Apple's Hidden Scam

Here is the ugly truth about how Apple scams iPhone/iPod application developers who publish on the App Store:

First, Apple keeps 30% of the gross sales price.

Second, Apple keeps the other 70% of the gross sales price.

That's right - they don't actually forward the 70% to the developer. Here's what they do:

Apple divides the world into 7 regions:  United States, Canada, Europe, United Kingdom, Japan, Australia & New Zealand, and "the rest".  Each region corresponds to a currency:  USD, CAD, EUR, GBP, JPY, AUS, and USD for "the rest".

Apple keeps the developer's 70% until the developer has accumulated $150 in profits PER REGION/CURRENCY.   So having posted an app, the developer can earn up to $1050 in profits before receiving a single cent from Apple.  Some profits may never be paid if they don't reach $150 in a region/currency.

In a world of small transactions, this is just not acceptable. Doesn't $150 seem high? Do you think it might be to limit Apple's transaction costs?  It's not because they can convert currencies in bulk from each region since they have many many developers selling all over the world and overall they are converting a lot more than $150 each month.  But wait, Apple is already taking a 30% cut of the gross sales - they need to pay for that expenses out of their greedy 30%, not by holding on to the developer's 70%.  PayPal, Amazon, and others have already demonstrated they can be profitable by taking a cut of less than 5% and this includes currency conversion fees. They don't have a monopoly on their platform (Internet payments) and that's why they can't charge 30%.  But I'm not railing here against Apple's high-but-tolerable 30%  - I'm railing against Apple holding on to the other 70% too.

The $150 hold per region/currency, that could add up to $1050 of withheld funds is also high compared to a $99 annual developer license fee that Apple collects from developers for the privilege of selling their applications on the App Store.