Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

That depends on your marginal cost of supporting an incremental user. For most Internet services, that marginal cost approaches zero. 30% sounds like a lot of commission versus real world purchases but when gross margin is close to 100% on an incremental subscriber, it's not nearly as egregious an ask.

To make what I'm saying more concrete: For a physical object, it's not uncommon for the cost of the item to be 90% of its price. So the seller makes 10%, and a "reasonable" 3% commission on sales price = 30% of the profit.

Whereas for a totally virtual service there's a large fixed cost to set it up (programming, servers, etc) but relatively little "per user" cost. Cost per unit approaches zero, marginal profit approaches 100% of price, and 30% of price is approximately 30% of the marginal profit from selling an extra unit.



> ... relatively little "per user" cost.

This makes a lot of assumptions about the business model of developers. For a BaseCamp-like product, it is mostly true, support costs notwithstanding. But a video- or music-streaming service that pays out to content providers on a per-item basis has much more in common with a brick-and-mortar retailer when it comes to profit margins.


I'm not saying it's great for every online business, just that it's also not right to see 30% and assume that's a wildly inappropriate rate.

It's also not entirely impossible that Apple realizes that the music/book/video streaming services are one of the few virtual products with material per-user costs, and adding this kind of surcharge will drive more users to their iTunes services.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: