Archive for August 18, 2020

Tuesday, August 18, 2020

Time to Change the App Store Sales Model

Drew McCormack (tweet):

But that is not the app world of 2020. It has become a huge, multifaceted market, with multiple platforms, crossover with the web, and a multitude ways to make money. Very few companies now live solely within Apple’s city walls; they are more like multinationals, with offices in many cities, trading across borders in a global marketplace. Apple’s simplistic feudal system, taxing income alone, feels dated.


[The] landlord’s success is based on bringing value to the property itself, and my success derives from how well I execute on my business, the restaurant. It would feel wrong if the landlord demanded a cut of the restaurant profits, something they have had no part in.


To make it in today’s app world, you have to find your own users. A company like Netflix will have benefited very little from being featured by Apple, and that is no doubt why they feel miffed at Apple taking 30% of income they have worked hard for.

He wants a rent-like fee based on download tiers, plus a (smaller) percentage for apps that use Apple’s payment processing.

Max Seelemann:

We’d be a step closer to fairness if apps that monetize outside would also pay for the visibility and distribution. Especially business apps and ad-driven platforms pay nothing but get all the benefits for free.

Developers don’t owe Apple for the iPhone or the toolchain. That’s nuts. Apple earns for that from the devices sales. Building an SDK is a service for the users not the developers. They sell more phones because of apps available and their quality.

Ben Thompson:

And worst of all, while this was happening, App Store functionality, particularly around payments, was being left in the dust by companies like Stripe, Square, Shopify, and even PayPal. While these companies were making it radically easier for developers to accept payments, offer subscriptions, even get loans and manage their finances, Apple’s payment solution took years to even support subscriptions (never mind that that solution is so difficult to use that a startup just raised $15 million to provide basic tracking functionality); in-app purchase still doesn’t support traditional trials or upgrades, the importance of which I’ve been writing about for years.


The App Store was, at least at the beginning, a wonderful example of this promise; as Jobs noted even the smallest developer could reach every iPhone on earth. Unfortunately, without even a whiff of competition, the App Store has now become a burden for most small developers, who instead of relying on the end-to-end functionality offered by, say, Stripe, have to support at least two payment solutions, the combined functionality of which is limited to the lowest common denominator, i.e. the App Store.

Frank Illenberger:

I would be more than happy to pay 30% for sales through the Apple App Stores if they were first class for both customers and developers. But until we get there they have to fix a lot of problems[…]


The StoreKit framework is deficient. Implementing subscriptions is extremely tedious and unreliable and the customer facing purchase UI only consists of raw modal alerts loosely popping up in any order.

Why are subscription apps and apps with free trials treated as if they were free? This is deeply wrong, confusing, and is leading to a load of problems like unwarranted bad reviews and unfair placement in the charts.

Apple does not offer a path for paid upgrades but at the same time limits the types of apps that are eligible for subscriptions. This severely restricts business opportunities for a lot of apps.


Update (2020-08-26): Nick Heer:

Purely as an observer and user, it seems that Apple’s current enforcement of App Store policies has made them the police officers hiding behind the construction site barricade ticketing pedestrians instead of trying to figure out why so many tickets are being written in the first place. Surely it more desirable to think less about what is legally possible and more about what is best.

This is not an argument for Apple to abandon all control over iOS and bend to the demands of every developer. It is only an observation that the attempts at policy circumvention and aggressive enforcement actions are not sustainable for a healthy developer ecosystem. It has been a long time since Apple was a company that prioritized developer needs, but there is a big difference between being standoffish and hostile — and the latter is increasingly an apt way to describe building apps for the iPhone and iPad.

Update (2020-08-27): Mike Piontek:

I’ve spent months working on App Store receipt validation. It’s a mess but I thought I understood it. I’ve watched WWDC videos across multiple years multiple times, I’ve read all the disconnected documentation spread across Apple’s web site, I’ve looked at third-party guides.

Today I’ve discovered I’m either doing something very wrong, the App Store sandbox returns inconsistent data, or maybe both. I’m just so frustrated and angry and defeated.

Joe Cieplinski:

THIS is the part of the App Store I actually get angry about. The tools are way undercooked, and the documentation only makes you more confused. This stuff should be dead simple to implement at this point.

Update (2020-09-07): Rene Ritchie:

Personally, I’m still debating between two different takes on this.

The first is keeping it at 30% but really delivering on the promise of the App Store for developers and customers alike. A real focus on eliminating scam apps, outdated apps, websites wrapped as apps. Even if it’s only feasible for the top 100 apps in every category. The ones that have the most visibility. Also, no derelict frameworks, no capricious rejections, no accidental terminations, just no BS. Basically, rather than treating developers as second-class suppliers, treating them as first class customers — of App Store services. Making developer sat every bit as much of a bragging point as customer sat.

This is a nice idea, but there have never been structural incentives for this to happen, so it likely won’t. I don’t think Developer Sat is in the corporate DNA. And, absent that, it’s hard to improve in an area that isn’t a direct revenue source and that doesn’t have dog fooding or real competition.

The second is that Apple should just suck it up and drop the rate to 15% for everything, across the board. Not dropping for droppings sake, or even for the optics, but just to get the balance back towards break-even. Apple’s platform obviously provides tremendous value to developers, and apps obviously provide tremendous value to Apple’s platform, so periodic adjustments to maintain that balance is in the best interests of everyone, especially customers.

My guess is that Apple could break even at just 3% to cover credit card processing, as it’s already collecting more than a billion dollars per year in developer program membership fees.

App Consoles

John Gruber (tweet):

If you think Epic is right in principle about iOS and Android, then they ought to be making the same argument about Xbox, PlayStation, and Switch. A computer is a computer. “Consoles” are a business model and user experience design choice, and the iPhone and iPad are effectively app consoles, where games are just one type of app.

Steve Troughton-Smith:

The idea that the de facto primary computing platform for most of the world is an ‘app console’ is trash. Apple may be treating it like a console, but it’s so much more important than that and is a critical component in the daily lives of nearly everybody on this planet

The smartphone is everything from communication to banking to camera to credit card to medical device to navigation to game platform. It doesn’t play in the same arena as games consoles; it doesn’t even play in same arena as desktop computers — it’s far more important than the PC

All the more essential that the future of innovation atop smartphone computing is not entirely beholden to the whims of a single team (or VP) at a single company, who has shown time and time again that they can modify and abuse their rules for their own benefit

It is an app console, because that’s how Apple runs iOS. But should it be? Troughton-Smith is right that this is qualitatively different from gaming consoles. Because of the scale and importance of these platforms, I think a better analogy is something like network neutrality.

Comcast and Verizon have built networks of wires and towers that deliver packets to your devices. Does this mean that Comcast should be able to block packets from competing video providers or charge extra for them? Should Verizon be able to block mentions of AT&T or MVNOs? Should they get a cut of everything you buy online because they routed the packets, making sites don’t comply invisible? Yet that’s pretty much where we are with the App Store. Customers who are really lucky have two high-speed Internet providers to choose from, but that limited competition doesn’t give them much protection. What helps is that there’s a long history of network neutrality, and the companies believe the government will step in if there’s abuse. Likewise, with iOS and Android, having a duopoly rather than a monopoly does very little for customers—and in this case the government has so far been hands-off.

Ben Thompson:

The specific case of Apple and the iPhone raises an additional angle: should the importance of the market in the question make a difference as well?


Apple consistently acts like a company peeved it is not getting its fair share, somehow ignoring the fact it is worth nearly $2 trillion precisely because the iPhone matters more than anything. This is not a console you play to entertain yourself, or even a PC for work: it is the foundation of modern life, which makes it all the more disappointing that Apple seems to care more about its short term bottom line than it does about the users and developers that used to share in its integration upside; if Apple doesn’t change course, hyperessential will at some point trump hypercompetitive.

Jeff Johnson:

The top selling game console Nintendo Switch has over 2000 games.

The iOS App Store and Google Play Store each have over 2 million apps. They’re not consoles. You can effectively curate a few thousand titles, but not a few million.

Nick Heer:

Perhaps there is a difference between app distribution expectations on game consoles and smartphones. In my mind, it feels like there ought to be. But I am having a difficult time articulating why that ought to be so. Perhaps it is as simple as the smartphone being a convergence device, while a game console is intended primarily as a single-purpose appliance.

Matt Birchler:

The PlayStation 4 is fundamentally a game playing device, and allowing random software to run on it is not going to change that. There have been plenty of open gaming platforms to hit the market, and despite this open nature and the ability to technically run anything, all of them have just been game playing devices.


At the end of the day, the smartphone is likely the most important single piece of hardware in most people’s lives. You basically must own a smartphone today, and if you’re going to get one in 2020 and you live in the US, then 46% of you will get an iPhone and 54% will get an Android phone. That’s it, there are no other players in the market, so we don’t have a monopoly, but we sure do have duopoly.


The “what about consoles” argument also ignores history— 4 years ago Epic broke Sony’s platform rules by adding cross-play between consoles to Fortnite. They demonstrated to consumers that Sony had a bad rule (that hurt them), Sony was pressured into changing it and everyone won.

Nick Heer:

I certainly fall on the side of considering smartphones more as general purpose computers, but the arguments Gruber has been setting up have got me thinking harder about it. It is a difficult line to draw: why should a PlayStation not be considered a computer like the one at your desk? But, also, why should an iPhone be thought of as closer to a Mac than an Apple Watch? I am not arguing that it should not — I fully believe that there are differences between all of these devices — but I have not seen a clear articulation for why that is.

Michael Love:

Apple doesn’t heavily subsidize their hardware and then make it up on proprietary game sales like console makers do; if Apple lost $200 on every iPhone they shipped it’d be a whole lot easier for them to justify their 30%.

Tim Sweeney:

Consoles are unique in that the hardware is sold at or below the cost of manufacturing, and is subsidized by software sales, whereas iOS and Android are insanely profitable for Apple and Google from just hardware sales and ads.

Chris Holcomb:

The difference is that switching game consoles is easy for gamers. But switching computing platforms (iOS/Android/etc.) that have photos, contacts, dozens or hundreds of accounts and apps ... this is hardship for most and enables monopoly.

The second (related) distinction is that almost all adult Americans are tied to a mobile computing platform. Far fewer own a single gaming system. There are far more negative economic outcomes due to monopolies in general computing platforms.

Steve Troughton-Smith:

Apple have built one of the two dominant computing platforms of the next 30 years, and as a result of how they’re running it, ensure that nobody else but them can ever build on top of it and do anything that’s not pre-approved by Apple, stifling innovation and harming consumers

Michael Love:

The problem with all of these “App Review is the only thing keeping us safe” takes is that even if you buy that idea, there’s no reason why that has to be coupled with an App Store.

Like, why not just add a human review element for iOS app notarizarion? Would do whatever it is they do now minus the business model stuff. Can charge a per-submission fee to cover the cost if you don’t simply include it with developer program membership.

Will Strafach:

iOS could allow Notarized apps like macOS. still have same App Store, still managed, let the users decide whether their preference is Apple’s 30/15 offering or an alternate download.

Adam Faircloth:

As long as App Store is the only way to install apps (and it is, TestFlight/jailbreak not viable), rules should be:

-app doesn’t wreck the device
-app doesn’t trick or cheat the user

And that’s it. Apple doesn’t have to promote every app, but they should be allowed.

Michael Love:

iOS sideloading, done right, would open up vast new opportunities for developers while preserving all of the parts of the current system that actually benefit users; Apple should seize the opportunity to do it well, rather than wait and eventually have to do it poorly/grudgingly.

Also, a seamless, Apple-y version of sideloading - tap on a link and tap on an alert and the app installs - would actually be a fairly bad outcome for Facebook/Epic et al, since it would dampen the prospects for 3rd party stores and encourage small devs to distribute directly.

Tanner Bennett:

[As] soon as tech giants can threaten to leave the App Store, Apple will be forced to implement agreeable payment rules to keep apps like Netflix and Prime from jumping ship.

In all likelihood nothing will change as far as grandma is concerned.

Jeff Johnson (tweet):

The iOS App Store has been compared alternatively to a retail store and to a game console. Retail stores and game consoles are very different entities, so I’m not sure how, rhetorically speaking, both comparisons are allowed and considered apt. In any case, neither comparison is accurate, presently or historically. We know the origins of the App Store, because it originated only a dozen years ago. The model for the App Store wasn’t retail stores. It wasn’t game consoles. It wasn’t even the smartphones that existed at the time. The model for the iPhone App Store was the iTunes Music Store.


The term “app console” has been coined recently to describe the iOS app business model, but in my opinion it would be more accurately termed an “app jukebox”.


It’s worth noting that iTunes does let you import music from outside the iTunes Music Store.

But try getting your own music into the iOS Music app without using a computer.

Matt Birchler:

I’m just saying, I much preferred the “Macs are trucks, and iPads are cars, but they’re both computers” metaphor we’ve used for a decade. What happened to that in the past week?


Update (2020-08-24): Thomas Brand:

@gruber opened my eyes, iOS is an app console. For some people the restrictions and advantages of a console make for good personal computer, but I will never look at an iPad or iPhone’s future potential the same way again. Far too restrictive.

Matt Birchler:

We no longer say, “Macs are trucks and iPads are cars,” instead we say, “Macs a general purpose computers and iPads are consoles, did you actually think there were similar?”

We no longer say, “the iPad can replace your Mac,” instead we say, “the iPad is a totally different product with totally different distribution, and it will never be anything like a Mac.”

We no longer say, “there’s an app for that,” instead we say, “there’s an app for that as long as its business model fits in with the App Store rules written in 2008 and Apple gets 30% of whatever you’re selling, even if you don’t sell it in app, unless you’re Netflix or some other big company.”

We no longer ask, “what’s a computer?” Instead we ask, “we all know what computers are, and iPads are no computers.”

See also: Accidental Tech Podcast.

Update (2020-09-18): Fred Wilson:

Coinbase, Epic, and Spotify are not alone in their struggles with Apple and Google. They are simply large enough and protected enough to go public with their struggles. The truth is every developer that distributes software through these two app stores struggles with them.

In what world does it makes sense for two large and powerful companies to completely control software distribution on mobile phones? In no world does it make sense. It must stop.

The control also extends to the Mac.

AppAdvice Removed From the App Store (in 2015)

Mahmoud Hafez:

Today I found out an email I wrote to @tim_cook in 2015 was part of the congressional record in the antitrust hearings earlier this month. My email was about App Review gaining too much power (back in 2015!)


Apple removed our popular iOS app which at the time was visited by 750k devices each day. Our app was an app recommendation app that curated the App Store into lists of best apps to download. In late 2014 it was removed from the App Store without warning.


The reason they listed was not their true motivations.

Mahmoud Hafez (Hacker News):

I subsequently spoke to Phillip Shoemaker, who confirmed that Apple executives ordered the elimination of apps that drove downloads to the App Store. He said “Your app drove download volume. Apple doesn’t want any outside sources to drive ratings. So yeah, we got rid of all app recommendation apps.” He said he thought it was unfair, but this was something Apple set out to do, and even as Senior Director of App Store (person directly in charge of App Review), he could not stop it.

The other thing that was hard to understand, is we used to have a great relationship with Apple. We were not flying under the radar. Since the App Store first launched in 2008, we used to be invited to all Apple events to see the new product launches, we met with the iTunes team to discuss upcoming initiates for the App Store, our apps were featured on the devices inside of many demo units into Apple Stores. It felt like a complete 180, and until this day I never got a formal conversation on what they actually objected to, beyond being pointed to a vague rule which was applied arbitrarily. They became a brick wall in terms of communication, and this is why I resorted to emailing Tim Cook.

How can this be, when Tim Cook told Congress that the rules are “transparent” and Apple wants to “get every app we can on the store, not keep them off”?

The letter (PDF):

When we saw some apps get removed, it made us more steadfast in our mission. Because we believed the fact that we were not bothered is because we were doing it the "right1 way. We were really serving the user and the App Store. Not selling fake "recommendations" as deceptive ads. We literally turned down millions of dollars in revenues, as developers repeatedly asked to pay per install to be featured in our app (outside of tradition advertising).


I always thought I knew what these guidelines were trying to protect. People gaming the App Store charts and users being tricked into believing bad apps were the best. But we are not doing that. I can’t even make up a reason why I think Apple would not want our app on the Store. It’s a great app with [redacted] 5 star reviews and countless thank you emails from our users.

I fear App Review is getting too powerful. It’s no longer about keeping iDevices safe or protecting the user’s best interest. It’s now about something else which I don’t understand. I am not alone in this observation and it honestly makes developing on the platform scary.


Facebook Events vs. the App Store

Juli Clover:

As Apple battles with Epic Games over its App Store fees, Facebook is joining the fight over its new Paid Online Events feature, which allows small businesses in 20 countries to charge Facebook users to attend online classes and events.


When a business owner schedules an event through Facebook on iOS, Facebook will make it clear that Apple is taking a 30 percent cut of the purchase price. Facebook is waiving its own fees for the feature “for at least the next year.”

Transactions done on the web or on Android where Facebook Pay is available will allow business owners to keep 100 percent of revenue generated from paid online events.