Pixel Envy

Written by Nick Heer.

Trade Organization Representing American Press Pushes for Same App Store Rate as Amazon

Benjamin Mullin, Wall Street Journal:

In a letter to Apple Chief Executive Tim Cook on Thursday, a trade body representing the New York Times, the Washington Post, The Wall Street Journal and other publishers said the outlets want to know what it would take for them to get better deal terms—which would allow them to keep more money from digital subscriptions sold through Apple’s app store.

App developers, including news publishers, pay Apple 30% of the revenue from first-time subscriptions made through iOS apps; that commission is reduced to 15% after the subscriber’s first year. Apple says the revenue split is similar to other app marketplaces and allows the company to cover the app store’s operating expenses.

Apple has repeatedly claimed that all developers are treated the same under its App Store rules. For example, Tim Cook testified (PDF) that “[the] App Store guidelines […] are transparent and applied equally to developers of all sizes and in all categories”. But the Congressional investigation into antitrust matters uncovered an email (PDF) from Eddy Cue to Jeff Bezos, in which Cue confirms the details of an earlier private discussion:

  • Amazon Prime Video app in iOS and Apple TV

  • 15% rev share for customers that signup using the app (uses our payment); no rev share for customers that already subscribe

  • content meta-data is provided for Siri and Spotlight search

  • support “Watch [showname]” in Siri which will launch your app to the show page

  • support new TV app so that shows/episodes being watched are shown and link directly to your app

  • upsell streaming services (e.g. Showtime) in your app – pay 15% only when its a subscriber that originally signed up through us

  • understanding any tax issue is an open question – ready to have our tax team engage in discussions

In its letter to Apple (PDF), Digital Content Next, the media trade organization, cites this email and asks that Apple “clearly define the conditions that Amazon satisfied” to be given this favourable treatment.

Apple set this trap for itself. It could have been honest and admitted that bigger companies are treated differently, or its payment mechanism could have been an equalizer. Instead, it made a deal with Amazon — or deals, plural, as we learned of a similar arrangement earlier this year for its Apple TV app — that it would comprehensively support system features in exchange for paying half the commission rate.

Apple’s credibility on the fairness of its application of App Store policies is increasingly tattered by cutting special deals like these. It is widely rumoured that a similar agreement existed for Netflix as well. If Apple is going to open the door to half-rate commission for some, I say kudos to any developer demanding similar treatment.