid to be on top of the list, like they do with a Google search.
So the marketing that Apple can do for any app or app developer is limited to promoting the app store as a whole, which benefit all apps and apps developer. And Apple spends a lot of money in advertising to do this. Spotify or any other developer that makes money for Apple by selling apps or subscription apps should not expect any more from Apple, in terms of marketing. If Spotify wants to use how much of percentage they have to pay Apple per subscription as a means of getting special services, they better be prepare to explain why they are any more special than Microsoft or Netflix or the Wall Street Journal.
the idiots are right.
am gonna sell my product at Wal Mart and DEMAND %100 profit because Wal Mart NEVER advertises me and I'm helping their Eco system.
Screw all their hard work and bills, everything should be free FOR ME.