“The Sell Sider” is a column written from the perspective of the sell side of the digital media community.
App creator-turned-developer advocate David Barnard’s career trajectory is one typical of Apple’s App Store, but also exceptional to the App Store.
A recording engineer with no software expertise, Barnard built a profitable stable of mobile apps, such as Weather Up and the productivity app Launch Center Pro. In 2019, he was hired by RevenueCat, an app software and monetization company, as developer advocate.
Barnard is part of the marketing team at RevenueCat, though he said that his job doesn’t feel like marketing. “But that’s probably just good marketing.”
Since the young love between Apple and developers soured in the past couple of years, Barnard’s job has become increasingly complicated. The relationship reached a “low point” earlier this year during the Apple vs. Epic trial, he said. Developers felt betrayed by the casual indifference to app makers expressed in Apple internal emails and when their executives took the stand during the trial.
Barnard must straddle the iOS platform, where developers still earn the majority of their living, and an increasingly restless crew of app developer clients.
We spoke to him about Apple’s hefty 30% cut of App Store revenue, how Apple could conciliate developers’ goodwill and whether other app store companies could ever break Apple’s lock on developer mindshare.
AdExchanger: How did it get to this point, where developers are boiling over with anger about Apple?
BARNARD: I’ve personally never had an issue with Apple’s 30% [its cut of in-app sales and subscriptions]. And I think that gets to this slow shift in sentiment.
The reason I’ve never had a problem with that 30% is that I wouldn’t have a business if it weren’t for Apple. I didn’t have a background in software or an existing business. I didn’t have employees. I hired a contractor to help build an app in 2008 and was able to launch a global software company within five months of deciding to go for it. To me, that 30% was a fair exchange.
The App Store was a discovery engine. Being featured by Apple or showing up high in search results was much easier then, so you could make an app without heavy investment.
But over time, I think the value of the things that they do has diminished. And if it were an open market, the amount they would be able to charge over time would diminish.
What’s Apple’s case to charge 30%, other than it’s kept that same rate for years?
I think some of the sentiment around the 30% issue is misguided and misinformed.
People say, “Hey, credit-card fees are 3%. Stripe is 5%.”
But what so many people fail to recognize is that Stripe does not provide compliance all around the world. There are legal and financial responsibilities in each country that you operate as a business. Apple handles tax payments, legal compliances, all of that. There are companies that provide those end-to-end services, and it’s probably closer to a 15% rate.
RevenueCat has considered that kind of end-to-end compliance service as a value-add for our platform. It’s not an insurmountable task, but it would be an undertaking.
A lot of developers also overlook how easy it is for people to purchase using a credit card that’s stored with Apple. Particularly for subscription apps, which is my jam.
If your card expires, you’re way more likely and speedily going to update your app store credit card, because you’re going to rent a movie, buy an app, pay for iCloud, etc. A company like Stripe is trying to help with that on subscriptions, but still, people are way more likely to update their App Store card before they visit some ecommerce site and update their Stripe or PayPal billing.
And I think Apple can make a strong public case about consumer trust and protection. There are things they can do, like sideloading [allowing unvetted apps to be downloaded from sites or other app stores]. And there are ways to do that with certificates that can be revoked for privacy or security violations, which is what they do for the Mac. But I want Apple to have a degree of consistency and control, and as a consumer, I think that’s a strong argument if you look at what goes on with sideloaded apps.
What’s the strongest argument for developers that Apple is exerting unfair monopoly power?
The strongest argument on the 30% issue, to me, is that it prevents businesses from operating on the store that don’t have the margins to pay 30% or 15% [the discounted rate for developers with subscription renewals or revenue of less than a million dollars per year].
Kindle is one example. And any potential competitors. The economics just don’t work. If you’re selling e-books, the royalties you pay to authors and publishers, as well as the mobile platform, mean the unit economics just don’t make sense.
There’s been discussion lately around content creation apps. Twitter, for instance, is testing a Super Follow feature [a beta product that lets users charge a monthly rate for exclusive content – with Apple taking its 30% cut and Twitter hoping to eventually raise its take from low single digits to about 15%]. Perhaps Twitter can make that work, because their platform can help drive adoption. But you would see more of that kind of business if they didn’t have the 30% taken off the top.
What concessions can Apple make or what can Apple do to fix this situation?
Apple could just proactively drop its service fee to 10%.
I’ve been arguing for years that Apple should have a graduated commission rate based on the underlying economics. So an e-reading app with low profit margin opportunity and high costs, maybe Apple should take 5%-10%.
My weather app has a ton of weather data costs. There are gaming apps that are selling zero incremental cost trinkets that are pure profit. We’re actually paying every time someone opens the app. So you could argue our business fundamentals should mean a lower App Store fee.
They’ve done that for video service providers [the likes of Netflix, Amazon Prime or Disney Plus negotiate exclusive rates]. But it’s a big administrative cost to decide what those rates should be by company or category.
There’s so much more I think Apple needs to revisit.
Well, I’ve been incredibly frustrated with App Review over the years. I think Apple’s App Review stifles more innovation than the 30% cut.
I’ve personally had many run-ins with App Review with my app. We pushed the boundaries on productivity, and even somewhat directly violated the rule about not recreating home screens, but Apple did finally let us into the App Store.
I’ve been perpetually scared of trying innovative things because I don’t want to waste three months of my life and tens of thousands of dollars, if I’m paying a contractor, only to have them say, “Oh, yeah, that’s not going to fly.”
So I think App Review needs a ground-up rethink.
With the impending regulation in the EU and the UK, and then individual states now suing the app stores, I think it’s the end of an era. Apple has to change things.
If developers have soured on Apple, is there an opportunity right now for other app store operators to get developers to commit more time to them?
There are opportunities on these other platforms. But, as a developer, your goal is to – and I mean this as an oversimplification – make the most money you can with the least amount of code and least investment.
Apple’s tools for building apps are way ahead of building on other platforms.
Google’s improved their Play Services, where you can target newer APIs without the phone having to update to a new version of Android, but it’s still a fragmented mess. There are convoluted screen sizes and graphics capabilities, and inconsistent RAM on the device.
Microsoft Windows has a huge opportunity. There’s a billion-user install base on Windows, which is similar to iOS and eclipsed only by Android. So in some ways it should be right up there.
But it goes back to one of the strong arguments Apple makes about the App Store fee. That the value they bring is people do pay for apps on their iPhones and iPads and use them in a way people do not on other app stores. People don’t browse Windows for the latest apps and pay for a dating app. They just visit the dating site.
So, for now, the iPhone is still where it’s at. And it’s where people build first.