Comment by rdw
4 years ago
The 30% cut was considered very good at the time. It was way better than the 50-90% cut that traditional publishers would take.
A sibling comment notes that Steam charged 30% at the time (though some had better deals) but it's worth noting that Steam was not an open platform that anyone could publish on. Much like for consoles, to put a game on Steam you had to have a preexisting relationship with Valve, or try to develop one with no certainty of success. This was also considered a very generous cut because getting on Steam was almost a guarantee of financial success.
"The 30% cut was considered very good at the time."
Let me fix this.
There was a full range of views. Some considered the 30% cut to be good at the time, some didn't consider it much at all, some considered it to be a criminal abuse of market power. I remember commenting myself that microsoft would be crucified for attempting to tax everyone who wanted to write software for windows 30% of revenue. I don't recall anyone suggesting that was a controversial comment.
You want to talk about a criminal abuse of market power?
Microsoft used to charge ridiculous fees for things as simple as submitting a patch for an XBox 360 game.
>Double Fine's Tim Schaefer pegged the cost of submitting an Xbox 360 patch at $40,000 in an interview with Hookshot Inc. earlier this year.
"We already owe Microsoft a LOT of money for the privilege of being on their platform," he said. "People often mistakenly believe that we got paid by Microsoft for being exclusive to their platform. Nothing could be further from the truth. WE pay THEM."
https://arstechnica.com/gaming/2012/07/microsoft-comes-under...
People who think a 30% fee is outsized tend to have no idea whatsoever what the costs were previous to that.
I don't know the specifics of Xbox and patches but I do know that in general, at least in the past, shipping a game on Playstation required thousands of hours of testing by Sony employees. They didn't take your word for it that your app worked. They ran it through a battery of manual testing. Examples, does it recover if someone turns off the power in the middle of saving a game. At that point the save game file may be corrupted. The game better at least boot and let the player start a new game and not just crash.
Other examples include checking all the text meets the platforms spec. It's says "DualShock Controller" not "Joypad". It's always Press ○╳□△ and in the correct color for that button, and responds to the region/system setting. For example that X = select in USA, and ○ = select in Japan
The point being that the game console owners don't just trust that your patch didn't break the rules of their technical requirements checklist. Someone actually has to check and it's not a small amount of work. Maybe $40k is too much but $0 is arguably too little
AFAIK, Apple and Google don't do this much. Certainly not to the same extent as Sony/Nintendo/XBox
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I don't get it, why make a exclusive game and pay Microsoft for it...a vulcan would say illogical...it's not like MS has any Hardware, that no one else has.
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> $40,000
There are probably a few developers who’d love to pay just 40k to Apple.
Given that review costs are fixed, what is the cost of distribution?
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Let me fix this.
Microsoft did worse, they did charge more than 30% to everyone that published software for the xbox.
People with skin in the game, game publishers, game developers, mobile app developers for nokia, blackberry, samsung, motorola, etc, considered Apple taking "only" 30% to be an excellent deal at the time. It was so good in fact, almost all other store splits collapsed shortly thereafter to the same 30% to compete with Apple.
Others complained, sure. I too complain Ferrari charges way too much for customizing the color of the thread of the interior lining on their cars, I don't know why they don't seem bothered.
Please correct me if I'm wrong, but I believe Steam and Xbox Live Arcade (small games akin to mobile today, not mainstream games) were both 30% before the iPhone existed.
Apple, however, transformed the phone industry by bringing that same model to mobile that had already existed in PC/console game storefronts.
You don't think there was a range of views. And anyone who disagreed with your view had no skin in the game and so can be ignored. I disagree with that.
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I have worked in mobile since 2004. How anyone felt about it is irrelevant.
The fact is that 30% was far less than the carriers and Qualcomm were taking with their stores.
Hoping someone will chime in and share ringtone royalty rates back when they were selling by the millions. I’d bet labels got under 50% and artists got basically nothing.
the iPhone is a PDA. There's 20 years of PDAs before iPhone. There was no price to put an app on my 1998 Windows CE PDA, nor my Sony Clie, nor my Dell Axim. Just install the software same as PC. The software vendors had the option to sell direct, go through a distributor, a publisher, various stores, etc..
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Microsoft didn't really have a comparable App Store at the time, not to mention, Apple hadn't really made a comparable App Store for the Mac yet either. The iPhone app model was more analogous to the business model of gaming consoles (and Steam), except with lower barrier to entry.
Today, I'm sure you could still publish independently of Steam... but you'd be at a disadvantage.
Microsoft also never managed to build a system that was secure enough to do e.g. banking on. I just noticed how I can do everything from my iPhone just using my fingerprint and don't even feel unsafe about it. I love that there are different approaches like you mentioned and hope that they continue to exist and are not overruled by a central authority as you suggest.
In the mobile world there were so many intermediaries and costs to publish then that included:
-the mobile carriers cut - up to 70 percent
-the publishers cut (depending on whether you used them). up to 70 percent (carrier fees included).
-some publishers requiring apps to be code signed like Java Verified (a cost that could go up to 50 thousand dollars PER J2ME/JAVA ME app) or Symbian Signed or BREW.
It was a horrific time to build mobile apps.
I am still not defending the 30 percent cut. Just that the cost was seen as trivial then (also the miniscule 99 yearly membership fee that included code signing - Blackberry started at 2500 USD a year).
A simple solution to all this mess is to have rules allowing us to download apps (at our own risk) from outside the app store like you can on Android.
This is such a nonsense justification.
You want to sell software you wrote to run on an iphone. You have zero choice. Apple tax your revenue.
You want to sell software you wrote to run on a pc. Steam is not your only choice. I am not defending steam or valve here, I've never sold anything using their stuff, nor am I suggesting anything other than that their market power over pc compared to apple's store over the iphone is not remotely comparable.
It actually works against you to suggest apple's iphone software store and steam are comparable at all because it's so incredibly bogus.
You want to make the case that steam suck too but with loads less market power. Go right ahead. We're listening. You don't need absolute and total market power to be abusive of it. Apple will immediately attempt redefine the market to include android or people spending money on coca cola instead of apple product to suggest that customers have real choice so there is no market power abuse here.
The situation on Android shows us that consumers like consolidation and they like walled gardens and simple choices. These things benefit them. Plenty of Android phones come with 2 or 3 app stores. One for the carrier, one for the vendor and Google Play Store. There plenty are others as well, but the market has spoken. Even Epic had to fold and move to Play Store. Maybe Google played dirty, but I think it's perfectly clear users benefit from consolidation. They like the simplicity of having everything in one store and when they change devices they just set up their Play Store account and there everything is. That's a massive advantage to them. Fragmentation is a nightmare.
Developers have come to the same conclusion, it's to their benefit for the customers to all be on one store with one set of policies and features so that's where the majority of the apps go.
So what are you going to do, force Apple to become a fragmented Android copy with multiple stores and side loading that a tiny fraction of techies actually use? Those people already have that on Android if they want it. Honestly you'd just screw over Apple and a few other people over a principle hardly anybody actually cares about or benefits from. It certainly wouldn't make any significant commercial difference. We ran that experiment and the results are in.
The idea that users would all be side loading apps and developers would be making far more money having their apps spread across 5+ different stores that would compete down to lower prices is delusional. If that were the case, why has this not happened on Windows or MacOS where side loading is actually the default yet Steam, GOG, etc still charge 30%? It's crystal clear that's just the split the market has converged on through a competitive process. After all Steam has competed from day one with a default split of nothing for direct downloads from the software publisher but has thrived charging 30%. If that's not direct market validation I don't know what is.
Are people buying software through steam because they like the consolidated experience? Or because they trust it more than an exe from a random website? Or because steam already has their credit card info stored? Or because it's the only place to obtain certain games?
It's some combination of these things (and some others I haven't considered), and the value all of this added up, minus steam's downsides, is apparently worth an extra 30% if this cost is sufficiently hidden from the consumer.
Would people still pay a 30% fee if the store were forced to actually show the fee, and there were alternatives? I'm not so sure.
You're right that there's some value there, but it's probably closer to 3% than 30%.
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Fragmentation and walled gardens are a false dichotomy. Steam is actually a great example of this, there are many other stores (Humble Bundle, Fanatical, GMG, whatever) that sell you Steam keys so you can keep your game library in one comfortable place.
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> The idea that users would all be side loading apps and developers would be making far more money having their apps spread across 5+ different stores that would compete down to lower prices is delusional. If that were the case, why has this not happened on Windows or MacOS where side loading is actually the default yet Steam, GOG, etc still charge 30%?
That has happened. The majority of my 20,000 Steam games were acquired from outside of Steam.
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I think the point is that Steam manages to do just fine while charging 30%, on a platform where developers could easily choose to self-publish. For small developers, that 30% is worth it because the value Steam brings to them is worth more than the revenue it takes. The only ones choosing to go elsewhere are massive publishers that can market their own storefronts, and indie devs taking large up front payments from Epic to leave Steam.
I can see both sides of the argument here. It sucks having no choice as a developer, and feeling forced pay Apple a tax just to get paid for your work. It's especially egregious with subscriptions, where Apple doesn't even do any of the content delivery. However, as a user, I think it would also suck if a huge player like Facebook or Google decided to open up their own iOS App Stores, and developers started flocking to them as a means to escape Apples increasingly strict app privacy rules.
It’s weird to compare Steam’s market power over PCs to Apple’s market power over the iPhone. The obvious difference is that the iPhone is a product created by and sold exclusively by Apple. Why would we expect Steam to have comparable market power over the entire PC industry? A much better comparison would be Apple’s market power over smartphones, which is probably comparable to Steam’s market power (as a video game store) over PCs!
Are you implying that you feel entitled to sell software on Apple's tightly controlled consumer devices?
I am stating, very clearly, that Apple have massive market power that they are abusing. This is known in economics circles as "market failure" and across the spectrum from Keynsians to Neo-classical economists is seen as a compelling case for regulation.
Why are you implying I am saying something different to what I /said/.
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They are entitled to sell software on Apple customer's devices.
Why shouldn't he? When did we decide to let Nintendo, pardon me, Apple, dictate our digital lives?
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https://www.filfre.net/2016/04/generation-nintendo/
> In a landmark ruling against Tengen in March of 1991, Judge Fern Smith stated that Nintendo had the right to “exclude others” from the NES if they so chose, thus providing the legal soil on which many more walled gardens would be tilled in the years to come.
- - - - -
The simple fact that Apple feels they have to enforce this proves they're afraid. If they <<knew>> that their model is absolutely superior, they'd just let people choose.
But if they do that, they'll lose tens of billions of dollars in revenue. So it's not about "security" or whatever, it's just about money.
This is the same company that nickels and dimes every Lightning cable maker to the tune of several billions of dollars, when USB C has been around for many years.
The same company that removed the headphone jack for bogus reasons just to create a market for wireless headphones, worth several billion dollars.
I could go on and on and on about their anti-competitive and anti-consumer practices.
I can't help but feel like having it this way is breaking one of the huge reasons that made computers so absurdly exciting and enticing in the past.
The fact that there was this wide open field, where, sure, maybe you paid Microsoft for the OS, but then the rest was up to you. Trade shareware CDs, install stuff from the internet, type in code from a book or whatever, it felt like an infinite open field of possibilities.
I guess it's normal that the exciting frontier shifts around, but I really can't believe that it's somehow a good thing in this case.
You can still do all those things on a computer.
And now it’s so easy to put up a web app that I’d argue barriers are much, much lower than when you had to figure out how to get your physical software distributed.
The goals of “keep grandpa from getting his life savings stolen by malicious software” and “allow a power user to do whatever they want” can literally never be solved by the same device. If there’s any way to disable protections then the scammers will get grandpa to do it. And the market for grandpas is much larger than the market for tinkerers.
This is false.
Windows used to be a sieve. The infection rates and general abuse Windows received went down by orders of magnitude once they added UAC and the default malware scanner/antivirus.
And they didn't need to lock down everything, completely.
The rest is an easy money grab from the OS vendors who obviously don't want to remain "dumb pipes".
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And the market for grandpas is much larger than the market for tinkerers.
This kind of thing has become a meme. It's basically irrelevant. If the market of tinkerers was big enough 20 years ago, it's more than big enough now, and the GPU shortage kind of proves that. It's also an all-or-nothing fallacy -- nobody can protect all financial victims, and restricting the tech device market is probably one of the least effective ways to try. There are much better chokepoints for combatting both malware and fraud than the sanitized amusement park experience.
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> You can still do all those things on a computer.
Have you tried to distribute software on macOS out of the App Store recently?
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> I can't help but feel like having it this way is breaking one of the huge reasons that made computers so absurdly exciting and enticing in the past.
We live in a bubble, so it was exciting for us.
The iPhone was exciting for everyone, for the whole world, and in no small part because normal people finally felt confident enough to try all that sweet sweet software that became available thanks to people like you who don't need a safety net to tinker with stuff.
People were still doing iPhone stuff before the iPhone. You had blackberry and palm offering email, internet, games, and mms to the masses and the devices were quite popular for those who could afford them.
The iPhone only became a device for the masses, truly, when carriers started subsidizing the older models for zero down, around the iPhone 4g era. This has continued today where Verizon currently offers the iPhone SE for "$0/mo" like some cheap flip phone of old. Before that, the iPhone was exclusively rich persons phone, and probably still would have been in the U.S. at least (like it is in the rest of the world) had it not been for carrier subsidies and cheaper mobile internet plans (or maybe just the normalization of spending so much on a mobile plan every month). The iPhone didn't even get third party apps until years after launch, and when it did, the most popular of that sweet sweet software during those early days were mostly dumb stuff like apps that make gunshot sounds, or flash game clones. The real gems during that era was software written by the jailbreak community, and a lot of that added functionality was cloned by apple in later OS versions.
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> "The iPhone was exciting for everyone, for the whole world"
You live in a buble, most of the world can't afford to spend $1000 on a phone.
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It’s a 15% cut for developers who makes less than $1 million and for most other developers after year 1 on the App Store.
This only happened recently after they've had lawsuits and antitrust suits and Congressional interest.
It depends of course on how you published.
When I was authoring software (over two decades ago) and a company acted as publisher they took 85% of gross.
For author/publisher relationships at that time, this was pretty typical (book authors/publishers being the closest analog).
Needless to say there was, in addition to the cost of creating and shipping floppies, advertising that the publisher had to cover.
Apple's 30% cut seemed fair to me when the App Store arrived.
I'm not sure if I would try to ship an iOS app these days though. Not because of Apple's cut but because of the race to the bottom that was unleashed shortly after the App Store gold rush: where now you don't appear to even be able to sell a $0.99 app.
You are probably right about the cut the publisher took, but the margins are still higher for Apple as they have very low costs of marketing, distribution etc. In fact I think Apple charges way more if you consider the margins.
The other problem is of course that no one else can really enter this space. It's now only Apple and Google. It will be very hard for anyone else to enter. There were many more publishers and the competition and differentiation was higher.
Bullshit - we were building and publishing mobile apps in the early 2000’s and the top rate was 15%.
The 30% cut was considered very good at the time.
No, it wasn't. I'm not going to dig up links, but one could pop a web site storefront and Fastspring for payment processing (as one example of a company I used) for less than 10% (Fastspring would take something like 6-7%, IIRC). Discovery has always sucked on Apple's store, so no value-add there. In fact, I'd argue that the only value-add one gets out of Apple's store is access to their closed garden.
And "50-90%"? Is that in reference to putting software in physical boxes and on CompUSA shelves? Because no mobile publisher charged 90% before Apple's store came along.
IIRC 50% (60%) was the rate for the app distributor I used for selling my PalmOS app. It was digital download, too.
For the Apple case: access to the walled garden is the majority of the benefit. But still, setting up payments, customer service, chargebacks, fees, etc., is nice to have taken care of. 30% nice? Who knows. But more than just the raw payment processor overhead, surely.
AFAIK physical boxes are way above 50%.
There were a couple of stores that were more expensive.
But there's 2 reasons the comparisons aren't valid:
1) The revolution Apple brought to mobile phones was making them personal computers. So the relevant comparison really should be with personal computers and I doubt any of them had stores that took as much of a cut.
2) More relevant, the vast majority of such app stores which charged 40-50% were optional marketplaces. A customer didn't need to go through them to install an app on their phone (I believe Palm was like this. I'm pretty sure the likes of WinMo allowed many different ways to install apps). So if a marketplace was charging 40-70% it was entirely for the fact that they were bringing a customer to you. If you were able to acquire a customer by yourself, you didn't need to pay anyone any cut.
The big problem with Apple's 30% cut has always been that they charge you that amount just for having a user, even if you did all the work to get that user to use and pay for your app. Outside of the maybe 3% credit card fees, Apple provides 0 value.
One may argue (as many Apple folks do) that they charge for the frameworks, etc., but that argument is absolutely backwards. Apple creates the frameworks and APIs because they need the apps, not because the apps need them. If Apple was to get rid of its 3rd party APIs and frameworks, so there were no 3rd party apps, it's not the app developers who would suffer because all those users would migrate to Android. It's the iDevices and Apple that would basically disappear.
In fact, App developers would be thrilled because now they only need to support 1 Operating system.
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I remember considering 1-2% to be fair, for the payment processing. Publishers were an old-fashioned thing and not even considered for the comparison.
> The 30% cut was considered very good at the time. It was way better than the 50-90% cut that traditional publishers would take.
Why didn't Steve Jobs go with web distribution of first class web apps or allow Flash on his platform? If they truly wanted to be remarkable, this would have been the future.
The answer is control.
Apple is a cutthroat business just like any other, and their "privacy first" veneer is just a wolf in sheep's clothing. They're playing it up as an attack against Google and Facebook, meanwhile they still phone home about the apps you're running and can shut them off remotely.
Microsoft never taxed software on their platform. Jobs had to invent that business model. It flourished like wildflowers thanks to him.
'First class web apps' was precisely how you were supposed to create apps for the first iPhone; the SDK was thrown together over the next year only after the huge demand for writing native apps. The iPhone pushed a bunch of device access web APIs originally explicitly for this reason.
> Why didn't Steve Jobs go with web distribution of first class web apps
That was exactly his intent when he announced the iPhone, and he got absolutely obliterated by the internet for it.
*exactly what he claimed was his intent. There's no way Steve Jobs cared so little about quality he thought web apps were preferable.
Not allowing Flash on the iPhone is probably the best thing Apple ever did
Destroying an open, low barrier to entry animation and application platform that was used by teenagers to develop and share interactive content?
Destroying a way to deliver native-like, cross-platform applications without an app store was good?
Jobs did it for control. He didn't want interop between Android and iPhone, and he didn't want any web browser with enough flexibility to do anything sophisticated.
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Flash was absolutely garbage on mobile at the time.
Signed, a heavy Windows Mobile user.