I have been thinking about a quick post on App Store economics for a while. For some time, I have thought that the 30% rake that all the app stores take today - imho – just isn’t sustainable. So long as their is choice in the market, economics should bias towards the app developers. Mobile competition is intense and should produce good consumer choice.
There is a tremendous amount of value that Apple, Google, Microsoft and others provide (to varying degrees) with their respective app stores: discovery, payments etc. Apple even claims they provide quality. There is a cost to running app stores and companies should get paid well for it. I don’t know the cost of providing the app store functionality (and I would be interested if anyone has some good pointers here) – But 30%? Really? Longer term, this seems like it will be hard to defend. Application developers may have benefited from an iphone only world to a great extent a couple of years ago (and maybe 30% or more was justified then) but now with mobile devices dominating the landscape from many vendors, the value ought to shift more to the applications. I own a Nexus S and I can tell you I don’t see any difference in my Android version TweetDeck app or my Ebay app as compared to the iOS version.
The recent Apple announcements around subscriptions - asking that any in-app subscription revenue be also shared/taxed maybe is a tipping point. Its a bold move by Apple and one has to be a little impressed by the audacity. Apple does say that it only applies if the subscription is made in the app but it seems to me it is unreasonable and creates some real conflict (think Netflix). Clearly Apple believes that developers and publishers will just have to accept it. Or it will push apps like Netflix back to the web and a browser based experience. I think HTML5 still has a long way to go to be a real alternative to native mobile applications. Apple’s announcement shows that they clearly agree.
I hope Google, Amazon and others take advantage of this opportunity to support app developers and distance themselves from the App Store economics as opposed to just following Apple’s lead.
I hope some publishers decide to push back too. It is about time. I think it will serve consumers best over time.