News publishers push back against Apple's App Store commission fees
Major news publishers have reached out to Tim Cook, and are asking Apple to reduce its 30 percent cut on first-time subscriptions.
Spurred to action by Epic's ongoing fight with Apple, some of the biggest names in news publishing are now pushing for more favorable terms in the App Store.
The Wall Street Journal, New York Times, the Washington Post, and other publishers have signed a letter requesting Apple cut its App Store commission fee to 15 percent, down from the current 30 percent.
Apple charges a 30 percent commission fee on first-year subscriptions purchased through apps hosted on the App Store. After the first year, the commission fee is reduced to 15 percent. It isn't clear why the publishers aren't asking the same of Google.
As it turns out, Apple has cut its fees in the past -- for Amazon. In 2016, Eddy Cue had proffered a deal in which Amazon would share 15 percent of revenues generated by new subscribers who signed up for Prime Video through an in-app purchase. This move directly contradicts Apple's stance of treating all apps and developers the same.
The letter, penned by Jason Kint, chief executive of the trade body, Digital Content Next, reads, "I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN's member companies meeting those conditions can be offered the same agreement."
Apple has been increasingly criticized for its App Store policies, both from app developers and government officials. Spotify has long waged war against Apple over the fees.
The U.S. Department of Justice and state attorneys general begun launching an antitrust investigation into Apple's App Store after developers continue to raise concerns over anticompetitive behavior.
Spurred to action by Epic's ongoing fight with Apple, some of the biggest names in news publishing are now pushing for more favorable terms in the App Store.
The Wall Street Journal, New York Times, the Washington Post, and other publishers have signed a letter requesting Apple cut its App Store commission fee to 15 percent, down from the current 30 percent.
Apple charges a 30 percent commission fee on first-year subscriptions purchased through apps hosted on the App Store. After the first year, the commission fee is reduced to 15 percent. It isn't clear why the publishers aren't asking the same of Google.
As it turns out, Apple has cut its fees in the past -- for Amazon. In 2016, Eddy Cue had proffered a deal in which Amazon would share 15 percent of revenues generated by new subscribers who signed up for Prime Video through an in-app purchase. This move directly contradicts Apple's stance of treating all apps and developers the same.
The letter, penned by Jason Kint, chief executive of the trade body, Digital Content Next, reads, "I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN's member companies meeting those conditions can be offered the same agreement."
Apple has been increasingly criticized for its App Store policies, both from app developers and government officials. Spotify has long waged war against Apple over the fees.
The U.S. Department of Justice and state attorneys general begun launching an antitrust investigation into Apple's App Store after developers continue to raise concerns over anticompetitive behavior.
Comments
in the end only Apple and Google will be able to afford a 15% slice of revenue from subscriptions. Isn’t that thought interesting.
Yeah that was stupid.
Except Apple won't fire Eddie because services are up every damn quarter.
Bad analogy as these services can sell themselves.
Digital Content Next complains that Apple's 30 percent fee drives publishers away from direct audience revenue, pushing them into the "murky world of digital advertising."
The commission goes down to 15% after 1st year!
Their claims of being hurt is way overblown.. there is no hurt... its just being spoiled and being opportunistic to jump on the band wagon in the present climate...🤦🏼♂️
I think 15% sounds reasonable for newspapers if this would cover the traditional 10% platform commission (10-15% commission is common in many industries) + 5% overhead. 30% is common in areas where overhead is much higher (games w/ subsidized hardware, enormous download sizes, and multiplayer servers) or where there is significant rent seeking (Audible, etc.). The 30% fee originated with Nintendo in the 80s. It was 10% commission plus 20% for cost of cartridge manufacturing. The App Store is a great place to find services revenue, but it should be for actual services offered instead of rent seeking. Apple should stick to the standard commission in business of 10-15% (10% is more common) and only charge for actual services beyond that. Think of this as limiting rent seeking to 10%. Just because there is rampant rent seeking in some digital services that are anti-competitive enough to demand it doesn’t mean that Apple should be given a free pass. Most of these digital services got away with it initially because they made the transition from brick and mortar to digital (such as audiobooks). Everyone talks about the commissions brick and mortar stores charge, but access to a digital platform has always been closer to 10% before overhead. This is also (not coincidently) what agents charge for artists and actors. Brick and mortar has always been higher because they want to rent actual real estate. If I’m selling an app or reader content through Apple, they are my agent.
I think Apple probably could keep 30% in some cases where they have more to offer, but it would be nice to see more areas of the store dropped to 15% when Apple is mostly just taking a commission and not offering much else. Digital reader app content (like newspapers) and one-on-one training video conferencing sessions definitely should not be charged 30%. That is clearly rent seeking.
Apple will probably be able to fend these off for awhile, but as long as rent seeking is occurring they are going to continue to be attacked. This may end with government regulation forcing multiple stores if companies continue to fight back against it. I’m sure Apple would rather make less profit off the store then lose control. I’m not convinced that they would actually lose money since more reasonable fees would probably bring more content and purchases to the store.
I’m mostly frustrated with Apple keeping certain apps off the platform. I would like to see xCloud. I strongly disagree with that decision and the rules around remote access apps and app collections in general. These apps will never replace the App Store, but make more sense in some contexts. People access other platforms as a last resort. Either it isn’t possible to do on device, uses too much processing for on device, or has strict compliance issues (finance, etc.) that require execution on a remote device. Apple is being over paranoid that this will affect their control of the platform. Nobody expects Apple to review things running on a remote system just like nobody expects Apple to review everything a web browser can access. Put game streaming, remote desktop apps, VDI, and web browsers in a remote access parental controls category and call it good. If a game can run on mobile, people will prefer that 60-120 hz refresh rate and high resolution that they will never get through a streaming service. For another example, if you could run a Mac native app or a Windows app in Parallels, you are going to pick the Mac native app. No, I don’t want my remote apps to show up in App Store listings. That would be crazy. I’m also slightly frustrated that Apple can’t reduce rent seeking enough to allow Netflix, etc. to use in app subscriptions.
It is common for people to subscribe for a month, then unsubscribe, then subscribe again.
They are referring to the Service Provider Fees charged by Apple going down after being available for 1 year, not a subscriber.
I think “politically” the best thing Apple could do is go to 15% for all subscriptions in the reader category, (netflix, prime video, newspapers).
As for xCloud and other game streaming I see no reason why xCloud can’t have a web-app solution to avoid the app-store entirely, maybe it’s about game-controller api access to a webview on a technical level. Personally I don’t want multiple app-stores on iOS which is effectively what game streaming services are, it would be the thin end of the wedge. If they allow it for games, then we will get people wanting to do it for all kinds of things. One Microsoft app that “streams” all the office apps? Yuck.