30% across-the-board is too much

Apple’s policy of taking a 30% cut from every in-app transaction in iOS apps was recently thrust into the spotlight due to its effect on BeamItDown Software and their iFlow Reader app. Some, like John Gruber and Ben Brooks, seem to have no sympathy for the plight of companies and services that can’t afford to continue doing business on the app store. That’s the nature of the game, says John — “tough noogies.”

The problem is, this isn’t a small fee. It not 5% or 10%. It’s 30%, almost a third of all revenue. Not profit, revenue. And this isn’t an independent store that needs to make a lot on each transaction. With an economy of scale like the App Store, Apple could make significant profit with a fee of only a few percent.

On the other hand, many of the apps in the App Store are from small independent companies, which can’t afford 30% with every single transaction. The problem is that it’s 30% across-the-board, regardless of the type of app, the type of subscription, etc. 30% may make sense for some apps, but certainly not for all, like those that distribute others’ content and therefore don’t have as much control over the pricing. Otherwise, the kind of apps that can afford to be on the App Store will continue to be restricted, with eBook sellers, music subscriptions services, and others being excluded unless they can cut a deal with Apple.

This is not the environment Apple should want to create for developers and companies. It doesn’t promote trust, nor does it encourage companies to make the App Store their primary market.

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