Apple Is Defending Consumer Choice
Some Apple pundits and developers are gaslighting the public by claiming that Apple’s 30% AppStore fee is against consumer choice. When in fact, the opposite is true. Apple is actually the party which is defending freedom of choice for the consumer.
True consumer freedom gives the end user the opportunity to vote with their pocketbooks who the winners and losers are. When consumers find products or services that they value, they are willing to exchange their dollars for it.
Who Pays for the AppStore?
I wrote yesterday that Apple passes on 100% of the cost to run the AppStore. They split it between the developers and the hardware users. However, if you go further downstream, the developers are also passing on their AppStore costs to consumers too. So iPhone buyers ultimately shoulder all AppStore costs.
However, Apple’s current system gives consumers the choice of who they will support. They only cover AppStore costs for the apps that they like the most. They are voting with their dollars on which apps are good and which apps they don’t find any value in.
Developers want to short-circuit this system and have the consumer subsidize all apps. The hardware buyers would get no vote. They would be forced to support everyone whether they use those apps or not.
In the current system, the more AppStore resources an app consumes, the more it would contribute. More downloads equals more fees paid. This is a fair system.
Moving to a system where hardware buyers directly shoulder 100% of the AppStore costs disconnects app consumption of resources from having to pay for those resources. Unpopular apps will get to drop their prices since they are being subsidized by iphone users who may not even like their app. This is not fair.
Outlet Stores vs Retailers
Outlet stores are popular because when a manufacturer sells directly to the public, they can offer a lower price. However, to get the lower price, you have to travel to the outlet store. No one expects outlet store prices when they go to a large department store or the mall.
Don’t listen to anyone who says that selling software on the internet is different from selling physical items in the store. The ratio of various costs is different but the principle is very much the same. Software developers who sell their own software on their own website are no different than shirt manufacturers selling their own shirts in an outlet store.
Software developers and Apple pundits who say that the 30% fee is bad for consumers are making it sound like customers somehow can’t get the software. That is untrue. If they find value in the software and are willing to pay for convenience, they will buy the software in Apple’s AppStore. It’s no different from customers who pay more for a shirt at the mall because they like the convenience of driving 5 miles versus spending half a day driving to another city to visit an outlet store.
If customers balk at paying more to get software via the AppStore, it’s because they don’t find enough value in that software. Think about it. Apple’s 30% fee on a $4.99 app is about $1.50. If someone’s business is going to die because their app now costs $6.49 versus $4.99 the problem is with the business model of the app developer. They have no pricing power and that’s not Apple’s fault. The software is not attractive to consumers.
Despite what Nilay Patel of The Verge says, there is nothing complicated about selling software these days. What Nilay really wants to do is obfuscate the truth so that he can turn tried-and-true business principles upside down. He’s trying to pass off greater government control and anti-capitalist ideas as something new.
Conclusion
Apple’s current system defends the consumer’s ability to vote with their dollars which apps are good and which are bad. The anti-capitalist views of some is to force consumers to subsidize all apps by forcing hardware purchasers to shoulder all the AppStore costs. The true defender of choice is Apple and developers want to take that away.
Who Pays for the AppStore?
I wrote yesterday that Apple passes on 100% of the cost to run the AppStore. They split it between the developers and the hardware users. However, if you go further downstream, the developers are also passing on their AppStore costs to consumers too. So iPhone buyers ultimately shoulder all AppStore costs.
However, Apple’s current system gives consumers the choice of who they will support. They only cover AppStore costs for the apps that they like the most. They are voting with their dollars on which apps are good and which apps they don’t find any value in.
Developers want to short-circuit this system and have the consumer subsidize all apps. The hardware buyers would get no vote. They would be forced to support everyone whether they use those apps or not.
In the current system, the more AppStore resources an app consumes, the more it would contribute. More downloads equals more fees paid. This is a fair system.
Moving to a system where hardware buyers directly shoulder 100% of the AppStore costs disconnects app consumption of resources from having to pay for those resources. Unpopular apps will get to drop their prices since they are being subsidized by iphone users who may not even like their app. This is not fair.
Outlet Stores vs Retailers
Outlet stores are popular because when a manufacturer sells directly to the public, they can offer a lower price. However, to get the lower price, you have to travel to the outlet store. No one expects outlet store prices when they go to a large department store or the mall.
Don’t listen to anyone who says that selling software on the internet is different from selling physical items in the store. The ratio of various costs is different but the principle is very much the same. Software developers who sell their own software on their own website are no different than shirt manufacturers selling their own shirts in an outlet store.
Software developers and Apple pundits who say that the 30% fee is bad for consumers are making it sound like customers somehow can’t get the software. That is untrue. If they find value in the software and are willing to pay for convenience, they will buy the software in Apple’s AppStore. It’s no different from customers who pay more for a shirt at the mall because they like the convenience of driving 5 miles versus spending half a day driving to another city to visit an outlet store.
If customers balk at paying more to get software via the AppStore, it’s because they don’t find enough value in that software. Think about it. Apple’s 30% fee on a $4.99 app is about $1.50. If someone’s business is going to die because their app now costs $6.49 versus $4.99 the problem is with the business model of the app developer. They have no pricing power and that’s not Apple’s fault. The software is not attractive to consumers.
Despite what Nilay Patel of The Verge says, there is nothing complicated about selling software these days. What Nilay really wants to do is obfuscate the truth so that he can turn tried-and-true business principles upside down. He’s trying to pass off greater government control and anti-capitalist ideas as something new.
Conclusion
Apple’s current system defends the consumer’s ability to vote with their dollars which apps are good and which are bad. The anti-capitalist views of some is to force consumers to subsidize all apps by forcing hardware purchasers to shoulder all the AppStore costs. The true defender of choice is Apple and developers want to take that away.
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