I agree. Charging a blanket percentage of gross revenue is an extremely inexact way to monetize what is a broad basket of services that were previously separate including: electronic software delivery, software security verification, marketplace, transaction processing, DRM, etc. Since 2009, first on Apple's app store and then Google's, these services have all been arbitrarily bundled together despite having vastly different one-time, fixed and variable costs. People are only used to it in this context where every marketplace has been controlled by a monopolist gatekeeper.

Doing it this way makes no economic sense for either the seller or the buyer but it's coincidentally the absolute best way for a middleman to maximize the tax they can extract from a two-sided marketplace they control. In competitive markets, blanket taxing on total gross revenue generally only occurs when there's a single fundamental cost structure tied to that revenue, or the amounts being collected are so small it's de minimis. App stores are highly profitable, multi-billion dollar businesses.

Perhaps the most perverse thing about this is that electronic transactions for purely digital goods which occur entirely on real-time connected digital platforms make it trivial to price each service for maximum efficiency. It's easy for the price a 2GB game with frequent updates pays for electronic delivery to reflect the cost they impose on the infrastructure while a 100k one-time purchase app can pay a vastly smaller amount. And that's exactly the way the competitive marketplaces evolve - from moving shipping containers around the planet to residential propane delivery.

I'm by no means defending the percentage they take, but I would suggest that it's a percentage because it's simple:

Pick 3 imaginary games for sale priced at $1, $10 and $100. Any one of those games could be a million download a month success, and any one of them could be a complete dud.

What flat rate would you suggest to:

* Pay the developer for their work (ongoing per sale)

* Review each game and ensure it meets store guidelines (once per update)

* Host said game regardless of how popular it is (ongoing)

* Process transactions for the game (ongoing)

The alternative would be pricing based on revenue tiers (similar to what Unreal Engine does now), which aren't known in advance and don't take global variance into account (USD$200 in Eastern Europe might be a month's salary).

Percentage is just simpler. It also means that they'd be taking a loss on every free app or in the case of Free-to-Download In-App purchase apps - until users start transacting.

Well it's based on sales, not cost. In theory, a more popular game is a larger stress on servers, so charging them more makes sense.

The scaling also helps so that some (probably most) games aren't losing money to be hosted kn a store. That would be catastrophic as at some point games would need to remove themselves to name financial sense.

>It's only a percentage Because They Can.

Do you object to other sorts of royalty-based compensation, like for Unity engine or Unreal engine?

Yes. No to rent seeking.

There should be caps overall and under the caps there should be the option to choose between lump sum and royalties.

Nobody should be collecting unlimited revenue for a brilliant idea at the start and benefit from cheap or free scaling.

This entire model is ripping apart the fabric of modern society.

And yes, I known this is blasphemy on this website.

That is the hill you want to die on? The fact that at income levels greatly above the median income, taxes aren't capped?

You should look at it the other way, where ANY income or income equivalent, of any kind, should be taxed like income.

So when Bezos spends $5bn per year, that means he made $5bn per year (at least), so his tax statement should show him paying $2bn or whatever the top tax rate would imply.

On consoles, a review costs several grands. That’s the alternative.

This.

If something gets super popular, it presumable costs Epic more. But does 100 sales cost 100x more than 1 sale? That seems unlikely.

It’s proportionally more expensive to run a credit card charge for twice the amount, yes.