“Apple is planning a departure from the pricing formula that has defined the economics of digital media for a decade, which would cut the 30 per cent fee music, video and news companies pay on subscriptions through its App Store,” Tim Bradshaw and Shannon Bond report for The Financial Times. “The iPhone maker is discussing new commercial terms with media companies, people familiar with the matter said, to change the 70/30 ‘Apple tax’ pioneered by Steve Jobs when its late founder launched the iTunes music store in 2003.”
MacDailyNews Note: Some perspective: The Financial Times has long attempted to skirt Apple’s 70/30 subscription rules. More info:
• Via Reuters, Financial Times claims Web-based app more popular than App Store app, offers no hard proof – September 22, 2011
• Financial Times hopes against hope they can skirt Apple’s iPad app subscription rule – April 4, 2011
• Financial Times owner Pearson threatens to go ‘somewhere else’ over Apple’s iPad app subscription rules – March 1, 2011
We just searched the U.S. App Store for “Financial Times” and they do have a single app (Financial Times Chinese) available as of October 2014. We assume they’re paying the “Apple Tax” for any subscription revenue, if they do have subscriptions, in that app. Their main English content is accessible only via Web browser.
“Apple paid out $10bn to app developers last year, from in-app payments and subscriptions, and has hundreds of millions of iTunes accounts. Its 70/30 split has been mimicked by rival digital content platforms run by Google and Amazon,” Bradshaw and Bond report. “Today, rival music services such as Spotify, Deezer and Rdio which charge the same $10 monthly fee must pay out a 30 per cent share when subscriptions are purchased through Apple’s in-app payment system on iPhones and iPads. That looks set to change, according to people briefed on the plans, not just for music services but also video subscription services such as Netflix, Hulu and HBO Now, and publishers on its Newsstand portal, including Condé Nast, Time Inc, and the New York Times. The Financial Times operates outside the App Store using a browser-based app.”
“Apple has already begun to test a more generous split for some premium content services on its Apple TV box, Re/code reported in April,” Bradshaw and Bond report. “It remains locked in negotiations with US broadcasters over an internet TV service of its own, to be accompanied by a revamped set-top box that incorporates the App Store, people close to the discussions have said. However, Apple’s previous hopes to launch both the TV hardware and service next week have been pushed back until later in the year, they say.”
Read more in the full article here.
MacDailyNews Take: With over one billion iOS devices sold to date, surely Apple has significant costs associated with maintaining and running the App Store. The so-called “Apple Tax” certainly doesn’t seem to have hurt it so far. Perhaps Cook & Co. see this as a negotiating tool – especially where it comes to Apple Music and the company’s over-the-top Internet TV plans. After all, it’s not like Apple needs to profit from the App Store or the iTunes Store – they both exist in order to make high-margin hardware even more difficult to resist.
Apple Music to offer users three months free; Apple to largely abandon 15-year-old iTunes brand – June 5, 2015
All-new Apple Music subscription service, rebuilt iTunes Radio to arrive with iOS 8.4 in late June – June 5, 2015