Apple mulling reduced App Store fees for subscriptions - report
For the first time since the opening of the App Store, Apple is reportedly considering alterations to its revenue model that would see the iPhone maker's cut of subscriptions reduced to less than 30 percent.
The changes, noted by the Financial Times, would apparently only apply to subscription revenues. Sales of apps and in-app purchases would remain subject to the conventional 70/30 split.
Many in the music industry have complained -- often loudly --?that Apple's 30 percent cut, ostensibly used to cover the expenses of running the App Store, is excessive.
Some choose to simply eat the fees, trading potentially higher customer volume for lower per-customer revenues. Others, like Spotify, increase their rates to compensate --?signing up for a premium Spotify account through iTunes costs $12.99 per month, compared with $9.99 per month for those who sign up through Spotify directly.
"They control iOS to give themselves a price advantage," one insider said last month. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
Apple is already thought to have experimented with a reduced revenue share on the Apple TV. Netflix, Hulu Plus, and MLB.TV are believed to pay Apple just 15 percent of subscription revenue.
The changes, noted by the Financial Times, would apparently only apply to subscription revenues. Sales of apps and in-app purchases would remain subject to the conventional 70/30 split.
Many in the music industry have complained -- often loudly --?that Apple's 30 percent cut, ostensibly used to cover the expenses of running the App Store, is excessive.
Some choose to simply eat the fees, trading potentially higher customer volume for lower per-customer revenues. Others, like Spotify, increase their rates to compensate --?signing up for a premium Spotify account through iTunes costs $12.99 per month, compared with $9.99 per month for those who sign up through Spotify directly.
"They control iOS to give themselves a price advantage," one insider said last month. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
Apple is already thought to have experimented with a reduced revenue share on the Apple TV. Netflix, Hulu Plus, and MLB.TV are believed to pay Apple just 15 percent of subscription revenue.
Comments
This might be a very good time for Apple to remind everybody that they have to pay to play. By being on the App Store, a business does not have to spend money to...
If a business does not want to pay to play, the business can...
There is no free lunch for anybody wanting to do business through an Apple designed, developed, maintained store.
I really do not want to write this, but Steve Jobs would have eviscerated the businesses that are once again bitching about having to pay for access to Apple services.
"They control iOS to give themselves a price advantage," one insider said last month. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple." Google charges the same 30% that Apple does. Where is the outrage for Google? The same goes for Microsoft.
yeah, and B&M retailers have to pay rent, too. Bourbon Street bar operators pay $35,000/mo in rent. so sad.
had the split not been the same or similar to the app-split price, then devs would all make $0 apps and charge everything in the app.
tho it appears this is just for subscriptions. still, one of my least favorite apps is a dog-cam streaming app that my kennel partnered with. the app is free, and how do they charge for it? subscription, one month or year at a time. when, of course, you just need it for when you drop your dog off at the kennel a couple times a year. and the fucking thing auto-renews you and it always seems to be major PITA for me or my SO to unsubscribe our device(s).
id just like to buy the stupid thing.
ha!
As an app developer, I'll let Apple have their 30%
I've run servers before (and still do for another business) and it takes a lot and is a PITA to do and keep them up 24x7.
Then just download the iPhone app and log in.
Why would people pay $3.00 more thru iTunes unless they are oblivious to the fact that you can signup and pay directly thru Spotify for $9.99.
Extra convenience thy iTunes but still.................
If, for example, I get the Netflix app, then the App Store downloads it from Apple's servers. When I watch a movie using the app, it's served by Netflix's servers, not Apple's. Similarly any other subscription based service. Apple are still handling the payment services, but nothing else.
Netflix aren't a great example, since the app is free, but the point stands. If someone other than Apple is hosting the subscription content, then Apple has no need to charge them as much as an app which they do host.
Note, this only applies to subscriptions, and for subscriptions it makes sense. It arguably makes sense for other content not hosted by Apple, such as the Kindle store, and maybe we will see a change in that policy too, eventually. However it still makes sense to charge the full 30% for content hosted by Apple, whether iTunes or App Store.
The music industry is having to boil their leather shoes to make a thin soup. The artists are making even less. The music industry is hurting bad (compared to years past), so it's any wonder if the music industry is bitching that Apple is making 30%. With the industry moving toward streaming instead of purchasing the music industry is seeing even less income down the road, I can see where the bitching and moaning is coming from.
If Apple drops the percentage they charge to something lower, the music industry may up their own percentage, I'm not so sure we'd see a subscription price drop.
Source: I got that info from the same place Munster digs out his little nuggets.
I thought Spotify was on the edge of bankruptcy because their business model simply won't work once the labels raise their rates to their standard licensing fees. This according to Jason Calacanis, if I'm recalling his statements correctly. Apple charging 30% isn't the problem. The problem is streaming subscription music is not a sound business model.
Yes. Most of the commentators here seem to forget that simple fact with their inane witherings about how Apple hosts everything. Obviously Netflix hosts its own content and even handles fufillment.
30% makes sense for an app. At least 30% of what's running when you run an app is library code, provided by the OS vendor. Apple write the code to recognise gestures, draw on the screen, play the sounds, etc. And since OS upgrades are free, something has to cover the cost of that. But when people are just downloading additional media content, and Apple aren't even hosting it, the 30% charge doesn't make as much sense.
As an app developer, I'm more than happy to pay 30% for apps and in-app purchases. But for subscriptions, where Apple has little to do apart from process a credit card once every year? It's likely to stifle innovation on the platform.
Apple is charging for the privilege of listing one's apps or subscription service. Mall owners don't reduce the rent because a store is offering insurance sales to consumers instead of selling pizzas.
Apple is charging for the privilege of listing one's apps or subscription service. Mall owners don't reduce the rent because a store is offering insurance sales to consumers instead of selling pizzas.
That's a bad analogy. Mall owners don't take a cut of a business's revenue, they charge a fixed rent based on location and size.
I'd willingly pay Apple a 50% cut if they gave me a prominent place on the front page of the App Store.
What I'm curious to see on Monday is how Apple responds. Hopefully, what they present moves towards the future and not a mere restructuring of existing applications.
To stay in front, you need to lead with creating insanely great user experiences, that way people won't care about a $2.99 marginalized difference. Lowering price is conceding that you are competing from a point of parity and not differentiation.
Let's go Apple, pioneer the future!
I am not sure how Apple stifles innovation since every platform charges the same 30%. The app developers reach a larger audience and get more subscriptions as a result. Though companies like Netflix began streaming online and from game consoles first. Apple doesn't prevent companies from selling subscriptions online so they are not stifling anything. Music streaming is way overblown. Spotify has a small paying customer base compared to their free tier and that will get smaller once the labels flex their muscles with higher licensing. If anything the content owners are the ones stifling innovation due to their higher costs. If Apple lowers their take, it will be a sign to the content owners that Apple is now a weak negotiator and it will never stop. Apple should shut down the iTunes music store for a little while to show the labels whose bottem line is more dependent on music sales.
Convenience, or the mistaken belief that they have to subscribe via the device.
I'm not exactly sure why people would pay for a radio streaming service to begin with *snark* when there's all these other "free" radio streams.
OH WAIT, these other streams play nothing but covers, not the actual song. Sucks to be a free streamer.
This is not about the music industry. This is for any service that has a subscription fee like Netflix, Hulu, etc, etc. Also, Apple has never disclosed the exact percentage it takes for music sales.
You're wrong. In a shopping center, the rent is usually stated as a minimum guaranteed rent per square foot of leased area against a percentage. Typically, this percentage is between 5 and 7 percent of gross sales, but it varies by type of business and other factors. This means that if the rent calculated by the percentage of sales is higher than the guaranteed rent, you pay the higher amount. If it is lower than the guaranteed rent, then you pay the guaranteed rent amount.