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

[az431]

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

Exactly. This email was sent 1 month after Apple enabled subscriptions, and obviously there had been disagreement internally as to whether to make the fee the same as app sales or implement a large upfront fee followed by decreasing fees on renewal.

The fact that they relied on a single email from 9 years ago (which materialized into nothing) only weakens their argument.
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All that will happen if Apple raises their rates is the end of the $.99 app era.

And? There isn't a single 99 cent app that is worth more than 1 cent.

 

[kc9hzn]

Considering that we’re talking the Apple TV gen 2 and 3 here, the iOS based ones without apps, it’s likely Apple was working directly with Hulu et al to write the apps. That may or may not justify a 40% cut, but it is a different situation from charging a cut but leaving app development up to the service.

 

[trusso]

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

Motive and opportunity. Apple has spent many years putting themselves on a pedestal. They should have known this would require their work to be unimpeachable (which it's not).

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....)

"I hear only what I want to hear..."

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

Not sure on the timelines, but this might be some circular logic, seeing that Apple was one of, if not the first to popularize an online app/game store. Regardless, your argument doesn't hold water.

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

And Amazon should be taken to task as well.

 

[Rogifan]

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%?

What about the developers that don’t need Apple to sell their apps? The have no choice because the only way they can sell them is through the App Store. Apple wants to pretend that we went from brick and mortar to the App Store in 2008. That is ridiculous. I remember buying digital software via the web well before I had an iPhone.

 

[matrix07]

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

9 years, and today YouTube still charging YouTube creators 45% and yet no one talking about that.

https://twitter.com/x/status/1288636207212244993

 

[Apple_Robert]

9 years, and today YouTube still charging YouTube creators 45% and yet no one talking about that.

https://twitter.com/x/status/1288636207212244993

I think some will be questioned about the 45% this week. I had no idea about that percentage, as I am not a YT creator nor do I have an account. That is a lot, though.

 

[mariusignorello]

Ok and...? Every business considers price/rate increases but may or may not implement them. It’s really nobody’s business until it becomes effective.

 

[lk400]

A distribution channels is incredibly valuable. For reference, in the pharma industry, its common for companies with a successful product (that they have invested billions into developing for 10-15 years) to enter into co-promotion agreements in countries where they dont have an existing distribution network which splits revenues 50/50. A great product is not worth much if you cannot get it to market.

 

[cuencap]

What about the developers that don’t need Apple to sell their apps? The have no choice because the only way they can sell them is through the App Store. Apple wants to pretend that we went from brick and mortar to the App Store in 2008. That is ridiculous. I remember buying digital software via the web well before I had an iPhone.

If they don’t need Apple, they don’t need to program for iOS so they wouldn’t be on the App Store.

 

[lilcosco08]

false alarm

 

[cuencap]

Fun fact:

The full amount for app refunds comes straight from the devs, whilst Apple pockets the 30%

Thank you Tim Apple, very cool!

If true that’s pretty messed up.

 

[dragoon2745]

I think the point here is that Apple could charge developers whatever percent they want whether that's 30%, 40%, or 90%. Tim Cook's rebuttal is that Apple competes for both customers AND developers and unfair rates to developers would cause Apple more harm than good.

 

[lilcosco08]

If true that’s pretty messed up.

I actually just double checked on the guys twitter and he was mistaken

https://twitter.com/x/status/1288625617873694721

Nothing to see here!

 

[richsw]

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

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

30% is actually no bad considering that the margin on most retail purchases is much higher. Those $100 pair of Nike's cost the store $50 and Nike might have $20 invested.

 

[Colonel Blimp]

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

Indeed. I briefly considered killing someone just yesterday. But I didn’t.

If people were held responsible for everything they ever considered, we’d all be in deep trouble.

 

[Jakewilk]

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

Right, because the playstation store was a highly influential marketplace in 2008. I would chalk this up to coincidence

 

[Art Mark]

OMG! Apple is actually a company that looks to make ... money? Oh yes, hold that against them and tell me how much capitalism means to you. —- it’s just silly. Apple also discussed not having an App Store. Remember web apps? I see No point in this stuff. Apple can’t win. They are always held accountable to constantly moving expectations.

 

[PickUrPoison]

No business wants to leave money on the table, and Apple is a for-profit company.

Chulani was likely right, they probably could have gotten 40% for first year subs. 40/20% for subs could easily have been the day one price instead of what Apple actually did (30/30, later reduced to 30/15).

If Apple had been charging 40/20, I’m sure people would be complaining that it should be no more than 30/15 lol. Or lower.

All this document shows is that they were a little unsure where to price things coming out of the gate. I can’t imagine these conversations don’t happen dozens of times before they settle on something. Apple TV+, News + and Games and the credit card surely had this type of discussion 🤷‍♂️

 

[boss.king]

30% is actually no bad considering that the margin on most retail purchases is much higher. Those $100 pair of Nike's cost the store $50 and Nike might have $20 invested.

Physical and digital goods are obviously very different, it's not really even worth comparing them.

 

[arvinsim]

30% is perfectly fair. 40% is not.

What's with the 10% difference that makes it go from fair to unfair?

 

[amartinez1660]

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.

Well, wait, that’s a tad black and white I find.
There’s a time and place for “free” things, demo style software, light version without all the features, research things, etc
There’s also the “free” counterpart for apps supporting something else like cameras, bank accounts, etc

Granted, when we mean free is not free, someone else is paying, example Blender touted as “free” but having at least ~$120k monthly via individuals and corporate donations (not much, but that’s the public number).

 

[rwxx]

What about the developers that don’t need Apple to sell their apps? The have no choice because the only way they can sell them is through the App Store. Apple wants to pretend that we went from brick and mortar to the App Store in 2008. That is ridiculous. I remember buying digital software via the web well before I had an iPhone.

And since Apple is only App Store game in town, there can be no competition between app marketplaces as there is in the brick and mortar world between stores.

Before the web truly existed, NEXTSTEP users could get the Electronic AppWrapper optical disc. It was an App Store (the first App Store) on CD. You got fully functioning demos of all apps to try and could purchase, unlock and install them directly from the disc. That was early 90s, 15 years before the Apple App Store.

https://en.wikipedia.org/wiki/Electronic_AppWrapper

Apple has developed a great solution, but they were hardly the first to build an app marketplace, nor should they be the ONLY game in town.

 

[arkmannj]

This is kind of a “so what” email.
I mean I’d be more shocked if there had not been some back and forth discussions on pricing. This is just day-to-day business in a for-profit company.

 

[PsykX]

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.

Being an app dev myself, I couldn't agree more.

Development is not an easy task, it should be rewarding. When I see so many $0.99 apps out there, and people reviewing apps 1 star (not my apps, of course 🙂) and being insulted they wasted a buck, all I wanna do is try another business model instead.

And this is where I'm lost. Ad-supported? Freemium? Subscription? Trial? In-App Purchases? Sponsors?
I see flaws in each of those. But I simply cannot just sell an app $0.99 to a thousand people. I need to eat.

 

[iMi]

I considered raising unicorns and cross-breeding them with fairies for commercial gain. Why is something that didn’t happen a decade ago relevant today?