Apple execs discussed not ‘leaving money on the table’ when setting Apple TV subscription fees

A look inside the Apple TV app economy sheds light on how Apple does business
Apple execs discussed not ‘leaving money on the table’ when setting Apple TV subscription fees
Apple execs discussed not ‘leaving money on the table’ when setting Apple TV subscription fees

In Apple and Epic’s ongoing courtroom battle over App Store fees, one of many key sticking factors has been Apple’s insistence on maintaining a 30 % reduce as a cornerstone of the storefront.

However newly revealed Apple executive emails from the case present that the App Store guidelines that Apple flouts as important to the equity of the app economy had been rigorously negotiated into existence over time in a way that ensured Apple wasn’t “leaving money on the table.”

The emails date again to a 2011 dialogue, which included Apple software program and providers chief Eddy Cue, round how Apple would handle subscription video purposes on the Apple TV — an vital dialog, given the rise in recognition of streaming providers. And whereas the dialogue doesn’t provide a lot perception on Apple’s current 30 % payment for the App Store, it does reveal how malleable these guidelines had been when it got here to maximizing revenue.

The corporate examined quite a lot of choices, including a 40 % one-time reduce, a 30 % one-time reduce, a 30 % ongoing payment, or extra individualized offers with providers just like the NBA and MLB.

One electronic mail in the thread breaks down the different types of content companions that will offer subscriptions on Apple TV. It muses on which partnerships could be fruitful to attempt to get a reduce (like new streaming providers) and which of them gained’t (like “entrenched” cable and satellite tv for pc corporations).

Apple’s staff settled on the concept that any iTunes-based transactions or subscriptions ought to stick with the identical 30 % reduce because the App Store. However there’s extra dialogue over how the corporate will handle referrals, the place the Apple TV purposes hyperlink out to a service’s web site for purchasers to subscribe on to the service.

The thread then discusses how fees ought to work when Apple refers a brand new subscriber. Ought to the corporate insist on 30 % of the initial subscription? 30 % of the primary yr? Simply insist that each one subscription purposes funnel subscribers by way of the App Store? Considerations are raised that Hulu Plus may not be capable of afford that form of price. Cue responds that Apple ought to ask for 40 % of the primary yr, however that it could must work out just a few offers first.

One level of concern for Apple was structuring the new fees in such a way that they didn’t undermine the cost structure it set on the App Store. “I don’t need to do any offers the place we get lower than 30%. That’s what it’s on the app Store and we will’t be making a special deal right here. If that isn’t potential than I desire a one-time bounty however we have to very cautious right here so this doesn’t spillover to the app Store,” one exec wrote. (The emails are threaded such that it’s arduous to inform who’s replying to whom.)

It’s vital to remember that in 2011, the Apple TV didn’t even have an App Store — simply particular person apps that Apple labored out partnerships with on a case-by-case foundation. And the thread appears to emphasise the advert hoc nature of the platform growth right here: Apple doesn’t appear to return into this with any outlined concepts of what it must make the platform succeed, only a obscure aim of maximizing revenue and shaping the rules for the platform to finest obtain that.