Mike Peterson
Newly revealed email discussions between Apple executives show that Apple TV App Store commissions were carefully planned to ensure the company didn't leave any "money on the table."
The emails, which date back to 2011 and were revealed in the ongoing legal battle between Apple and Epic Games, concern how Apple would handle subscription-based video apps on the Apple TV. The Verge, which first reported on the emails, notes that Apple software and services chief Eddy Cue was one of the participants in the discussion.
In the talks, Apple executives discussed several different options for video apps — including a 40% one-time commission, a 30% ongoing fee, or special deals cut with organizations like the NBA and MLB.
One email suggested that Apple may not make much money from "entrenched" content providers like cable companies, but could benefit from commissions on newer streaming service subscriptions.
Eventually, the discussions settled on the idea that subscriptions would be subjected to Apple's standard commission rate. They then moved on to how the company would handle referrals.
"I think we may be leaving money on the table if we just asked for about 30% of the first year of sub," one executive wrote.
In one response, Cue says that Apple should ask for at least 40% of the first year of service. Other ideas included a one-time cut or a requirement that subscription applications are funneled through the App Store.
Other messages suggest that Apple didn't want to structure video fees in way that undermined its normal 30% cut of in-app purchases.
"I don't want to do any deals where we get less than 30%. That is what is on the app store and we can't be making a different deal here," one executive wrote. "If that is not possible than [sic] I want a one-time bounty but we need to very careful here so this doesn't spillover to the app store."
When the email thread was circulating, the Apple TV platform did not have an App Store. Instead, tvOS featured individual apps that Apple worked with on an per-app basis.
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6 Comments
Obviously they were wrong about what the market could bear.
And? Not sure why the tech media is so interested in the "money on the table" quote. It's the type of mindset that you would expect from a for-profit business.
Why is this news? Do people who run a business really debate that they should give away their products for free or for as little as possible?
While it provides insight into how Apple look at balancing a business relationship a decade ago, it has little bearing on Apple's approach to apps, especially how Apple treat smaller developers with lower rates and support marketing. However one thing is clear it does reenforce Apple's longstanding desire for a 30% cut from those that can afford it.
This differs quite a bit from the current arrangement where app developers code their own apps using Apple's tools. I don't mean to imply that there should be higher or lower fees - rather that it's an apples to orange comparison.