This is part 3 in a series about POS APIs. Part 1 and part 2 can be found in these links.
When Apple laid their junk on the table in 2008 the market stepped in line quickly.
Wait, we’re going to make 30% on every sale just for supporting an app store? Where do we sign up!
Presumably everyone who never knew they even wanted an app store
Ever since you’ve seen arbitrary tolls, taxes, and tariffs as market-makers “work” to connect developers with end users of their applications. Keep in mind that Uber and Airbnb, arguably the two largest market-making platforms on the planet, take 25% and 15% fees respectively.
Because not everyone is a lemming, Apple is now facing Supreme Court heat over its anti-competitive App Store pricing model.
Most interesting is a new app store economic model being proposed by Discord, a chat application for games that counts over 200 million users on its platform: Discord is giving developers 90% and keeping 10% for themselves.
Why does it cost 30% to distribute games? Is this the only reason developers are building their own stores and launchers to distribute games? Turns out, it does not cost 30% to distribute games in 2018.
Discord representative
Discord’s announcement came on the heels of an app store launch from Epic Games which proposed an 88/12 revenue split in favor of their developers. Valve’s Steam store, another competitor, had offered a traditional 70/30 revenue split for all developers. After these announcements from competitors Steam said it would give a more favorable split to its developers.
This obviously begs the question: what does it really cost to support an app store? APIs are only getting cheaper as software and infrastructure prices come down (thank you free market competition).
If the market-maker isn’t selling or supporting the developer’s software, why are they taking such a large cut? We’ll hear the Supreme Court’s say on the matter in the summer of 2019 regardless – maybe the debate will surface data on COGS and the like.
Obviously we’d like to see more examples of price innovation in the POS industry. Instead of walled gardens and high tariffs, what if some of the bad actors came out and competed with their modernized contemporaries who offered open, free APIs?
We expect good things to come from Global Payments and Shift4, two of the industry horsemen who can lead brick and mortar to greener pastures with their investments in APIs. Since they represent such large percentages of restaurant POS, they could set the new standard for integration pricing.
But the fat lady ain’t sung yet.
We’ll be watching closely.
