The 24-Hour Wordpress Saga

Luckily here things worked out the way I think everyone agrees it should have for the wordpress app. Apple backed down and agreed that it overstepped by asking for the wordpress app to support IAP.

But the problem is that it almost doesnt matter, to most people this is just one more example of greedy Apple squeezing its tax out of more and more developers. There must be folks within Apple that arguing the loss of good will with the developer community is so much more important that whatever drop in the bucket this kind of revenue represents.

Like Ben I do expect apple will make some changes to the App Store in the near future to try and stop the bleeding but I’m not quite sure the changes he’s suggesting are quite right. I like his approach to this however. It’s not really useful to think about what you want Apple to do here but I do think its interesting to think about what they might be willing to do, and just hope they are listening.

I like this chart because it does get at the two key areas where Apple has the best case to continue to claim its 30%. Its for digital items with “zero marginal costs” and where the experience is primarily on iOS. Items like live zoom cooking classes are digital but also involve a “cost” for each sale. Sure a large number of people can all join a single class but if you are holding the same class repeated over multiple weeks each instance of that class has costs by way of the instructors time. V-Bucks on the other hand have “zero marginal costs” and no matter how many they sell epics costs don’t go up (other than some server capacity maybe?). Why is the marginal cost so important to this for apple. Because products with zero marginal costs area effectively all profit, so theres more to share with apple.

But even if theirs more to share, that alone doesnt meant that Apple deserves it right. That’s where the other aspect of the equation comes in, is the item you are buying primarily consumed on the phone. If you are buying a masterclass subscription with its prerecorded classes that you watch on your phone and Apple TV thats clearly something that benefits more from apples platforms. If you on the other hand use hey.com for email or even more clearly the wordpress app to post to your blog, those arent as much stand alone experiences on your phone as they are nice and convenient UIs for what are primarily web services. I realize that this distinction gets pretty blurry and thats part of what makes this so hard to figure out.

So what would be an easier way to handle this? I think its inevitable that Apples fees will have to come down for in app purchases. They said themselves they have never changed the rate since the App Store launched and its without a doubt that they have gotten better and more efficient at running the App Store since then, not less. So lets just say they cut the IAP rate in half to 15% across the board. And if the product has marginal costs, such as Uber or Amazon or live cooking classes they pay a rate thats more competitive with traditional credit card processing, say 4%. Still more expensive but in the ballpark where many clients would have it be worth the risk. I think the idea would be that when folks submit a new app they can apply for the lower rate by filling out a small form where they can explain why they do not have zero marginal costs. It would be up to Apple to make the final call on who qualifies, of course, but this feels reasonable to me.

It’s easy to say that this would be Apple giving up a ton of revenue and it may not even solve the problem but it’s important to keep in mind this would actually open the door to other revenue that they are completely missing out on such as Uber that could easily make up the difference.

Could they do this and then more reasonably require EVERYONE who collects payments on iOS to use it? Would large retail companies like Amazon ever agreed to that or would it just drive them from the App Store all together?

This is hard, I don’t know that there is a perfect solution here no matter how you tweak the numbers. Nothing they do will ever be as clean and as easy as running a traditional retail experience. No wholesaler expects to be able to use their own credit card processing for the products they sell at Wal-mart, or even on walmart.com. Add to that walmart doesnt carry any free items either, even the gum balls are at least a quarter.

So maybe that means any kind of system designed around the idea of a sales commission for apple is a dead end? Could it be usage based fees? But then what about truly free apps like wordpress?

The problem with all this madness is there is no good solution, they really are destined to look like the greedy supervillain no matter what they do.