Stuart Langridge, Jono Bacon, and Jeremy Garcia present Bad Voltage, in which I buy your product but I still have virus, there are apparently cellphone pedestrian lanes all over the world, and:
[00:30:54] There have been a bunch of news stories about Apple's handling of payments in their app store recently: Hey, WordPress, and Epic Games. There's an increasing pushback from developers about the way that app store owners are demanding payments, Google as well as Apple, but perhaps it's just a storm in a teacup and it'll all blow over? What is reasonable for app store vendors when it comes to influencing app makers? How much are you entitled to extract from an ecosystem that you created? This seems a subject with a lot of ramifications: we'll dive into it in detail
In mind the app store should be treated as a service that developers can choose to use or not. It should be offered in tiers from basic listing to consumer metrics to payments. An app developer should be able to choose their tier and pay a portion of their purchase accordingly.
For the basic listing tier, it could be a sign-up fee for joining the app store. For the consumer metrics it could be an additional cost based on the count of consumers. For payments, it would be handled as a percent of revenue.
When discussing the topic, you missed a key issue. When the creator of Hey threatened to leave the app store, it was largely focused on the separation of the consumer and the product. Hey offered a product, but the consumer could not have a consumer/buyer relationship with the product creator, Hey. Instead they could only have a consumer/buyer relationship with Apple. This puts the value in the relationship between Apple and the consumer, leaving the product creator out. That is why a tiered approach would work better. Smaller companies may want to leverage Apple’s purchase experience and consumer management because they do not have their own. Larger companies can “graduate” into using other providers who specialize in handling this relationship.
I like that there was a focused discussion for about half the show instead of all news. I’m waiting to see @jeremy 's take on how the app stores should work.
I think Google and Apple are almost two different beasts. With Apple there is no other choice whereas with Android there are other albeit less popular app stores (as well as side loading).
I’m also really suprised Google didn’t announce a new policy yet that is more developer friendly. Like 30% until you hit the median or average revenue then it drops to 15% and when you hit some really high threshold it drops to 5% - but a threshold that Epic would qualify for.
Although both these companies (and others) operate app stores and payment systems there really is no technical reason the two need to go together! I mean, PayPal, Mastercard, Visa, Interac, etc are all legitimate payment systems.
The only consideration is funding the on-going cost of maintaining and evolving the ecosystem. It’s probably easier to spread the cost over a larger surface area as opposed to covering all the costs entirely by the sale of hardware or software licensing. Ultimately as a consumer I’ll pay the whole cost but the current system is more palatable than paying $1,000 for an entry level handset!!!
PS.: how much developers pay to Apple or Google just to get on to their app stores?
I have…opinions. I’ll try to distill them down here, as this has a very high chance of becoming a screed if I don’t. I’ll focus on Apple for the sake of these comments, as that’s where the focus of the show was. I am extremely surprised how closely Google has followed Apple when it comes to Play Store rules. They have a huge opportunity to differentiate themselves here (and engender themselves to developers), and are squandering that. Also note, from a legal perspective, I find it highly likely that Apple will win.
Business model innovation: Apple is extremely rigid here, to the detriment of themselves and App developers. The fact that there are still no paid upgrades makes some categories of apps extremely difficult to sustainably monetize (productivity for example). That there are still no free trials is also strange. How they are handling apps similar to Stadia makes little sense to me.
Payment processing and fees: The current setup Apple has is, again, bad for themselves and bad for developers. By better aligning incentives, I think everyone wins (at the cost of more complexity around classification). What I’d like to see is a breakdown by centricity and marginal costs. Something similar has been suggested by Ben Thompson. Attempting to treat a phone-only experience that has zero marginal costs the same as an app that is cross-platform or mobile is an addon, or one that has true marginal costs seems untenable long term. In this updated app store you’d have something like the following:
Mobile-only/Mobile-first and zero marginal costs: same as it is now - Apple IAP-only and 30% fee.
Cross-platform first and zero marginal costs: option of login only or Apple IAP-only and 30%. This would basically be an expansion of the current “Reader Exception”.
True marginal cost: option of a lower rate of say 15% using Apple IAP or the ability to charge outside Apple IAP. That they are currently trying to get 30% of the purchase of a Gym trying to be able to reserve spots in a physical facility is astounding.
Granted, this will create some grey areas…and ironically I think an app like Fortnite is one of them. You could reasonably put them in bucket one or bucket two above. Overall though, I think a system similar to above would expand the overall ecosystem and be more fair to developers and businesses trying to build on the App Store, all of which is also better for Apple long term. Most of the other changes I’d suggest are more minor tweaks, so will leave the discussion for the above.
