When the App Store launched in 2008 with 500 apps, Apple executives viewed it as an experiment in offering a compellingly low commission rate to attract developers, Philip W. Schiller, Apple’s senior vice president of worldwide marketing and top executive for the App Store, told Reuters in an interview.
“One of the things we came up with is, we’re going to treat all apps in the App Store the same – one set of rules for everybody, no special deals, no special terms, no special code, everything applies to all developers the same. That was not the case in PC software. Nobody thought like that. It was a complete flip around of how the whole system was going to work,” Schiller said.
And this bit of history:
In the mid-2000s, software sold through physical stores involved paying for shelf space and prominence, costs that could eat 50% of the retail price, said Ben Bajarin, head of consumer technologies at Creative Strategies. Small developers could not break in.
Bajarin said the App Store’s predecessor was Handango, a service that around 2005 let developers deliver apps over cellular connections to users’ Palm and other devices for a 40% commission.
With the App Store, “Apple took that to a whole other level. And at 30%, they were a better value,” Bajarin said.
Back to Phil Schiller:
“As we were talking to some of the biggest game developers, for example, Minecraft, they said, ‘I totally get why you want the user to be able to pay for it on device. But we have a lot of users coming who bought their subscription or their account somewhere else – on an Xbox, on a PC, on the web. And it’s a big barrier to getting onto your store,’” Schiller said. “So we created this exception to our own rule.”
Schiller said Apple’s cut helps fund an extensive system for developers: Thousands of Apple engineers maintain secure servers to deliver apps and develop the tools to create and test them.
This is clearly a hot button topic. Does that 30% cut make the same sense today as it did back in the early days?
And what about the fact that macOS developers can sell their apps through services like Paddle, who takes a much smaller percentage but provides no marketing exposure or security/privacy oversight? Why doesn’t Apple allow this same sort of behavior in the iOS App Store? This would provide developers the same choice they have with the Mac App Store and likely quiet the uproar.
Seems to me, the devil in this model is the critical importance, to Apple, of services revenue. As I’ve said before, Apple is a public company and is beholden to its shareholders. They need that 30% from iOS app sales. I suspect the money it gets from the Mac App Store has never been big enough to be worth the PR black eye it would bring to force that iOS model on Mac developers.
It’d be interesting to see the cost of running the App Store, with all its engineers, writers, servers, all of it, as a cost per developer. Put that cost, side-by-side against the revenue per developer that Apple takes in.