Manish Singh, VentureBeat:
Netflix is further distancing itself from Apple’s iTunes tax bracket. Earlier this year, the streaming giant enabled iOS users in more than two dozen markets to bypass the iTunes payment method as part of an experiment. The company now tells VentureBeat that it has concluded the experiment and has incorporated the change globally.
“We no longer support iTunes as a method of payment for new members,” a Netflix spokesperson told VentureBeat. Existing members, however, can continue to use iTunes as a method of payment, the spokesperson added.
Companies are doing this more & more. Spotify doesn’t allow you to pay via Apple. And why should they? 30% is a huge fee to give to Apple when you have the name and market presence. Makes me wonder what Apple will do if this trend proliferates even more.
This is despite changes made last spring to Apple’s cut of subscription pricing, which is now set at 30% for the first year and 15% for every year thereafter.
Apple’s cut is booked under the broad “services” category in their financial reports. Services revenue, as a whole, has been growing rapidly for the company, but I’d be curious to know how much these moves are impacting Apple’s take. My initial assumption was that it must represent a lot of lost revenue for Netflix and Spotify, but perhaps it’s such a small amount that it’s worth the risk of some potential customers giving up on figuring out how to subscribe.1
Regardless of how much lost revenue Apple’s cut represents for Netflix and Spotify, it strikes me that this is an option for only a handful of established companies. In addition to the aforementioned, Adobe can also forego Apple’s option in favour of their own Creative Cloud subscription. The only indie company I can think of that is trying a similar approach is Panic with Transmit 5: it’s $45 directly from them, or a $25 per year subscription if purchased through the Mac App Store. This doesn’t seem viable for most small developers because of the more circuitous route customers have to take without instruction — see footnote — nor does it seem very efficient or safe, given that it requires many small studios to build a paid account infrastructure.
Update: Lawrence Velázquez points out that 1Password has a similar purchasing and subscription arrangement to Transmit 5.