And The Challenges to Apple’s App Practices Have Begun…

In what has been an issue-in-the-making since Apple first took 30% of every transaction within the App – and perhaps since they simply took 30% of every app purchase – there is now movement that could force a true stand-off between Apple and App Publishers.

Beginning in February of this year, Apple started taking a 30% slice of in-app purchases.  A solution that some publishers resorted to was the inclusion of a link that spawned a Safari browser to send people to complete transactions on their sites – which Apple felt they should still get a piece of.  As a result, some major players have caved to Apple’s heightened pressures last week by removing that link entirely.  You can read more about it at MediaWeek

What’s interesting to me is what that next step is.  I don’t believe that the move that Amazon, Google and others made is the way to go in the long run.  I also question the HTML5 route as a long-term solution due to the trade-offs on the UX side. But, something will have to give.

I can see this causing a more official questioning of the flat commission policies by organizations and governments.  The commission on a “distribution” fee of 30% may make sense upon initial download.  Receiving that on all transactions seems to be excessive.  If most people make in-app purchases or purchase subscriptions based on the work and quality of the app publisher, does it make sense for the original distributor to take a percentage at the same rate as the initial download?  I do feel that there is a need for some type of charge – just like credit cards charge on every transaction, but they charge considerably less – at a lower rate or perhaps even a volume-adjusted rate.  Android apps allow transactions to be completed by other means such as PayPal, but there is also an option to go through the Google In-App purchasing mechanism for that same 30% fee.  The Google payment is not as ubiquitous as Apple’s, but is slowly making inroads due to its ease of use with credit cards.

My hopes are that this forces a change from Apple – its better to get something than nothing – and they reduce the 30% on in-app purchases.  I can see Apple getting 30 on initial purchase, but the assumption is that people will complete in-app purchases based on the work of the app developer means that Apple should not get the full 30 once people are inside.  Granted, a change like that could force Apple to charge on every download of an app that includes in-app transactions– which could be a better return for them when you look at how many downloads of “lite” or basic free apps there are.  If publishers are looking to use Apple’s distribution to essentially get a free marketing tool for further purchases later, it only makes sense that Apple should get a nice piece of that return.  But if those are all charged up-front – even with a nominal fee – the volume should create a win-win for both sides.

As with all markets, these questions and challenges arise.  For the continued growth of the industry, and the hopes that politics do not come into play on this, something’s got to give.  Hopefully, a solution that benefits all those involved will be found in the end.  We all just have to wait and see…

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