18 February 2011
Apple Inc. took a risk, and invested in the design and development of an integrated platform — including innovative devices, an operating system, a distribution system, and a payment system. They offer this platform in the free market, under a set of terms and conditions to which those who choose to participate must agree. Those terms explicitly allow Apple to change the game anytime they wish.
Recently, Apple have introduced a subscription policy, requiring that any subscribed service to which an app provides access, must also be available for purchase through the platform as well, compensating Apple with 30% of the subscription revenue. Furthermore, the app may not promote the subscription option that is available outside the app.
One can see how this benefits Apple, its shareholders, and many of its customers. One can also see how this will prove detrimental to many business exploiting the iOS platform; particularly those providing access to a low margin product, through a free iOS app.
A lot of people around the internet have responded in an uproar, speaking of Apple as a tyrant and extortionist, claiming that the new policy is “inequitable”. They go on about how much margin Apple is making, and claim that to be “unfair”. These seems like knee-jerk reactions, motivated by a misplaced sense of entitlement.
Apple have done nothing wrong. What they’ve done is within the scope of the terms we’ve agreed to, it makes financial sense for Apple, their shareholders, and will prove attractive to many of their customers. They are acting in their own self-interest — which is a fundamental freedom of participants in a free market.
With a bit more thought, I believe most of these people would acknowledge the logic behind Apple’s policy, would recognize that the principle of “fairness” has no place in this discussion, and would admit that what they are really upset about is the specific amount — 30% — that Apple are charging.
Which reminds me of past discussions about product pricing and ratings.
Ironically, many of these same people would (and have) argued that their own app and service offerings should be rated on their objective merits, and not on the subjective basis of price. They would argue that a Porsche is no less of a car, because most people can’t afford one. If they’ve chosen to price their app at $19.99, instead $0.99 like most in the App Store, don’t give it a 1-star rating because of that. Rate the app, not the price, and don’t call it “unfair”.
By the same token, these people would also not consider it “unfair” to change the rules of their own game, as long as its within the terms to which their customers have agreed. They wouldn’t consider it unfair to the original purchasers of their app, if they later decided it commercially made sense to drop the price to $9.99 (as long as there was no previous promises made to those purchasers), nor unfair to future purchasers to raise the price to $29.99.
To be clear, I have no issue with speaking out. I’m personally not happy about the situation. Apple’s new policy has caused me to deeply reconsider the roadmap of a product we’re going to develop. So I hope to read people writing more about how it no longer makes economic sense to bring their compelling product/service to the iOS platform, and hope to read less statements of “this is bullshit” and “this isn’t fair”. The former is what is relevant, and, ultimately, what has the power to influence Apple.