Apple Planning to Change 30/70 Pricing Formula for In-App Media Subscriptions

[MacRumors]

Apple is planning to alter its pricing formula for subscriptions in a major change that will benefit subscription-based apps and services like Netflix, Spotify, Hulu, and more, reports Financial Times. Apple is said to be considering changing the 30 percent fee that it currently charges and is discussing new commercial terms with media companies.

At the current point in time, all apps and in-app subscriptions work on a 30/70 split. Apple gets 30 percent of what's paid for an app or service, while the company or developer offering the app gets a 70 percent cut. That means when someone purchases Netflix through the Netflix iOS app, Apple gets over $2 of the fee paid. At the same time, Apple has disallowed direct links to outside subscription sign up services within apps, ensuring it gets its fee.

Apple's 30 percent subscription cut has been a sticking point for many companies, especially those with tight margins like music services, and it's gotten Apple into hot water in the past, most notably during the e-book price fixing case levied against it by the U.S. Department of Justice.

According to the Financial Times, changing the App Store subscription terms could make Apple devices more appealing to content creators while also lessening potential pressure from regulators.

Changing the App Store's terms of trade could improve the economics of online content businesses and reassure regulators that the company is not abusing its position as gatekeeper to one of the world's most lucrative digital marketplaces.

On the Apple TV, Apple is already offering a more generous split, taking just 15 percent of revenue generated from subscription services like the recently released HBO Now.

There are no specifics on the terms that Apple is potentially considering for companies that offer subscription services, but it appears that the price cuts at this time will not extend to standalone apps.

Article Link: Apple Planning to Change 30/70 Pricing Formula for In-App Media Subscriptions

 

[luckydcxx]

Sooooo more like 20/80 or 40/60?

 

[kmj2318]

A lot of CYA. But hopefully it helps some developers.

 

[Crosscreek]

Gwad, I hope Apple doesn't go broke doing this.

 

[HenryDJP]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

 

[nagromme]

I always thought subscriptions--and also one-off media (Amazon books?) not hosted by Apple--should have a lower split.

 

[AngerDanger]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

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[2457282]

As long as it helps bring more content to Apple TV that does not require a cable subscription, I think this is fantastic! Otherwise, less so. They need a tiered approach for the apps. Maybe keep the 30/70 but if it hits a certain level of downloads, then move to 20/80, and then to 10/90. That way the initial cost of vetting, approving, and hosting an app can be absorbed up front. since there is little incremental cost, as the app gets popular, they could improve the return to the developer. Obviously, with each update to the app they would probably need to restart.

 

[furi0usbee]

Make it 10% so maybe Amazon will let me buy audible books directly from the app.

 

[starnox]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

Yeah because developers don't use MacRumors...

 

[horsebattery]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

If Apple has unfair practices in place that other providers are not happy with, then customers may end up suffering by not being able to utilize those services. Having this transparency gives Apple's customers a way to know why a particular company may not be offering their services. I'm not following why this is a bad thing.

As an example of being unequal, consider the service in question. An in-app purchase for a freemium game for premium-currency vs. Kindle books from Amazon will have significant differences in value, so a 30% hit has been the reason why Amazon does not go through with the in-app purchases route. (Of course, whether a provider decides to go through with this is up to them, e.g. Microsoft's 365 subscriptions)

 

[nutmac]

Sooooo more like 20/80 or 40/60?

I assume App Store will just match Apple TV HBO NOW revenue split of 85/15.

 

[furi0usbee]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

??? Why would this information need to be private?

 

[Hustler1337]

Apple will probably negotiate on a 25/75 split

 

[SgtPepper12]

This should really be between the developers and Apple. Why does this need to be public information? It's not going to stop me from purchasing my apps one way or another.

This is one of the weirdest things I've ever read on these forums. I don't even know where to start.

 

[furi0usbee]

Apple will probably negotiate on a 25/75 split

Let's face it, with the volume of sales, 10% for Apple would still make a lot of money and keep devs happy and maybe customers can see some of that savings on their end.

 

[MikeAnd]

Seems like a smart move. The only question is how they will deal with grey areas - e.g. what exactly differentiates an in-app game purchase from an in-app media purchase.

 

[furi0usbee]

In-app media: music, video, audio book, ebook, etc.

OTHER: truckload of donuts, box of gems, etc.

 

[Roykor]

Let's face it, with the volume of sales, 10% for Apple would still make a lot of money and keep devs happy and maybe customers can see some of that savings on their end.

yes, but Apple is a very money hungry company

 

[VPrime]

We just launched subscription pricing for our app. This would be awesome if it is true.
Right now we offer users to subscribe both on our site, or directly through the app. We're usually much happier when they subscribe on the site, as that only costs us a few% .

 

[Eso]

So how about 0%, what they deserve for services that run completely independently from them?

 

[horsebattery]

This is one of the weirdest things I've ever read on these forums. I don't even know where to start.

A challenger appears!

So how about 0%, what they deserve for services that run completely independently from them?

 

[MikhailT]

So how about 0%, what they deserve for services that run completely independently from them?

Which is technically impossible since apps itself (including the app page with screenshots/video) and app updates, AppleID authentication and so on are served by Apple.

0% is never going to happen and shouldn't. It is more likely Apple will drop down to 80/20 in the near future for everything except media-based/external services getting 85/15 instead, which is generally fair.

Even physical stores charge more than 15% for shelf space.

 

[VPrime]

So how about 0%, what they deserve for services that run completely independently from them?

They're still handling payment processing, and creating an ecosystem/funnel to drive users to make purchases.

Example: Users are more likely to use iTunes to make the purchase since they already have credit card info tied, gift cards etc.

We're personally willing to give up some revenue for this. It would just be nice if it was a little more comparable to other platforms and payment processing services.

 

[Mackinjosh]

People here constantly whine about Spotify supposedly screwing over artists. Apple has been doing it to content providers for years.