Apple in 2011 Considered Collecting a 40% Fee From Some Subscription Apps

[MacRumors]

Apple once considered taking a 40 percent cut from some subscription apps, according to documents shared today by the House Judiciary Committee (via Bloomberg).

Back in March 2011, Apple's services boss Eddy Cue emailed three other executives and suggested Apple should "ask for 40% for the first year only," but that a "few deals" needed to be worked out for Apple to "see what is right."

One of the executives, Jai Chulani, wrote back that Apple could be "leaving money on the table" asking for 30 percent in the first year of subscriptions.

At the time, the emails referred to apps that offered digital content like Hulu on the Apple TV rather than apps running on iPhone and iPad, though Apple had launched App Store subscriptions in February 2011.

Apple ultimately decided to take a 30 percent cut from subscriptions purchased through the App Store, and later reduced that rate for longer running subscriptions. Today, when customers sign up for a subscription within an app, Apple collects 30 percent for the first year, and 15 percent for the second year and all subsequent years.

Apple CEO Tim Cook during his testimony at today's antitrust subcommittee meeting emphasized that Apple has not changed its App Store fees since the App Store launched, and has in fact lowered them, referencing the 15 percent cut.

Ahead of the antitrust meeting, Apple also commissioned a study suggesting Apple's App Store fees are in line with the fees collected by other digital marketplaces and service providers.

Article Link: Apple in 2011 Considered Collecting a 40% Fee From Some Subscription Apps

 

[TheYayAreaLiving 🎗️]

Greedy Apple SMH!!!!!

 

[farewelwilliams]

30% is perfectly fair. 40% is not.

 

[Apple_Robert]

Much ado about nothing, seeing how that did not come to fruition. Not sure why it is story worthy 9 years after the suggestion.

 

[boss.king]

30% is perfectly fair. 40% is not.

Can I ask you to explain how you came to that judgement? What makes 30 so much more acceptable than 40? Why not 25? Why not 60? Are you just drawing an arbitrary line in the sand because it's what we're used to, or is there some calculation you've run here?

 

[LN3000]

I don't see how this is really much of a story. One person suggesting something doesn't mean it reflects company values. I could suggest Mickey Mouse becoming president, but that doesn't mean all of America wants Mickey Mouse to be president (although....)

 

[farewelwilliams]

Can I ask you to explain how you came to that judgement? What makes 30 so much more acceptable than 40? Why not 25? Why not 60?

because it's consistent and in line with the industry standard that Sony, Nintendo, and Microsoft has adopted with their game console online stores.

Are you just drawing an arbitrary line in the sand because it's what we're used to, or is there some calculation you've run here?

Calm down.

 

[boss.king]

because it's the industry standard that Sony, Nintendo, and Microsoft has adopted with their stores.

But it's the industry standard in part because that's where Apple set it. If they had originally been debating between 40% or 50%, would you be arguing that 40% is perfectly fair but not 50?

 

[japanime]

Amazon takes up to 65 percent (yes, you read that right) from independent publishers of books sold through the Kindle store.

I'm not suggesting that by "only" taking 30 percent (or 40 percent) is by any means fair. But Amazon is getting away with highway robbery.

 

[farewelwilliams]

But it's the industry standard in part because that's where Apple set it. If they had originally been debating between 40% or 50%, would you be arguing that 40% is perfectly fair but not 50?

No. Playstation Store existed in 2006 and took 30%. Apple App Store launched in 2008.

 

[C DM]

Capitalism and business are capitalism and business. Is any of this somehow new or surprising all of a sudden?

 

[boss.king]

Capitalism and business are capitalism and business. Is any of this somehow new or surprising all of a sudden?

No one's acting surprised.

No. Playstation Store existed in 2006 and took 30%. Apple App Store launched in 2008.

So it is just down to 30% being what we're used to?

 

[C DM]

No one's acting surprised.

So why the whole discussion about something typical that happens in pretty much any business pretty much all the time -- how should we price something, how can we make money off of something, at what point would changing the price of something result in something that's not desired, etc.?

 

[boss.king]

So why the whole discussion about something typical that happens in pretty much any business pretty much all the time -- how should we price something, how can we make money off of something, at what point would changing the price of something result in something that's not desired, etc.?

Because it's website dedicated to discussing Apple and the things they do, and in light of the hearing today some people might find it interesting?

I didn't realise people were only allowed to discuss things if they found them surprising.

 

[farewelwilliams]

So it is just down to 30% being what we're used to?

30% goes as far back as the early steam days which was launched in 2003. steam ran the numbers and increased the cut that the publisher/developer used to get from brick and mortar stores (from ~45% to 70%).

 

[boss.king]

30% goes as far back as the early steam days which was launched in 2003. steam ran the numbers and increased the cut that the publisher/developer used to get from brick and mortar stores (from ~45% to 70%).

Thanks. That's all I was asking for.

 

[loby]

Uh...why are people surprised? Not saying I approve or agree, 30% take in business is a common percentage. Are Politicians that out of touch or are they too in the pocket of others who are not doing as well like Microsoft that has almost a Monopoly in the U.S. government infrastructure to date...? Please...

 

[Baymowe335]

Being on their platform is valuable. They could probably get 60% or more. I think Apple is being reasonable.

 

[bobbie424242]

Wealthy exec for life really wants your money.

 

[cuencap]

Non-Apple retail stores like their margins to be 40-60%. They provide a brick and mortar store that customers visit and provide marketing. The App Store brings billions of people to one place for the developers to sell to. How is that not worth 30%?

 

[JosephAW]

All that will happen if Apple raises their rates is the end of the $.99 app era.

 

[wigby]

But it's the industry standard in part because that's where Apple set it. If they had originally been debating between 40% or 50%, would you be arguing that 40% is perfectly fair but not 50?

It doesn’t matter if they set it at 90%. The market will either reject it or not. Obviously, very few developers have a problem with 30% but that doesn’t stop them from piling on and trying to squeeze more from Apple. If Apple’s greedy then so is every developer complaining while still doing business with Apple.

 

[C DM]

Because it's website dedicated to discussing Apple and the things they do, and in light of the hearing today some people might find it interesting?

I didn't realise people were only allowed to discuss things if they found them surprising.

Not sure how or where anything was said about that.

 

[boss.king]

It doesn’t matter if they set it at 90%. The market will either reject it or not. Obviously, very few developers have a problem with 30% but that doesn’t stop them from piling on and trying to squeeze more from Apple. If Apple’s greedy then so is every developer complaining while still doing business with Apple.

That has nothing to do with what I asked. All I wanted to know was if they (farewelwilliams) had any calculations behind their decision that 30% was fair but 40 was not. I never said anything about Apple being greedy or who should be deciding pricing. I feel like it was a very staightforward question so I'm not sure where the confusion is coming from.

 

[lkrupp]

All that will happen if Apple raises their rates is the end of the $.99 app era.

And good riddance. Every app should cost at least $5-$10 at the very minimum. $0.99 is an affront to developers. Lowlifes who think software should be free should be locked up.