Sidebar Sidebar
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

Apple Execs Discussed Not 'Leaving Money on the Table' When Deciding Apple TV Subscription Fees

MacRumors

MacRumors

macrumors bot
Original poster
Apr 12, 2001
68,776
39,722


Apple executive emails revealed in the Epic Games vs. Apple lawsuit highlight how the company came to its conclusion to take a 30% cut on all App Store transactions in a way that ensured it wasn't "leaving money on the table."

app-store-blue-banner.jpg

One email thread from 2011, spotted by The Verge, features Apple services chief Eddy Cue discussing the commission that the company should charge providers for content subscriptions accessed via Apple TV (an App Store on the set-top box didn't exist at the time.) Apple execs considered charging a 40% one-time cut, a 30% one-time cut, a 30% ongoing fee, or individualized deals with different providers.

apple-tv-deal.jpg

Apple's team eventually decided to require the same 30% fees as it does on the iTunes Store and the App Store. Another email also discusses how Apple should negotiate referrals, where Apple TV apps link out to a provider's website for customers to subscribe directly to the service.

apple-tv-deal-1.jpg

One executive said they wanted to ensure they protected the 30% fee that had long been enshrined in the App Store, but stated they would remain open to other deal structures.
"I don't want to do any deals where we get less than 30%. That is what it is on the app store and we can't be making a different deal here. If that is not possible than I want a one-time bounty but we need to very careful here so this doesn't spillover to the app store," one exec wrote. (The emails are threaded such that it's hard to tell who is replying to whom.)
Click to expand...
Overall, the email thread appears to suggest that discussions evolved extemporaneously amongst Apple executives when it came to provider fees during the early development of the Apple TV platform, with maximum profit the main concern.

Amid increasing scrutiny over its App Store practices, Apple in November announced the Small Business Program, which saw ‌App Store‌ fees slashed to just 15% for developers earning under one million dollars per calendar year. The ‌App Store‌ commission remains at 30% for developers making over one million dollars per year.

The program has since received praise from many developers, but some larger developers including Epic Games criticized the move, saying it undermines the ‌App Store‌'s rules. Epic Games is ineligible for the reduced commission since it exceeds the $1 million earnings threshold. Apple said the program will benefit the "vast majority" of App Store developers.

Article Link: Apple Execs Discussed Not 'Leaving Money on the Table' When Deciding Apple TV Subscription Fees
 
Article Link
https://www.macrumors.com/2021/01/27/apple-execs-talk-apple-tv-sub-fees/
syklee26 said:
30% itself is way too high....
Click to expand...
You should see the markup on tangible products to wholesalers or wholesalers to retailers.

EDIT: For the sake of clarity, the average markup of a wholesaler or manufacturer to a retailer or wholesaler is 20-40%. Apple is charging 30% by acting as a middleman. If you reject Apple's 30%, I suggest you reject every retailer where you purchase any services or goods from.
 
Last edited:
  • Like
  • Haha
  • Disagree
Reactions: amartinez1660, TropN, graywolf323 and 26 others
Forget what the emails actually say. Look at how it's written! That's appalling! It's not properly capitalised! Noteworthy is that "the App Store" isn't even capitalised! And my Mac just automatically capitalised it for me as I wrote it here so there's no excuse for that. And there's even a word missing. "we need to very careful here". "be". Please write full sentences when you're an exec writing emails like this... And "than" is comparative. "Then" is the word you wanted there. God damn
 
  • Like
  • Disagree
  • Haha
Reactions: Entamoeba7, TropN, Kobekes and 31 others
If the courts find for Epic (big 'if'), I wonder if the judgment would be more nuanced than people are expecting: e.g. a finding that Apple exercises monopoly power over mobile gaming apps, but not VOD apps, so ordering a cut in their take on games, but leaving some areas like VOD alone.

I don't think that's how Epic is pleading it's case, but who knows what a court might end up going for.
 
casperes1996 said:
Forget what the emails actually say. Look at how it's written! That's appalling! It's not properly capitalised! Noteworthy is that "the App Store" isn't even capitalised! And my Mac just automatically capitalised it for me as I wrote it here so there's no excuse for that. And there's even a word missing. "we need to very careful here". "be". Please write full sentences when you're an exec writing emails like this... And "than" is comparative. "Then" is the word you wanted there. God damn
Click to expand...
Exactly the first thing I noticed, those emails appear to be written by an illiterate person. I guess you just stop caring when you make millions every month.

On the subject, I do not think the content of these messages reflect anything fundamentally malicious, I have been in business meetings that convey even more aggressive tactics than this. With that said I think 30% is excessive, I also think Apple offers little options for appeals and that there is definitely a monopoly since there is no other option within iOS.
 
Last edited:
  • Like
  • Disagree
Reactions: LeadingHeat, decypher44, Stenik and 2 others
Username32123 said:
Are there any For-Profit companies that centre their decision making around leaving money on the table?

Breaking news: Companies that survive based on profit discussing making as much profit as possible.
Click to expand...

No, but every now and then some people get the idea that Apple is somehow different. Good for them to get some reality checks.
 
  • Like
Reactions: Mal Blackadder, Huck, pauloregan and 6 others
LeeW said:
Nothing new, customers are there to bleed money from, nobody bleeds their customers better than Apple.
Click to expand...
What do you expect? A business to make no profit? Profit is essential for long-term survival, and aids future research and development.

Its also fair to acknowledge being more price friendly than Samsung lately. The entire iPhone 12 line up is cheaper than the S20 line up and yes its glass all the way no plastic backs and lowering PPI of the display to cut costs.

Secondly, Apple products have a higher sustained resale value AND more longevity in software support. Oh and surprise surprise creating improved optimised software year on year out ad providing it as a free upgrade costs what? MONEY.
 
  • Like
Reactions: gene731, slineaudi, KeithBN and 3 others
If anything, I think these messages help Apple’s position in the ongoing litigation.

A company with a monopoly would impose an arbitrary fee knowing that others would have no option but to pay it. These messages show Apple actively considering various fee arrangements in the event that their preferred fee (30%) is not accepted by the market implying they were simply seeking to maximize profit (normal business objective) and that they anticipated the market participants may have bargaining power.

I agree 30% is high, but a company truly intending to abuse its dominant market position would have started and ended the conversation with charging 50% with the knowledge that market participants have no other option but to accept it. That’s not what these messages show.
 
Last edited:
  • Like
Reactions: kltmom, jhfenton, LeadingHeat and 2 others
syklee26 said:
30% itself is way too high....
Click to expand...
Who gets to decide that. Funiture and clothing have 300 and 400 percent markups. Jewelry too. Apple is successful because they generally require a 35% profit margin to release anything and to do a few things very well. They strayed from this while Jobs was in exile and nearly went out of business. Most of their competitors from that era no longer exist.

30 percent is actually much lower if you look at their costs. They manage the support, they eat the 3% credit card processing fees, they host the apps in cloud, they provide free marketing and drive the platform via ads and other methods, they maintain the platform, with constant and consistent updates to APIs and security. They protect companies from piracy that plagues other platforms, and keeps them from being run out of business.
 
  • Like
  • Love
  • Disagree
Reactions: ZhenyaF, MEJHarrison, gene731 and 10 others
LeeW said:
Nothing new, customers are there to bleed money from, nobody bleeds their customers better than Apple.
Click to expand...

That's true......and yet people still find ways to justify a company like it was their family member.....when in reality the company couldn't care less about the individual company.

Just buy products and services that appeal to you, regardless of the company that made it. That's why I have devices from most major manufactures, instead of locked into one. They're not loyal to me, why should I be loyal to them?
 
  • Like
Reactions: LeeW
You must log in or register to reply here.
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.
Top Bottom
Back