Publishers Demand Lower Fees in Apple’s App Store
- Paul Thurrott
- Aug 20, 2020
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The New York Times and The Wall Street Journal are among the publishers demanding that Apple lower its App Store fees. The group has penned an open letter to Apple CEO Tim Cook airing their grievances, and they’ve sent a copy to the U.S. House of Representatives Judiciary Committee.
“[We would like] to better understand the ‘conditions’ you mentioned in your July 29th remarks before the House Judiciary Committee,” the letter notes. “We would like to know what conditions our members—high quality digital content companies—would need to meet in order to qualify for the arrangement Amazon is receiving for its Amazon Prime Video app in the Apple App Store.”
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The letter is signed by Jason Kint, the CEO of a trade group called Digital Content Next that represents The New York Times, The Wall Street Journal, The Washington Post, and other media brands that it says “together have an unduplicated audience of 223,098 million unique visitors or 100 percent reach of the U.S. online population.” The Amazon reference was an email uncovered during the House Judiciary Committee investigation, in which Apple agreed to lower its normal 30 percent vig to just 15 percent for Amazon.
In his testimony before the committee, Mr. Cook said that this special arrangement was available to “any app developers … that meet the conditions.” But Cook never detailed those conditions, and none of the email evidence collected by the committee provides any clue either.
“The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms,” the letter continues. “In keeping with your statement to the Committee, I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN’s member companies meeting those conditions can be offered the same agreement.”
Not coincidentally, the notion of a “special arrangement” came up in Apple’s mob-like dealing with Epic Games, which chose instead to sue Apple when it banned its game Fortnite from the iOS App Store. Epic CEO Tim Sweeney says he’s not looking for a special deal, but rather fair terms for all developers.
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Conversation 41 comments
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mattbg
Premium MemberLog in to Reply<p>Apple investors do not seem to be worried :)</p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562747">In reply to mattbg:</a></em></blockquote><p>They should be worried about how inflated the stock price is now. It's not based on anything except how much money the fed has pushed into the stock market to prop it up.</p>
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Vladimir Carli
Premium MemberLog in to Reply<p>I have to say that I am disgusted by these arrogant business practices. I wonder how any normal person can side with these gigantic corporations. It’s becoming more and more evident that they are just dangerous</p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562748">In reply to Vladimir:</a></em></blockquote><p>Which side are you talking about? It's pretty arrogant to demand a better price. Do you think it'll work for me to do that at the grocery store?</p>
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geschinger
Premium MemberLog in to Reply<blockquote><em><a href="#562759">In reply to lvthunder:</a></em></blockquote><p>That is not a comparable analogy. Grocery stores are providing a service that they are being compensated + a markup for doing. Acquiring/storing the product, marketing it / giving it shelf space, distributing it through their store front, handling the financial transaction.</p><p><br></p><p>Apple does the digital equivalent of this for apps and legitimately deserves compensation + markup for doing so. But digital content? Their only role is to put themselves in the middle of the financial transaction to grab a cut and otherwise do nothing. They are using their monopoly on iOS to shave off a large percentage of revenue for content or services that have nothing to do with iOS. </p><p><br></p><p>Asking for lower rates doesn't go nearly far enough.</p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562762">In reply to geschinger:</a></em></blockquote><p>So app updates don't incur a cost to Apple? They take a cut of the revenue to pay for the parts that don't generate any revenue.</p><p><br></p><p>Facebook for instance pays Apple $99 a year to join the developers program. Then they publish Facebook, Messenger, and Instagram for free. Then they update them every other week for Apple to send out to millions of people. That absolutely costs money. So it's the paid apps that pay for themselves and the free apps.</p>
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VancouverNinja
Premium MemberLog in to Reply<blockquote><em><a href="#562759">In reply to lvthunder:</a></em></blockquote><p>That is not a comparable analogy. If my product was listed in a supermarket that had a specific fee associated with shelf space it should be universally priced for all other products or if there were levels of sales that allowed for a discount they usually apply to all that hit the same levels. This is the way it is in normal situations. </p><p><br></p><p>I can also guarantee that the 15% charge is not tied to the products sold through Amazon.com as that would be an impossible arrangement. So while Amazon gets a discount and and unique deal any other app that sells anything through their app pays the 30%. </p><p><br></p><p>Apple has abused their position for far too long, and receiving revenue they have no right to receive. Its as close to stealing as it gets.</p>
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wosully
Premium MemberLog in to Reply<p>I think they certainly have a public perception problem being a two trillion dollar company who is still engaged in such practices especially during this time. They've gone overboard with their billing. </p>
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frank_costanza
Log in to Reply<p>It doesn't really bother me that Apple gets a 30% margin—especially since there is a viable competitor (Google Play).</p><p><br></p><p>If a company is able to sell the same product for less in the Play store, I can switch to Android and reap the cost savings if I so choose.</p><p><br></p><p>Naturally, I wish Apple and software makers would all charge less for their products. But, it is what it is.</p><p><br></p><p>I read a post by someone in the grocery business who says that stores routinely try to achieve 40% margin storewide. By that measure, the Apple store is a bargain!</p><p><br></p><p><br></p>
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JCerna
Premium MemberLog in to Reply<blockquote><em><a href="#562780">In reply to frank_costanza:</a></em></blockquote><p>I for one think its too much, Google Play and every store out there takes 30%. Apple is by far the most restrictive. If apple did not make money on the phones I could see 30% being reasonable. However apple charges a premium price for their phones and then charges a tax for 30% to get an app into the device you already payed for. They also block other stores so there cant be any competition. </p>
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F4IL
Log in to Reply<blockquote><a href="#562780"><em>In reply to frank_costanza: </em></a>It doesn't really bother me that Apple gets a 30% margin</blockquote><p><br></p><p>It only bothers companies because the fee places a virtual limit on opportunistic price gouging. The higher the pricing, the more they lose to apple. If apple agreed to lower their margins, nothing would stop companies from jacking prices, ingesting the profit for themselves and leaving customers out to dry.</p><p><br></p><p>That said, this debate is not about cost. Lowering their commission doesn't address the core argument that apple is a monopolist making the rules on their own platform but unfortunately the fees are being exploited using badly staged theatrics and sensationalist advertising. All this is for the benefit of companies selling the apps, not the market or users.</p>
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brettscoast
Premium MemberLog in to Reply<p>This is just pure greed, we are talking about a $2 trillion dollar company for god's sake. Screw over developers and any other companies that want to compete fairly, the behaviour is nothing short of disgraceful.</p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562782">In reply to brettscoast:</a></em></blockquote><p>That 2 trillion is a bogus number. It's not like that's what is sitting in the bank for them to spend. I take it you are one of the people that think Apple should run the app store at a loss.</p>
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Vladimir Carli
Premium MemberLog in to Reply<blockquote><em><a href="#562759">In reply to lvthunder:</a></em></blockquote><p><br></p><p>if there were only two grocery stores that sell food, one of them sold stuff that you don’t like and the other one had crazy prices, I think you would complain </p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562796">In reply to Vladimir:</a></em></blockquote><p>No one demands lower prices at Whole Foods.</p>
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Daekar
Log in to Reply<p>100% reach… Lol. They wish. </p><p><br></p><p>Personally, I can see both sides of the argument. But Apple is under no obligation to give them any breaks it doesn't want to. The app store exists to make money for Apple, and if they want to play in it that's fine. If they don't, then the web is a fine option. </p><p><br></p><p>I can't imagine wanting to install a news app of any sort when there are web versions available. Just add an internet shortcut to your home screen and be done if you must have an icon… The app obsession really boggles my mind. </p>
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ghostrider
Log in to Reply<p>No point a few prominent app developers begging for reduced app store prices – there needs to be a general revolt and downing of tools. Apple are just too powerful and controlling now, and that only seems like it's going to get worse. If there was a single alternative to the Apple App Store, maybe you'd say people have a choice, but they don't, because Apple don't like giving people a choice. App store customers need to start throwing their toys out the pram too.</p>
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shameer_mulji
Premium MemberLog in to Reply<blockquote><em><a href="#562805">In reply to ghostrider:</a></em></blockquote><p>Apple doesn't have to provide a choice of alternative app stores on iOS or iPadOS anymore than MS is required to provide alternate app stores on the Xbox App Store or Amazon is required alternative book stores on the Kindle platform. You don't like it, don't buy it.</p>
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bkkcanuck
Log in to Reply<p>I sent an email demanding NY times lower my subscription price…</p>
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Paul Thurrott
Premium MemberLog in to ReplyOh, does the NY Times have a monopoly on news? Because if it did, that would make sense.
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bkkcanuck
Log in to Reply<blockquote><em><a href="#562845">In reply to paul-thurrott:</a></em></blockquote><p>No, but there is no reason why they NEED to be on the iOS app store – they can use the Web and it is free for them… They may want to be there for what they think they can create, using tools and an environment, a better experience… but they can reach people quite fine using the Web… this is no different than Epic being able to sideload onto Google – yet decided they would be better off on the store. I actually do have a subscription online with them, but will probably cancel — they cannot even seem to bring their broadsheet into the modern era… Lots to hit you on the main page, but even with all that on the page they are unable to grab my attention on much of it. They also need to adapt to the modern era with more multimedia than they do now etc. If they cannot get that right, I doubt they will with do much better with an App. That is coming from someone that is and have been a news junkie.</p>
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jc
Log in to Reply<p>I guess that's how Apple got to their $2 trillion market value during the global lockdown…</p>
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bkkcanuck
Log in to Reply<blockquote><em><a href="#562844">In reply to JC:</a></em></blockquote><p>yes yes, that is why all tech companies are up like during COVID, because they are all ripping us off… not because of fundamentals such as more product sales to people needing stuff to work from home etc. </p>
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Mark from CO
Log in to Reply<blockquote><em><a href="#562759">In reply to lvthunder:</a></em></blockquote><p>Grocery stores are not a good analogy to Apple. Grocery store net profit margins are 1-3 pennies on the dollar, not the 23% net profit margin Apple realizes due, in part, to its 30% surcharge in its store.</p>
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Paul Thurrott
Premium MemberLog in to ReplyThey’re not a good analogy because none of them are a monopoly that have one billion customers.
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562868">In reply to paul-thurrott:</a></em></blockquote><p>What does the number of customers have to do with anything? I said it's arrogant for them to demand lower prices.</p><p><br></p><p>After reading about this elsewhere it sounds like they just want to know how to get the deal that Amazon has. That doesn't sound like a demand for lower prices to me like this articles title states.</p>
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lvthunder
Premium MemberLog in to Reply<blockquote><em><a href="#562866">In reply to Mark from CO:</a></em></blockquote><p>Where did you get the 23% net profit number from?</p>
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spiderman2
Log in to Reply<p>before apple fans will start to scream out loud let's recap:</p><ul><li>we're not talking about 30% of share when an user buy an app</li><li>we're talking about 30% on every single in app purchase or subscription (eg: netflix, spotify…)</li><li>you're obliged to use apple payment platform (and give them 30%)</li><li>there are no alternatives stores or sideload on ios like ALL the rest of OSes</li><li>and let's not forget t. cook: " we threat ALL devs the SAME", amazon: " thanks for the 15% discount)</li></ul><p><br></p><p>opefully more companies will join epic, spotify and NY times in this fight</p>
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geschinger
Premium MemberLog in to Reply<blockquote><em><a href="#562871">In reply to Skolvikings:</a></em></blockquote><p><br></p><p>Apple owns 65% of the global mobile app market and 100% of the iOS market. I expect government regulators will look at that global app market as a whole and owning 65% of a duopoly is fair game for regulators.</p>
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cavalier_eternal
Log in to Reply<p>This is the smart way to address Apple's exorbitant pricing. Man-child, Tim Sweeney, could learn from this. </p>
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Paul Thurrott
Premium MemberLog in to ReplyThis wouldn’t have happened if Apple wasn’t under investigation for abusing its market power. People like Tim Sweeney ARE the reason THAT happened.
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Vladimir Carli
Premium MemberLog in to Reply<blockquote><em><a href="#562871">In reply to Skolvikings:</a></em></blockquote><p>“In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices.”</p><p>It’s not just a matter of percentages. It’s more nuanced than that. Apple operates as sole gatekeeper for a huge market. Has the ability to harm competition. It’s definitively a monopoly. </p>
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Paul Thurrott
Premium MemberLog in to ReplyRight. This is obvious and it bugs me that anyone would try to argue otherwise. It’s as clear as clear can be.
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geschinger
Premium MemberLog in to Reply<blockquote><em><a href="#562899">In reply to lvthunder:</a></em></blockquote><p>You are ignoring the distinction between apps and digital content.</p><p><br></p><p>As I mentioned, I believe they legitimately deserve to make a profit for apps. The way or amount they bill may be excessive but they are legitimately provide services to developers – discovery, marketing, storage, distribution, bandwidth, payment processing etc.</p><p><br></p><p>None of that applies with digital content other than payment processing. iOS user purchases Mulan from Disney+ on IAP. Apple will collect $9. What is Apple providing to "earn" that $9? Disney+ is handling everything Apple does provide developers when it comes to apps except for the payment processing, Any updates or changes to the Mulan content is also completely the responsibility of Disney+ to get it to end users. Apple does nothing but forcibly insert themselves into the middle of the transaction to skim 30%.</p>
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scovious
Log in to Reply<p>This never would have happened without the heroic stance of Tim Sweeney; while there may not be any strict laws defining Apple's faults, its so obvious the laws are insufficient to address the reality. If enough complaints line up, laws will follow.</p>
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shameer_mulji
Premium MemberLog in to Reply<blockquote><em><a href="#562910">In reply to VancouverNinja:</a></em></blockquote><p>Apple is not denying the NYT accessing to any customers and the 30% fee that Apple takes is in the first year only and 15% thereafter and neither one of those fees are predatory pricing. There is no evidence for that at all otherwise the Xbox App Store, PS Store, Google Play Store, Amazon Kindle Store or any retail outlet for that matter also qualify under the umbrella of predatory pricing which they obviously don't. Seriously, you MS fanboys are just as bad as the Apple fanboys.</p>
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ommoran
Premium MemberLog in to Reply<blockquote><em><a href="#562899">In reply to lvthunder:</a></em></blockquote><p><br></p><p>It could be said that if the Facebook, Instagram, Messenger, Twitter, and other "free" social media apps weren't in the app store, and by extension then not on Apple's platform, Apple's iPhone would be abandoned nearly overnight. Apple is happy to have these behemoth free apps because they are often the first ones people install on their phones. They put up with the constant updates because social media apps are always looking to refresh, add new features, etc – and Apple wants their phone to get them first.</p><p><br></p><p>It looks to me that it doesn't cost them money, but it drives continued sales. If those apps weren't there, sales would drop to near zero. Ask Blackberry or MS's own Windows phone – their apps were often one to three generations outdated and people grew frustrated.</p>
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ommoran
Premium MemberLog in to Reply<blockquote><em><a href="#562764">In reply to VancouverNinja:</a></em></blockquote><p><br></p><p>Ah, hubris. A divine vintage. Apple appears to be a bubble in and of themselves. But that's ok, they know what the ride down looks like, right?</p>
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bkkcanuck
Log in to Reply<blockquote><em><a href="#562879">In reply to cavalier_eternal:</a></em></blockquote><p>There were also more components of the deal – some requirements on Amazons side with regards to selling Apple TV etc… depending on how that is valued – the gross could be considered 30% and the net 15% … of first year subscriptions (i.e. part of the deal could have been a fee to list Apple TV on Amazon — we won't necessarily know how the contracts were written up). </p><p><br></p><p>The deal for the small developers is not that bad though considering you get international listing and handling taxes/invoicing etc. and hosting / security for apps… the entry price is low $100 which (including all professional tools free (MSDN subscription equivalent and Visual Studio Pro etc. I found very expensive as an independent — a long time ago))… it is all the big guys that really want special deals. </p><p><br></p><p>Netflix, Spotify could also go direct over the web as well… </p>
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gedisoft
Premium MemberLog in to Reply<blockquote><a href="#562759"><em>In reply to lvthunder:</em></a><em> Yes, I you bring in a busload of customers each day, I think you'll be shopping for free in a very short time !</em></blockquote><p><br></p>
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brettscoast
Premium MemberLog in to Reply<blockquote><em><a href="#562897">In reply to lvthunder:</a></em></blockquote><p>Agreed the valuation of the company is based on it's share price and the total number of shares in play I don't believe they should run the app store at a loss but I find the 30% fee it charges app makers and developers unjust & excessive. They can still make good money by having less abrasive impost on contributors.</p>