Elon Musk Wants Apple to Lower Fees for 'X' Creators

[dwaite]

I'm not sure if my reasoning is sound here guys; but the creators do not have a contract or any kind of agreement with Apple. They create contents and post it on X, earning $ from X alone. Why would Apple be collecting 30% from them? If I got this wrong, will someone with the legal knowledge help educate me?

The 30% is for in-app purchases, where X Corp agreed as part of creating apps that provide services, that they would provide for Apple's in-app purchasing as one of the payment options.

One of those paid services is to provide content normally not available.

That it was created by an independent third party, a contractor, or an X Corp employee doesn't matter.

If it was a charge to have the content mailed to you as printouts and DVDs, not only would they not be required to use in-app purchasing but they would be forbidden from using it - and likely would be mildly encouraged to support things like Apple Pay instead. Apple's commission on Apple Pay is much smaller (like 0.2% I've heard), and comes out of the interchange fee rather than as any additional merchant charge.

App purchases and In-app purchases ("DLC") and subscriptions make up the revenue model of the App Store. This is why Apple doesn't charge the developer for downloads or updates. This is also one reason why app tracking transparency was made such a big deal - advertising does not give apple a cut, and breaking tracking made advertising less profitable (cutting into app ad revenue).

 

[macsplusmacs]

Liar.

You won’t even pay your office rent.

 

[dwaite]

They should only kick him out if he does something stupid like a 3rd party payment system without Apple’s permission.

it is worth noting that even Epic is not kicked out of the store. Apple has said publicly that they will reinstate their developer account and let them post Fortnight it abides by the App Store rules.

This is after they snuck in a in-app payment system to remotely activate, as part of a pre-scripted plan to drag Apple through the court of public opinion.

Elon _could_ do something stupider, but he might actually have to do so on purpose.

 

[tripsync]

What percentage of those numbers are ad revenue vs subscriber revenue? Is Musk's plan is to make the majority of their revenue on ads on subscriber content rather than the subscriber revenue itself, then give Apple 30% of basically nothing?

Even if you ignore Apple getting ripped off by creative accounting, they aren't going to agree to one off terms because of all the current regulatory scrutiny.

These numbers are only from ad revenue, not from subscriptions. Apple would take 30% of what X earns from content creator's pie. If X earns $0, so will Apple, similar to how purely free apps earn Apple $0.

Apple wouldn't apply rules just for one company, it would be a general rule for all content creator platforms.

 

[dwaite]

Liar.

You won’t even pay your office rent.


View attachment 2242162

Lol, he fired employees for responding to him on Twitter! That court appearance is gonna be awkward…

 

[tripsync]

You do realize that without the in-app purchase, creators get $0 as well.

I don't know what point you're making from this completely obvious observation.

Apple is providing them value as well. If it was the creator's app, Apple would get 30% of that in-app subscription.

We're not talking about the creator of the app. We're talking about the content creator in the app.

Why would Apple settle for a 3% cut through a middleman if they would have gotten 30% had the payment been made directly to the creator?

I have no clue what you're saying here.

 

[dwaite]

These numbers are only from ad revenue, not from subscriptions. Apple would take 30% of what X earns from content creator's pie. If X earns $0, so will Apple, similar to how purely free apps earn Apple $0.

That is my point. X could take $0 forever, and earn their money entirely through ad revenue and sale of physical goods like t-shirts (which aren't in-app purchases). Apple would get some percentage of zero.

Or X could come back later and say the portion of X's revenue that apple gets to bill on is really after X pays for all hosting, employee salary, physical office space, etc. out of their creator fees.

This is exactly the sort of deal where Apple would have to go into X's books and audit them to prevent getting ripped off by creative accounting. This is why they just channel everything through a percentage cut on in-app purchases, to keep things simple.

Apple wouldn't apply rules just for one company, it would be a general rule for all content creator platforms.

Yep, which means it likely won't be the rules that X is looking for, even if Apple does create new policy.

 

[macsplusmacs]

It’s all just another grift for the press and his 8$ a month only-Lon Fans to swallow like chum.

More distractions as his business loses money. A normal online population and ad revenue drops.

Look at the shiny object.

No. Not the one that has lost 30+ dollars. The other one!

 

[dwaite]

If Apple really wanted the X app removed from their App Store, they could presumably create updated (and legal) rules/guidelines that would make the X app ineligible (assuming X Corp doesn't eventually end up violating existing rules on its own). Again, not that Apple should or would want to do that.

Apple is very careful not to make their rules more strict - they've only added new capabilities (In-app purchasing, subscriptions), relaxed policies (15% on subsequent subscription years, reduced rates for smaller businesses), or "clarify" existing policies.

They also started with a "reader app" carve out, partially because they had their existing competing content store for video and music.

Google has been slapped by regulators several times because they have been perceived as changing the rules, and that has a negative impact on existing developers in the market. Regulators ding Google from disrupting their market.

Apple on the other hand was strict from the beginning.

 

[tripsync]

That is my point. X could take $0 forever,

Currently $0 apps and games on the app store can earn millions from just ads and sales of physical goods while Apple earns $0. This is allowed. I would know since I've done this a while back when admob existed and earned $10k while Apple earned $0 from my game I put out.

Yep, which means it likely won't be the rules that X is looking for, even if Apple does create new policy.

Well no, there's nothing of what Elon is asking for that is exclusive to X.

 

[dwaite]

Let's look at Mars with some back-of-the-napkin common sense. How often is Earth in the proper alignment with Mars for an Earth-based launch? What would the flight time be to get to Mars? And what would it land on? How much force would hit the red planet and how many test flights would you think it will take for just ONE SINGLE successful landing and return to Earth? I will tell you you're looking at almost three years for one test flight. Think I am wrong, ask ANYONE with engineering skills what they think. I bet they tell you my number is optimistic at best.

Now do you believe the first test launch will succeed? If not, how many will it take to get a successful landing in which you can lift off for the return? One test? Two? Three?? Multiply that by the time duration between tests. Do you see the problem yet? Let me know when you figure it out.

You can solve some of this with infrastructure, e.g. planning for an orbital stay over and return trip using independent landers, doing iterative/parallel development to hit each alignment window, and so on.

Musk is certainly capable of paying employees who have these insights. But the napkin math he gives is still too ambitious.

Which is his M.O. - he spouts deadlines knowing all he really needs to do is be able to claim some sort of progress by that date.

 

[dwaite]

Yes, and I’ll be laughing at all the irrational Elon haters when I’m driving around in my Cybertruck.

View attachment 2241264

In case you don't know, the vehicle as displayed there is not legal to drive on public roads in the United States and many other countries. But Musk doesn't make money by selling reality.

 

[tripsync]

Pretty incredible that Elon shaved off 80% of the staff and X isn't dead yet as haters predicted. Now Elon is paying out $$$ to creators which Twitter would have never done had Elon not bought it outright. Haters can't figure out why but it's probably making their blood boil and they're desperately trying to find something else about Elon to be mad at. 🤣

 

[tripsync]

In case you don't know, the vehicle as displayed there is not legal to drive on public roads in the United States and many other countries. But Musk doesn't make money by selling reality.

Doesn't look too far off from what is street legal. This is reality:

https://twitter.com/x/status/1673072594541506561

 

[dwaite]

What just happened in the past month? Oh yeah, most of the major automakers are adopting NACS because they need access to Tesla's supercharger network. Every EV made by them will likely add to Tesla's bottom line because of Supercharger profits.

To be clear, NACS is not a Tesla thing. It was a contribution by Tesla for standardization. As a result Tesla has given up exclusive control over future evolution of it.

I'm pretty happy they have done so, because the competing plug is absolute garbage - but there will likely be changes as a result which Tesla will need to adopt in its supercharger network to be compliant with the standard. Some of those changes are visible in the V4 supercharger. Future changes such as 800V charging will need to be adopted by Tesla on equal footing with every other auto maker and charging network.

I think that the ability to sell charging to all other car models, to eliminate domestic pressure to adopt CCS, to let them qualify for various subsidies to further build out their network and take some pressure off of near-term changes via standardization were all good reasons to make the decision, but they are giving up quite a bit as well.

There is absolutely nothing to suggest that Tesla is falling behind in automotive. They're planning more factories, ramping up their current factories, they're expanding their *current* factories, they're opening one new supercharger site every 13 hours globally, they're getting into lithium refinement and they're ramping up their own battery production. And they did all of this without a single TV ad. Even with all of the price cuts, their margins are still leading the industry.

I would say more that their lead is diminishing. They need to work on having their models compete with a lot more vehicles, across various price points. There's certainly a point of inflection where that need will happen, and we haven't hit that point yet - it is being delayed because Tesla has the manufacturing advantage of already being 'all in', while others face the costs of ramping up and competing with their own existing offerings.

 

[dwaite]

Currently $0 apps and games on the app store can earn millions from just ads and sales of physical goods while Apple earns $0. This is allowed. I would know since I've done this a while back when admob existed and earned $10k while Apple earned $0 from my game I put out.

Cool. Then X can just pay out of ad revenue, and doesn't need in-app purchases.

My point is Apple has no reason to let X play creative accounting and mix the two together, e.g. claim that 100% of in-app revenue went to creators, so they owe 0% to Apple by the 'revised' terms - while X makes money from the creators drawing people to their ad platform.

From Apple's point of view, their financial arrangement is with X Corp. Whether the content they sell came from employees or nuns doesn't change that.

The X/Facebook argument is "why does Apple want to make us take so much money from nuns". If you want Apple to care, then Apple's financial arrangement is now going to be with the content creators directly, not with the social network.

I can't help but thing that Apple would find the idea that they would let X charge a lower percentage than Apple would to those creators directly, and then only pay Apple a fraction of that, and do so all on X's accounting books to be absolutely absurd.

Historically they have stayed out of or exited revenue-generating markets when the amount of money wasn't worth the headaches and uncertainty. This is pretty much why many people find the ongoing Apple Car rumors so bizarre. I doubt they will adopt any new creator pricing scheme unless that scheme is going to at least budge the needle, and "maybe 3% after we tell you they earned $100k" isn't gonna be it.

 

[tripsync]

To be clear, NACS is not a Tesla thing. It was a contribution by Tesla for standardization. As a result Tesla has given up exclusive control over future evolution of it.

Well to be clear, Tesla created it and simply renamed it to NACS to standardize it.

but there will likely be changes as a result which Tesla will need to adopt in its supercharger network to be compliant with the standard.

For NACS? What changes? V3 is compliant with the standard. V3 doesn't need to support 1000V as the spec says it's interoperable between 500V and 1000V. V4 supports 1000V.

Some of those changes are visible in the V4 supercharger.

To comply with EU rules, yes like the screen.

Future changes such as 800V charging will need to be adopted by Tesla on equal footing with every other auto maker and charging network.

V3 supports 800V

https://twitter.com/x/status/1524113782284378114

I think that the ability to sell charging to all other car models, to eliminate domestic pressure to adopt CCS, to let them qualify for various subsidies to further build out their network and take some pressure off of near-term changes via standardization were all good reasons to make the decision, but they are giving up quite a bit as well.

There was never pressure in NA to force Tesla to adopt CCS in their cars. That was never a remote possibility. Subsidies? Sure, but business wise, it makes more profitable sense to keep the Supercharger moat and refuse subsidies instead of opening up the Supercharger and take the subsidies.

I would say more that their lead is diminishing. They need to work on having their models compete with a lot more vehicles, across various price points.

Agree to disagree. Most other manufacturers haven't even done the math for batteries. Either that or they're going all in on sourcing batteries from CATL/BYD/Panasonic which means they won't have the bargaining chip that Tesla has with their own in house battery production they're ramping up.

 

[dwaite]

Pretty incredible that Elon shaved off 80% of the staff and X isn't dead yet as haters predicted. Now Elon is paying out $$$ to creators which Twitter would have never done had Elon not bought it outright. Haters can't figure out why but it's probably making their blood boil and they're desperately trying to find something else about Elon to be mad at. 🤣

I suppose you can ask DeSantis how well he thinks the platform is running.

The creators who got a check should feel pretty fortunate, but if I were them I wouldn't rush to sign any exclusivity deals with a guy who won't pay his rent.

 

[tripsync]

Cool. Then X can just pay out of ad revenue, and doesn't need in-app purchases.

We're talking about two things. Ad revenue share and in-app subscriptions.

I believe Elon's post about talking with Apple is dealing with in-app subscriptions, not including ad revenue share. There is no current mechanism for X to reimburse Apple after calculating ad revenue share so one can conclude Apple's cut only deals with subscriptions.

 

[dwaite]

Agree to disagree. Most other manufacturers haven't even done the math for batteries. Either that or they're going all in on sourcing batteries from CATL/BYD/Panasonic which means they won't have the bargaining chip that Tesla has with their own in house battery production they're ramping up.

Tesla is _almost_ a battery company that uses cars as one of their packagings. It's going to be hard anytime soon for car manufacturers to be price-competitive with Teslas at the same range, let alone Tesla's advertised ranges.

 

[tripsync]

I suppose you can ask DeSantis how well he thinks the platform is running.

The creators who got a check should feel pretty fortunate, but if I were them I wouldn't rush to sign any exclusivity deals with a guy who won't pay his rent.

I don't really follow politics so I have no idea what you're saying with DeSantis. But plenty of famous haters assumed Twitter was going to shut down back in November. The fact that it's still running (not perfectly, but still alive) with 20% of the staff is incredible. Elon absolutely knows how to trim the fat (again, not perfectly, but effective).

From what I've seen, more and more creators who used to just post their YouTube links are now actually embedding the full video onto Twitter.

 

[dwaite]

We're talking about two things. Ad revenue share and in-app subscriptions.

I believe Elon's post about talking with Apple is dealing with in-app subscriptions, not including ad revenue share. There is no current mechanism for X to reimburse Apple after calculating ad revenue share so one can conclude Apple's cut only deals with subscriptions.

We are not.

With the _current_ terms, they are different things. Certain things are paid for via in-app purchases, and apple takes a cut at purchase time.

Under _new_ terms, anything goes. X is proposing that Apple get paid off of X's books - e.g. what X thinks is appropriate for Apple to earn off of a relationship between X and a creator, based on some portion of X's revenue from that relationship.

Apple could say, no, we'll take a portion of the _entire_ relationship, including advertising revenue, before any other expenses, excluding any discounts for $100k threshold shenanigans you want to play, and including payments through the web for creator subscriptions, with quarterly independent audits and the right for Apple to hire their own independent auditors for one additional audit a year.

This isn't hypothetical - similar arrangements (sans marketing revenue share) have been required in markets (such as Korea) that allow for third party in-app purchasing, because Apple still has in their contracts that they are entitled to a revenue cut even if your customer picks something like Naver Pay. Apple doesn't get a cut of payments on other platforms such as the web, but you better have a way of segregating those payment sources in your books.

 

[tripsync]

We are not.

With the _current_ terms, they are different things. Certain things are paid for via in-app purchases, and apple takes a cut at purchase time.

Under _new_ terms, anything goes.

They would also be different things under Elon's suggestion.

Subscription is fixed upfront cost. Ad revenue share is based on performance. User does not pay in-app to contribute towards ad revenue share, but in-app absolutely does contribute towards subscription.

Apple generally stays away from taking a cut from ads (except for what they did with iAd).

Apple could say, no,

Apple could say anything. Honestly don't know the point of bringing that up.

 

[dwaite]

I don't really follow politics so I have no idea what you're saying with DeSantis.

Awkward Silence: Ron DeSantis’s Bold Twitter Gambit That Flopped

The Florida governor wanted to show off his tech savvy by announcing his presidential campaign on Twitter. It quickly devolved into the conference call from hell.

www.nytimes.com

TL;DR Twitter spaces crashed for 25 minutes when Elon tried to host DeSantis announcing is presidential candidacy.

The significant issue with Twitter stability is that most problems are not obvious externally (we've had those too - the whole country of Australia losing access for hours, numerous instances where the app cut out, rate limiting people's access to view messages).

The architecture is such that there are systems that look at 'streams' of messages to perform certain functions. Optimize advertising and provide metrics. Build the algorithmic timeline. Handle notifications of responses to your tweets.

A good number of those have been partially broken for MONTHS now. While there are people who left because they could not stand Musk, a lot of creators left because they could no longer interact with their fan base - they would not see if someone asked them a question, for instance.

That's also the issue with letting go of such a large portion of the workforce. The reason it was built to have these independent processing functions on the 'firehose' of twitter messages was also organizational - it let a small team be focused on _just_ advertising metrics, or _just_ a certain type of bot detection. My understanding is some of those teams were cleared out completely; so there is nobody left who knows how to fix the problems in what amounts to a completely different codebase than what they normally work on.

You might be able to spread out workers to run those as even smaller teams, except the focus is on new features and new sources of revenue, not putting out the existing fires - and the pressure is high enough that things ship half-completed, like the transition to X.com before they even had a finalized logo.

But plenty of famous haters assumed Twitter was going to shut down back in November. The fact that it's still running (not perfectly, but still alive) with 20% of the staff is incredible. Elon absolutely knows how to trim the fat (again, not perfectly, but effective).

It isn't really Elon's pick of employees or leadership style there - the entire architecture is built for resiliency against failures in non-critical systems. that they have had problems with say Android phones not being able to connect for hours on end is more a testament to how seat-of-pants twitter-nee-X is being run now - before, changes would have multiple checks and contingencies to prevent such a long-term full outage from happening.

From what I've seen, more and more creators who used to just post their YouTube links are now actually embedding the full video onto Twitter.

Probably. Twitter seems to be paying way above market rate, and there's no exclusivity contracts that I know of.

 

[dwaite]

They would also be different things under Elon's suggestion.

Yeah I'm not sure how we are talking past one another. His suggestion is ridiculous. There is no way Apple would consider terms even of that category. It's a deal just begging to go south.

For more, see https://en.wikipedia.org/wiki/Hollywood_accounting