Apple’s taking of a 30% cut of digital revenues generated through iOS apps may be catching up to them, according to Bill Gurley, partner at Benchmark venture capital and considered one of technology’s top dealmakers.
Apple has one of the highest “rake” rates, which measures the percentage of revenues skimmed by the platform provider from its supported businesses:
Gurley has argued that although several developers have become millionaires off the iOS platform, Apple’s premium rake has diminished the possibility of strategic partnerships with other players. Facebook’s new Home mobile app, for example, is only available on Android and no current plans for iOS.
If developers follow suit in large droves, it reflects the unsustainability of such high-margin models over the long-term. It may also be a microcosm of the bigger battle between iPhone and Android: iPhone is the high-end model that swept the world off its feet, eliciting instant loyalty from those who can afford it, and even those who cannot. The Samsungs and other Androids of the world started off behind but have since come to dominate, expected to own 80% of the market by the end of this year.
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The question will be if Apple doesn’t relent on their aggressive model, will developers grow successful in finding ways around it? Some offering subscription-based services have moved to sell subscriptions via their website, and only authenticated users can login via the app. Others though had their apps rejected until all links pointing to a web-based signup page were removed.
Some have simply passed on the 30% markup to their customers. And others still are employing a hybrid approach, where premium services can be ordered for an additional fee via the app.
Bitcoin developers may be at an advantage following Apple’s change of heart to allow apps transmitting virtual currency. Although all digital sales proceeding through an app are normally taxed, this is apparently not the case with Bitcoin. One can indeed speculate that this was one of Apple’s motives for the original ban.
As apps like CoinJar, Coinpocket and others return to the marketplace, it will be worth watching if more merchants will rush to accept bitcoins just to make the most out of their mobile revenues.