The Apple Commission
I have come across many silly write ups, including mine of course, but never a sillier article like the one recently penned by Ted Dziuba. The article is not only baseless but also is the most mis-conceptualized cracked bunch of assumptions for all times to come, without doubt. Ted labeled Apple as a gangster and App Store as a classic protection racket for retaining 30% from applications sold through App Store.  We all know that Apple retains 30% and 70% percent goes to the developers. We also know that the deducted 30% is about enough to maintain the online store as claimed by Apple, which I think is quite true. Ted Dziuba has a different opinion and accuses Apple for purloining application developers.

Is Apple really making profits out of that 30% cut? Actually, this is a question developers are least concerned about at present.

Is this true?
A quote from Ted:

When a developer sells an application through the iPhone Application Store, they only see 70 per cent of the revenue. The rest goes to Apple for “system upkeep.”

As of today the App Store has 6,818 applications deployed by about 2,500 developers. Out of the total applications close to 30% are deployed for free. If you consider the download statistics of applications, free applications are downloaded triple times more than the paid ones. Apple does not charge a cent as maintenance fee to developers who deploy free applications. This doesn’t mean that those developers who deploy free applications are not making money.

Developers are taking the advantage of the free option by supporting ads, which I think is cool. Many developers are also using this free hosting service to deploy free/lite version to get more users to download their full/paid versions. Apple does not ignore your free application when it comes to providing publicity; it just does what needs to be done, though you are not giving a cent as commission. If we call this as “making developers dependent” on Apple, I am sure it is a good omen rather than a bad one. Apple is not jealous when developers make money in a fair play.

Apple is crazy! It has done something that no company has ever thought about. This “system upkeep” concept has done more for the developers rather than Apple. Apple recently threatened to shut down iTunes if the royalty fees paid to song artists is to be hiked at the cost of taxing those who are using iTunes, remember that? That also is “System upkeep” strategy? Again Apple made it very clear that the amount deducted from sales of songs, movies, applications all goes into maintaining of iTunes and the App Store. The App Store is a place where you submit a good application and sit back, watch the download statistic and collect your profit, do almost nothing but give update and fixes when required.

To keep all things simple, Apple is a modern software custodian, who provides a room for your software, handles all payment related headaches, advertise your application and provide links for download all for 30%. If you are to do all these on your own you might end up spending almost 90% or even more than what you might earn in all possibilities. If at all Apple earns something out of this collective hosting service, it is just fair and acceptable. Therefore, it is totally unfair to term the 70/30 split as a classic extortion scheme as Ted did, you know that. That is not all we have few more unfounded accusations. Read on.

Why not other platforms?
Another quote:

If you want to sell iPhone applications, you need to do it through Apple, and you need to accept these terms. For gangsters, the first step in the racket is to make the “clients” fully dependent on the mob, so crossing the mob is completely out of the question.

You read that right? Is there any force labor going on around here? Hopefully not, the App Store of all places is not a developers’ prison, where developers have to sign a term document and jump into business. I don’t see any logic why more than three thousand odd developers stick to Apple if there are unfair things happening here. There are free development platforms, but we don’t see many applications out there.  The App Store is a wonderful thing that happened for our good. And to be very optimistic, it still has better things to reveal to us.

Don’t compare with other platforms

Another odd comparison:

If you develop an Android application, you can sell it through the Android Market under the same 70/30 split setup. However, users can install applications on their Android phones without using the store.

The structure is the same the game-play is different, friends. Android market has the same 70/30 split. From a consumer point of view, I doubt the usefulness of the Android platform without proper censorship of applications. Apple no doubt has a very tight grip on the developers, still then we see many worthless applications in the App Store, how will a free platform be in that case? Ted too knows this fact “More applications for Android don’t mean more customers for Android.” So, in the end we all know that the system within the App Store is working well.

Here is the extreme assumption:

What happens when Apple’s 30 per cent vig becomes 35 per cent? What about 50 per cent? With nothing to stop them, Apple is in a great position to bleed developers dry.

The simplest answer to this is ‘developers will bid adieu to Apple.’ Apple, I am sure is not seriously planning to shut down their business, but is planning to reach out to build a mightier and bigger empire and shooing away users and developers isn’t the right thing, Apple knows this. If nothing stops Apple, the chances of losing developers and users to other platform surely will make them re- think about raising the 70/30 split mark.

I have friends who develop for the iPhone platform and also have met some developers; I often have asked them about the logic and the acceptability of Apple pocketing 30% of the sales revenue. Majority of them have no objection and thinks that it is only fair for better maintenance of the online store. Few of them of course claim that the commission is way too high, but also accepts that the success of their applications is attributed to the simplified and effective sales mechanism of the App Store. Apple and the developers have a common understanding that the commission is fair enough to both parties.

What pricks more to developers?

Having said that developers are least concerned or annoyed about the 30% cut, let’s talk about the other things that are bothering developers. In a matter of months the App Store has become so crowded; it has become insanely difficult for users to find good applications with simple clicks.

For developers, it is pretty hard to get the attention of users even if they deploy very good applications if their applications fail to make to the hot or favorite section. Apple might think of cleaning the online store to sieve out useless applications. Many developers will definitely curse Apple for that, no doubt. There are scores of reasons why developers seems to hate Apple and the App Store, but every developer also has secret admiration for the well designed and undoubtedly the best distributions system. That 30% definitely is not the bone of contention.

Ted’s reference to the failing economy again lacks the spirit of valid argument: “Software shops are cutting costs left and right (and by “costs,” I mean “employees”), so it’s not in Apple’s best interest to lean on them.” Apple seems to be faring well even if the global economy is experiencing downtrend. Apple has the resource to hire all the engineers at Silicon Valley. The recently released Apple sales report has it that the revenue of Apple comes from the successful sales of its Mac Computers and the iPhone (both the first generation and the 3G) not from the 30% cut from developers.

Is Apple still a gangster?