No, Apple does not pay developers

Enough is enough. For a few years already Apple has been boasting at WWDC and various other events (earning calls, etc.) about paying however billions dollars to developers; more recently, they have put this page where they proudly proclaim their contribution to the (U.S.) economy with, among others, the “App Economy” (they insist there: “And Apple has paid more than $4 billion in royalties to developers through the App Store”). If Apple has been criticized for this claim, I have not come across such criticism, which is a shame because Apple is not paying iOS or Mac application developers by any reasonable sense of the word “pay”. This is money that the developers have earned from users, and Apple is but an intermediary in this transaction.

All definitions and usages of the word “pay” (at least when one entity is subject, as opposed to say, an investment) that I could find imply either an opposite movement of goods or services, or an existing debt the payment exists to settle; as far a I can tell neither of these is the case: is Apple borrowing money from developers, then paying them back? Is Apple placing bulk orders of apps that it then redistributes? Is Apple commissioning the development of apps? No, no, and no, and quite the opposite in fact in the last case, as not only developers figure out themselves what to produce, but Apple has been known to reject the outcome, after it was done, in ways that have sometimes lacked transparency. In the context Apple uses it, “pay” implies there is a supplier/buyer business relationship, but Apple has none of the characteristics of a buyer: it is not the one that needs to be courted, it is not the one making the buying decision, it is not the one deciding how much to buy, it is not the one providing the money. The definition with which I could most charitably interpret their usage of “pay” would be “hand over or transfer the amount due of (a debt, wages, etc.) to someone” (New Oxford American Dictionary), in which case the amount due would be the remainder after commission that Apple owes developers, and transfers at the end of the month, which is not something particularly worthy to boast about.

Apple cannot even technically be said to be paying developers. The business and legal relationship iOS and Mac App Store developers have with Apple is, to sum it up, that Apple represents the developers in front of the customers, it acts as the developer agent (hence the agency model) and among other things collects customer payments on behalf of the developer and then forwards the payment to the developer (minus the commission Apple takes). The end user is the customer in this transaction, and she pays the seller, that is the developer; Apple does not. Apple merely transfers money that the developer earned from customers, nothing more. So it makes sense to say Apple transfers money to developers, amounting more than $4 billion; it doesn’t make sense to say Apple “pays” developers, even less so to speak of “royalties”.

Even worse yet, what kind of organization would boast about creating an “industry” of 210,000 unstable, underpaid jobs? Indeed, these jobs have no long term business visibility as any one of them could be the subject of a random Apple edict in the next few years; and clearly not everyone is earning a wage from the iOS App Store, as even if you assume all $4 billion have gone to the 210,000 U.S. developers, this works out at about $20,000 on average per such “job” since the introduction of the iPhone in 2007…

To me, this is symptomatic of a level of contempt towards third party developers not seen since the contempt of Nintendo towards third party developers at the heyday of the NES. This may or may not be anything new, but Apple should take care. iOS developers are a proud, independent bunch, and it is hard enough by itself to create apps that users will buy; telling them that it is Apple that pays them is not a good tactic. One day or another, Apple will meet its Playstation, and then everything will hinge on the attitude of developers.

Don’t get me wrong, Apple has made a lot of good things with iOS and enabled a lot of possibilities, and I am thankful for that. It’s just that “paying developers” is just not something Apple does; this is money from end users that developers have earned.