[rogerchucker]

I am waiting for that research paper titled "What came first for Apple - the money or the user experience?". I can imagine Apple's thinking here - if we can squeeze every 3rd party service to adopt our 30% cut, then (1) we'll add more to our bottomline and (2) people will have a better UX (or more precisely can go back to their old smoother and better UX). Question is - did I get the order right?

[saurik]

The 30% "apple tax" on their App Store is not a major way that Apple makes money (more on this in paragraph 2). This leads to the conclusion that Apple is not attempting to hobble stores that undercut them: they simply like using their control of the store ecosystem to maintain the quality, simplicity, and consistency of the experience that allows them to provide to their customers, with the nice side effect of giving them massive leverage over their largest competitors and power over many external markets. I'd thereby reverse the order you have.

Checking the numbers, the profit margin on an iPhone is a little over $170, while the profit margin on an app is <<$1; most of the people I know who own an iPhone have purchased at least two of them (an upgrade a couple years later) and have purchased maybe, at most, 10 apps. If you check the Apple quarterly earnings reports Apple doesn't even bother separating App Store sales from iPod accessories: both are a tiny line item in comparison to the profit they make on their actual profit center (core hardware).

However, for content resources, such as books or music, the story is much different: I know people who have purchased many thousands of dollars of music, movies, and television shows from iTunes over the years. This is enough that the iPod and AppleTV can be effectively subsidized by iTunes (something you don't see Apple doing with the iPhone: they make certain to get their profit on that at the point of sale, possibly plus a carrier subsidy).

This is why this issue starts coming to the forefront for services like Rdio and Kindle: those actually hit Apple where it hurts, so Apple would prefer to use their control to hobble their opponents. But, Apple doesn't really want 30% of the revenue from these sales... it would be much better for Apple if they just went away, and people used iTunes instead. (I make this clear, as that is why I then don't feel it accurate to use this as an argument for the 30% being a primary concern.)

[chris_dcosta]

The point is not whether Apple makes money on its "apple tax", but how that affects us developers. In fact it is a pure transaction fee, and if you compare that to paypal or credit card, or even affiliate commission payments, it's way too high.

In the long run where does the App developer get to make any money? On app sales alone? You cannot survive by making a one off sale to your customers, and apps that seek to generate more income through in-app purchases need to pay fees that are equivalent to what they would do through credit cards or whatever.

[jahewson]

But it's manifestly not just a transaction fee, it pays for the curation of the store, server storage space, bandwidth, royalty payments for patents which Apple have been shaken-down for, advertising on the Apple website, and finally the actual fee to MasterCard/Visa is all covered in that. It's a store, that's what stores do, provide some value-added and charge a markup.

[saurik]

No, the point was, quite specifically in fact, determining what "Apple's thinking" was and whether it included "we'll add more to our bottomline" as a concern, primary or otherwise, for why they are choosing to "squeeze every 3rd party service to adopt our 30% cut".

Please read the post to which I was responding to undersand the context; the only way in which we care how it affects developers is if that effect is one Apple wants (enough to have caused them to effect such an affect): the primary question is precisely whether Apple makes money.

[aidenn0]

It's also a subsidy for delivery of all the free apps.