Another Android Differentiation Idea: Take A Smaller Cut, Google

Apple established the proposition that the platform vendor deserves a 30% cut off apps sold through its store, and Google has behaved as a “good competitor”, at least in this regard, by simply matching Apple’s precedent.. I can squint and convince myself that 30% is fair and reasonable. What I find ridiculous is that they think they deserve a comparable cut of all business transacted through their platform. Tried to buy a Kindle book on Android? Have you noticed that Amazon flips you over to their website? They make the transition almost seamless, minimizing the pain, but it does seem kind of silly, doesn’t it, to go to all the trouble of building an app, and then having to switch to mobile web for serious business?

The reason is to evade the 30% platform vendor tax. That would obviously destroy Amazon’s business model. Or take Pandora–if you want to move from the freemium app to the paid service, you have to do it through their website–they don’t want to give Google 30% of their hard-won subscriber dollars.

So instead of getting 30%, Google is getting nothing. Wouldn’t it be smarter to change the model, and make it more reasoanble? 30% of the initial app sale–fine. But for in-app purchases and subscriptions, they need a different model. Probably in some cases, such as Amazon, it would have to be custom-negotiated. In other cases, particularly subscriptions like Pandora, maybe they do down to 5 or 10% of the first 12 months, and then after that, all they get is 2-3% they are going to get as the payment clearinghouse (same as Visa would take).

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