
Netflix stops paying the ‘Apple tax’ on its $853M in annual iOS revenue - pseudolus
https://techcrunch.com/2018/12/31/netflix-stops-paying-the-apple-tax-on-its-853m-in-annual-ios-revenue/
======
makecheck
I find it hard to blame anyone for leaving any store when there has been
almost nothing of value added in years and things are even regressing. That
30% should have gone a lot further; after 10 years, I can’t even use two
different search-and-sort criteria at once to find new apps (and I refuse to
sit there and scroll through offensively-bad lists of useless results, much
less buy them).

I am however not surprised by the slow rate of new features in stores because
there still aren’t “tiers” for developers to willingly become early adopters
of new store capabilities. When there are millions of apps, why does it make
sense to delay _any_ new feature until the infrastructure has grown to provide
that feature to _all million apps_?

Clearly there should be a way to roll out enhanced storefronts to a few apps
at a time. For example, charge early adopters/beneficiaries for complex new
features and don’t roll them out to all apps right away (if ever).

And then, developers shouldn’t have to sacrifice 30% for features they don’t
use, either. I’d rather have a tiny percentage as the base to provide _only
essential features_ , with infrastructure upgrade options! I should be able to
give up some low X% for “basic payment processing and auto-installation on
devices”, with an option of X+N% to provide “that, plus hosting of app preview
videos and several dozen screenshot images”, a higher option of X+2N% for “all
that, plus an increased chance of being featured”, etc.

~~~
ClassyJacket
I think more to the point, the 30% cut for Apple isn't justified because the
content isn't delivered via the App Store. 30% of in app purchases that are
downloaded from the App Store is one thing, but 30% of Netflix fees is crazy
when all Apple is doing is hosting the app itself. Apple isn't hosting
Netflix's content, why should they get a cut of that?

~~~
w1nt3rmu4e
That 30% is unjustifiable. Period. If we're talking cost, the cost of hosting
software and payment processor fees are closer to 7-8%, 99% of which are on
the payment side.

The cost of Apple's gatekeeping -- their review bureaucracy -- is entirely
their own doing and benefits no one. Software can and should be sold directly.
There is zero justification for a middleman with digital delivery.

They say it's for consumers which is absolute nonsense when you look at what
makes it into the store. Most of it is garbage.

The effect on "real" developers is staggering: Discoverability is virtually
non-existent, the review process is time wasting, opaque and capricious. There
is constant downward pressure on pricing. Reviews have to be aggressively
managed, either by begging users for positive reviews or buying them and
risking a ban, since people tend to review when they're pissed off. And _then_
, Apple takes 30% off the top for your trouble.

The 2 million apps (or whatever it is now) boast is laughable. Apart from the
expected stuff (browsers, social networks, etc) there is a dearth of
worthwhile software. Which is a shame given the capabilities of the platform
and its overall utility.

I don't see the US regulating Apple (or any big tech) given the prestige and
money coming into the country, so I'm sure status quo will remain. But Apple
should really be forced to open up iOS as a platform. And I say that as
someone opposed to government intervention.

I will say this, if they ever _close_ macOS as a platform, I'm changing
careers and throwing away all of my Apple products. Which would be a shame,
since they really are the best in a number of areas.

It's simply a power and money grab. Anyone who says anything else is full of
shit.

~~~
habith
> The cost of Apple's gatekeeping -- their review bureaucracy -- is entirely
> their own doing and benefits no one.

That was actually the reason I ditched my Android and switched to an iPhone a
few years back. After writing an app for both platforms and seeing how
terrifyingly easy it was to get on the Play store ($25 and 4 hours after
uploading the apk) vs Apple's more rigorous review process which took close to
a month, checked out our company's DUNS number and _actually_ tested/used the
app.

Also the cluster hell that is the forced Android permission system and how
intrusive the most basic ones are vs. Apple's opt-in "Read contacts? (Yes/No)"
while using the app are why I'd never go back.

~~~
nolok
> That was actually the reason I ditched my Android and switched to an iPhone
> a few years back. After writing an app for both platforms and seeing how
> terrifyingly easy it was to get on the Play store ($25 and 4 hours after
> uploading the apk) vs Apple's more rigorous review process which took close
> to a month, checked out our company's DUNS number and _actually_ tested/used
> the app.

An optional appstore with verifications is one (great) thing, making it
mandatory is another. We have the entirery of desktop computers history to
know that. That's like saying "I ditched Linux/OSX/Windows because they
allowed me to install things not from their package manager/store".

And if what you meant is "I enjoy a well curated app store", well the truth is
that apple's store is not well curated at all, that many apps are being
abusive anyway especially from the big ones, and that there are several
alternative stores for Android if you want one.

I just can't agree with "I want apple to make it impossible for me to be in
control of what runs on my device even if they disagree", and I think both
stores are absolutely terrible so I don't get the whole "I ditched terrible
for execrable".

> Also the cluster hell that is the forced Android permission system and how
> intrusive the most basic ones are vs. Apple's opt-in "Read contacts?
> (Yes/No)" while using the app are why I'd never go back.

That hasn't been the case for quite some time, apps now ask for granular
permissions and they do so when they need it the first time. There are still
some holdouts that don't upgrade to the newer api on purpose but that's why
google is bumping the minimum api version to publish on the store soon and
force those leftover to clean up.

~~~
habith
> An optional appstore with verifications is one (great) thing, making it
> mandatory is another.

Sure, and it's great that Android has side-loading and it would be nice if
Apple offered that too without a Mac/Dev License and XCode. But, given the
option between the two ecosystems, I continue to choose iOS.

> There are still some holdouts that don't upgrade to the newer api on purpose
> but that's why google is bumping the minimum api version to publish on the
> store soon

I've heard a similar argument 4+ years ago, this was supposed to be fixed in
Lollipop:
[https://news.ycombinator.com/item?id=8461466](https://news.ycombinator.com/item?id=8461466)

~~~
nolok
No, lolipop offered the new api that allowed to ask for granular permissions,
but apps using the older api were still using the old permission system, and
the store still allowed to publish apps using the older api (because most
phone of the time weren't being updated).

Now (like right now and for the first time) google is making is impossible to
publish new apps, or update to existing apps, using the older api.

That's two very different things, "X is deprecated but still there, the new Y
is available for those who want it" and "X is removed now, you must use Y".

------
wand3r
The Apple store seems good for small apps because the “tax” pays for
discovery/marketing, distribution, billing & payment, lends credibility to the
application, etc. This is especially true for single purchases.

Recurring revenue is a much different proposition— even for small or first
time apps. A player like netflix which handles it’s own marketing, payment and
all other ancilliary services doesn’t need to anything the apple store is
offering other than distribution. I would understand if apple took $1 or some
one time download fee but to regularly claim 30% of Netflix revenue seems like
a stretch. While I think apple could make the case that they signed up through
iOS, i think it is equally fair for Netflix to disable this option.

~~~
electic
> The Apple store seems good for small apps

This is simply not true. As a small app developer, I can tell you first hand
that Apple only promotes and supports larger apps in the ecosystem. It is the
exception, not the rule, when they promote a smaller app.

As a developer, you are on your own on the marketing and discovery front. The
billing infrastructure you allude to would be easily replaceable with a dozen
or so startups and wouldn't warrant a 30 percent hit that Apple charges.

~~~
hinkley
I have to agree with grandparent. You can't scale down international
infrastructure like this. The cost per sale for someone managing a store for
you has a certain minimum cost per month plus an amount per sale and per
return.

Of course they're going to hype the big games. It's opportunity cost.
Advertisement leads to sales, but feeding a hype train gets you more. If they
stop advertising the hot new game to showcase yours then that person is not
getting promoted. The guy who had no problems ignoring your game gets promoted
and now everybody answers to them.

Is it awesome? No. Do I like it? Not really. But it's _rational_ , and getting
large companies to be rational is often better than you can expect.

~~~
LoSboccacc
The fallacy there is that their push to promote big Warner is mostly promoting
toxic games that milk and dime users because freemium games is where money is
at.

It's no coincidence that on both stores you cannot filter out apps that have
in app purchases

~~~
LoSboccacc
s/Warner/earners/ sorry

------
dehrmann
The Apple Tax is especially hard on Spotify since Apple launched Apple Music
(previously, Spotify passed the 30% on to customers, but $13 vs $10 for
similar services doesn't work). Both services are $10 per month. It's well-
publicized that Spotify pays out 70% to labels, leaving nothing to run the
service.

Full disclosure: I used to work for Spotify. My personal take on the fee was
that 2%-3% is the floor (credit card processing), but Apple could charge up to
5% and reasonably justify the value-add without risking price gouging or anti-
competitive claims.

~~~
scarface74
Spotify stopped allowing subscriptions on iOS a while ago.

~~~
dehrmann
True. Their choices were that, taking a ~loss on these users, or charging
more. All put them at a disadvantage compared to Apple.

------
skh
I wonder how much money it costs Apple to handle subscription
payments/cancellations for Netflix and other streaming services. I prefer to
handle subscription through Apple because cancelling such services is never
difficult. I don’t know how it is on other countries but cancelling services
in the U.S. can be a hellish experience.

Personally, I’d be willing to pay the “Apple Tax” on top of a subscription
services’ cost for the peace of mind that comes from knowing that cancelling
is easy. What a pain it will be when all the other subscription services stop
paying the “Apple Tax”. I hope Apple comes up with a solution. Clearly their
current cut is too much.

~~~
toufiqbarhamov
For many things I’d agree, but to their credit Netflix has always made it
trivially easy to cancel. They’re one of the few modern IT companies that seem
to go out of the way to make joining and leaving fair and easily
comprehensible. Now if they’d just make that autoplaying a goddamned option!

~~~
MrMember
I was kind of surprised when I canceled my Netflix account. I had a laundry
list of complaints I was going to put in the "why are you canceling" box but
they never gave me one. Making it easy and painless to cancel is one of the
few things they're still doing right.

~~~
kraftman
What were your reasons?

~~~
bkraz
I also recently canceled and was surprised they didn't ask why. My reason was
that the selection of content has changed dramatically. When I first signed
up, I could choose a movie that I had in mind. Now, the selection of movies on
Netflix streaming is extremely bleak. It's almost entirely TV shows, and about
half of it is Netflix-produced. The quality of it is fine, I just don't want
TV shows. I want access to the majority of movies ever produced, and would pay
much more for such a service.

~~~
83457
"I want access to the majority of movies ever produced"

Appears that will never happen.

~~~
toast0
This is really unfortunate; when Netflix launched streaming, they had a
partnership with Start that had a lot of popular movies, but now you would
need to mix and match two or three services to get similar coverage. I've been
buying more and more discs lately, because I want to watch something today,
and at any time in the future.

I hope, one day, we get compulsory licensing for movies and TV shows, like is
available for music -- then we can really watch whatever, as long as it has
been digitized.

------
stemuk
Personally I feel like the most ridiculous part about the App Store is Apples
so called "developer program". Charging 99€ a Year for a nearly nonexistent
service is absurd, especially since they are already taking the 30% cut.

I am a flutter developer myself, so technically I could publish all my apps on
iOS and Android with minimal changes. But since Apples developer program would
eat up a significant portion of my potential yearly earnings I simply publish
only on the Play Store that only charges a modest 25€ one time registration
fee.

~~~
max76
I like the $99/yr bar of entry. That, combined with the more rigid review
process, keeps the App Store's average app quality higher than the Play
Store's.

~~~
pas
It makes a lot of apps simply impossible to exist. (Indie dev made an app for
themselves catering to a niche, also wanting to put up their app for free.)

This trade off is typically okay for iFolk though.

~~~
max76
If the market isn’t sigficanlty large so that 144 people will pay 99 cents a
year for the app (the minimum requirement to cover the developer’s cost) than
the application is probably not tested and developed to a high enough standard
that I want to run it on my cell. I consider my cellphone production hardware,
and treat it as such.

~~~
pas
It might be, but we'll never know. There might not be enough people willing to
test a new 1USD app from a hobbyist.

------
madrox
I've worked on a streaming service that did in-app subscriptions. I've written
up my experiences before:
[https://news.ycombinator.com/item?id=17831188](https://news.ycombinator.com/item?id=17831188)

I wonder if Apple is letting this slide because it's enough money that Netflix
would feel sufficiently motivated to spend lots of money to take Apple to
court over it. Apple could lose a lot more than a billion a year if the law
sides against them, which is a likely outcome. They would have to let everyone
pick their payment provider. Everyone from Stripe to Paypal would rush in with
better and better payment terms.

Better to keep anyone capable of winning a legal challenge against them happy.

~~~
scarface74
Subscriptions I have/had that require an email address/password but allow you
to subscribe outside of the store: Hulu, Netflix, PluralSight, STARZ.

Subscriptions that force you to subscribe out of the store: DirecTVNow,
ACloudGuru, Amazon Prime Video, Sling, Spotify.

I doubt very seriously that Apple is stopping your app because of a fear of
competition but not stopping dozens of other players.

------
emsy
At some point iOS feels like a third class platform, because I can't directly
buy subscriptions or download my (already paid for externally!) Audible audio
books. I think Apple is too arrogant to change this on their own so my only
hope is the EU will regulate quasi-monopolies like the app store at some
point. At the moment Apple users would benefit from a lot of regulations
ranging from freedom of choice in the App Store to right to repair. That's not
a good spot to be put in as a customer.

~~~
scarface74
The EU forced Apple and Audible’s partnership to dissolve.

[https://www.theverge.com/2017/1/19/14323438/apple-audible-
ex...](https://www.theverge.com/2017/1/19/14323438/apple-audible-exclusivity-
agreement-ended-antitrust-investigation)

~~~
emsy
This is about books sold from iTunes. I'm talking about buying books from your
Audible credits in the Audible app. But given this info, the most charitable
interpretation would be that Audible stopped selling via Apple all together. A
less charitable interpretation would be that Apples guidelines forbid Audible
to sell content without Apple getting their cut.

~~~
scarface74
You can buy books for both Kindle and Audible from Amazon and use them on the
apps without Apple getting a cut.

------
ndnxhs
Netflix only needs apple for distribution because apple has locked down the
system so much that you are forced to go through them. Apple has added very
little value and we had better systems before where you could just visit a URL
and view content without needing Microsoft for distribution.

~~~
scarface74
Netflix could easily stream DRM free H.264 video from their website without
needing an app....

~~~
monocularvision
They don’t even need to make them DRM free. There are plenty of DRM options
for web-based video.

------
mgkimsal
As long as we're bitching about the 'apple tax'.... I'll toss out an
unrelated-yet-perplexing issue I've had with mac/ios/etc since... 2008?:

Slow app store speed.

It doesn't matter what device I'm on - multiple macbooks, imacs, iphones,
ipods, ipads, etc, all running through multiple cable and dsl providers in
multiple states over the last decade.

Download speed is abysmal. 30meg app update - why does this take 2-3 minutes
on a connection that can get 120Mbps from multiple other sources? I've just
never been able to understand how they can stream live video around the world
instantly, but grabbing an 8meg update is *ever a > 1 minute process.

12+ devices over a decade, from multiple carriers in multiple states, and
always slow speeds. But no doubt other people here will have "all my updates
are less than 8 seconds, all the time, for years" anecdotes. :/

~~~
ksec
They should be fast though? They are on Akamai, LimeStone and their own CDN.
It was all very late in 2016 /2017, but things has been much better since
then. So to have a slow download speed from Apple, unless it is from iCloud
Storage ( which is getting better too) shouldn't have been the case as the
likely hood fo slow connection from all three CDN are very small..

Apart from Netflix Servers ( Fast.com, I really wish Netflix would make a CDN
for others to use ), I think Apple now has one of the best CDN network.

~~~
kkarakk
they're not, your claims of their CDN quality are based on what exactly?
recently tried to download macos mojave(a 5 gig download) and it was
EXCRUCIATINGLY slow. Took 12 hours! For reference i downloaded an 80gig game
from steam in 4 hours(i live in india and speeds vary quite a bit but it's
still a solid connection)

~~~
1123581321
That’s probably an India-specific issue, which is still annoying and probably
just one more reason Apple is not as successful in your market as they’d like
to be. The OS downloads always take under an hour in the US, and several
minutes for me for at least the last few versions.

------
soneca
Why call it "tax" if it is a fee?

The article shows numbers based on a 30% fee when it explicitly says it is
actually 15%.

 _" meaning Apple was making around $700,000 by doing nothing other than
allowing Netflix to offer subscriptions in its app"_

It seems a bit unfair also.

I have no horse in this race, but the author seems to have

~~~
philihp
"Apple Tax" is a well defined colloquial term to refer to the markup Apple
makes on its products because of their company branding and product
reputation. I wouldn't credit the author with inventing this term—rather they
are borrowing it for something that is actually more like a tax. When there's
a transaction in the Apple domain, Apple levies a tax/fee/toll/duty. This
isn't going away, and it's going to be heavy hitters like Netflix which
pressure them to change. Let's hope the change takes a form other than an
exemption specifically for Netflix.

------
anonytrary
The main reason I find app stores useful is that they are a third party data
aggregator. You can see ratings, downloads, reviews and other statistics very
easily. That does help me as someone deciding what apps I should download.

That said, Netflix is a company I've grown to trust. I have no reason to look
at Netflix's app statistics in the app store. I have no incentive to make
personal transactions with Netflix through a third party app store. I simply
go to their website, enter my card information, and enjoy their service
without thinking about it ever again.

~~~
na85
Do you really believe the ratings and reviews are useful?

Most of the reviews I've seen are obvious shills, or else useless "works ok"
reviews with a 5 star rating

~~~
ndnxhs
I don't think I have ever found the reviews on google play to be useful. I
switched to fdroid which has no review or rating system and I dont miss it a
bit. I find its usually easier to just open the app and see if it works.

~~~
freedomben
I find the reviews helpful, tho I take them with a grain of salt. It's true
there's a lot of garbage tho. So many reviews like this:

> 1-star

> Used to be awesome but has a bug I don't like now!

> This app used to be amazing but now I want some feature that it doesn't
> have. Rating this 1-star as a way to strong arm the developer into adding my
> favorite feature. By the way I'll forget to come back and update this review
> should I actually get what I want.

~~~
kkarakk
Paying customers asking for feature via review is part of the reason why the
review system is great. if you just want to make passive income by creating an
app that does one thing in one particular way that's fine but you should be
upfront about the deal. not being upfront about not providing feature updates
or rather extensions should mean a worse review imo

~~~
notSupplied
No it is not, it incentivize users to leave inaccurate information as a form
of making feature requests. An app that is highly useful and crucial to a
users work flow, but is missing a certain feature is a 4 star to this user,
but some people leave a 1-star to draw attention to the one feature they
really want. A user who passionately wants a feature to be implemented
_clearly values this app_ more than 1 stars worth. The users who do this are
holding the app rating hostage and I find this behavior utterly unethical.

------
throwaway98121
Good on Netflix for getting around the apple tax. I’ll admit, I have a MacBook
for work, and all my reading and general browsing is on my iPad and iPhone.
That being said, I’m saddened by Apple’s money grabs (absurd pricing). They
don’t seem to care about customer trust. The post 2015 MacBooks are horrible
IMO, and the AppStore is full of literally garbage. Every app is a bunch of
ads and pay to basically unlock anything useful. I don’t know what the bar is
to be on the AppStore anymore, and I never install anything other than
Netflix, Spotify, WSJ, a couple Amazon apps, and some banking and investment
apps... basically everything big name.

------
GeekyBear
Apple has long allowed content producers to give away an app at no cost on the
App Store and then sell subscriptions to access their content through their
own website.

>publishers can sell digital subscriptions on their web sites, or can choose
to provide free access to existing subscribers. Since Apple is not involved in
these transactions, there is no revenue sharing or exchange of customer
information with Apple.

[https://mashable.com/2011/02/15/apple-subscription-
model/](https://mashable.com/2011/02/15/apple-subscription-model/)

The sticking point in my eyes has been that the free app cannot provide a link
to the website where you buy a subscription to the content.

>Apple does require that if a publisher chooses to sell a digital subscription
separately outside of the app, that same subscription offer must be made
available, at the same price or less, to customers who wish to subscribe from
within the app. In addition, publishers may no longer provide links in their
apps (to a web site, for example) which allow the customer to purchase content
or subscriptions outside of the app.

[https://mashable.com/2011/02/15/apple-subscription-
model/](https://mashable.com/2011/02/15/apple-subscription-model/)

------
juiced
Why is Apple allowing this?:

“3.1.1 In-App Purchase: If you want to unlock features or functionality within
your app, (by way of example: subscriptions, in-game currencies, game levels,
access to premium content, or unlocking a full version), you must use in-app
purchase. Apps may not use their own mechanisms to unlock content or
functionality…”

My app was previously rejected because I had to built in In-App purchasing.

~~~
kalleboo
You're not allowed to use other payment methods inside your app. You CAN
require someone to separately browse to your website and sign up there, and
incidentally use that same login in your app. Directly linking to the online
payment form from your app is not allowed either.

This is how other apps like e.g. Amazon Kindle work

~~~
juiced
That explains a lot, I was redirecting to the website from a "Subscribe" link
in the app. Maybe if I just called the link "Sign up" it would've been a
different story. Anyway, I like having the subscription option in the app, it
makes it much easier for the user to sign up, without the need to go to the
website and fill in the forms.

~~~
MatekCopatek
Everyone likes it, it makes subscriptions easier - that's why Apple is
actively blocking it.

I'm not sure where exactly the line is though, I remember some stories where
apps were rejected because they said something in terms of "You can't
subscribe in this app as that would mean Apple gets 30% of your subscription,
but you can go to our website and register there".

------
CamelCaseName
Was it a mistake for Apply to set the precedent that they will not take action
against large tech firms that do this?

Regardless of what is a 'fair' fee, what happens when the handful of apps that
generate the vast majority of revenue move their transactions away from the
marketplace?

What is Apple/Google's next move?

~~~
notatoad
Apple's next move is to compete by charging reasonable rates, instead of
completely unreasonable ones. Netflix is a low chargeback risk, high volume
customer and should expect to be paying 1.5-2% for an initial charge and even
less for continued payments on the same card. Apple is charging 30% for the
first _year_ of payments and 15% after that.

30% is reasonable for an app from an unknown dev where the platform might have
to eat a large refund after the dev disappears and the app turns out to have
been a scam. charging that same rate to netflix for subscription payments is
price gouging, plain and simple.

As the article says, apple was making somewhere on the order of $700k _per
day_ off Netflix's transaction fees. For doing basically nothing. Netflix is
obviously willing to pay more than basic credit card processing fees for the
convenience factor of having in-app billing on iOS, so all apple needs to do
to keep that business is to be willing to negotiate.

~~~
tomp
What do you mean, “refund”? Is there a way to request a refund for an app you
bought? AFAIK there’s no way to “trial” an app...

~~~
notatoad
[https://support.apple.com/en-ca/HT204084](https://support.apple.com/en-
ca/HT204084)

------
notSupplied
I'd like to debunk two arguments I hear frequently in defense of Apple's 30%
cut:

1\. They created the iPhone hardware and OS platform on which all apps stand
on top of. Surely one who builds the most expensive infrastructure on which so
many rely on deserve to tax the economic activity they've enabled.

The problem with this argument is that the enablement actually flows in both
directions. Remember the last battle between Mac and Windows in the 90s? Mac
was the losing horse because "Windows had all the important software". Office
was the killer app back then and the Mac version was gimped. All the cool
games were on Windows, and hell, during the days of peak Internet Explorer,
Mac users could hardly browse the web properly. The tables have turned today,
but the past tells a story of how much the software ecosystem contributes to
the platform, not software as freeloaders on the platform.

2\. The AppStore is much more secure. Apple's curation protects users from
malware much more effectively than Google Play and overall app quality is
higher

The issue I have with this argument is one of "who pays for this?" I'd argue
the consumer should and has already paid for this via premium prices and the
handsome hardware margins of iPhones. This is a benefit that goes directly to
the users after all, so they should be (and already are) paying for it, not
app developers.

------
ancorevard
World wide product distribution for only 30% is cheap.

I see a lot of Sellers whining, but the Customers love this arrangement. Take
a look at iOS satisfaction rate among its users VS the other phone vendors.

~~~
ClassyJacket
But Apple doesn't distribute Netflix's content. Netflix does all of that
themselves. All Apple does is host a free app. The content is still hosted on
Netflix servers.

------
etchalon
At what point is Apple forced to treat the App Store as a subscription
platform, ala Shopify, with flat monthly fees to the developer and a tiny %
cut on top the credit card processing fees?

------
jakozaur
Antitrust laws should be modernized to force oligopolies to charge reasonable
fee once you became huge platform.

This happened in many European countries where CC fees are less than 1%, where
in USA it is 2-3%.

Same as electricity is natural monopoly with somewhat regulated prices, modern
platform distort the economy power. It destroys competition and create winner
take all market.

Apple fees should be determine be independent body, but I feel they should not
be larger than 10% for one-time purchase and 5% for recurring charges.

------
cpeterso
Would Netflix still need to pay Apple 30% of the Netflix app redirected new
sign-ups to a netflix.com web page in Safari?

~~~
URSpider94
I believe it’s against the rules to link out from within the app. The best you
can do is explain in words that users can’t make the purchase in the app, and
recommend that they visit the company’s web site to complete the purchase.

------
al2o3cr

        meaning Apple was making around $700,000 by doing nothing
        other than allowing Netflix to offer subscriptions
    

Well, nothing else besides providing single-sign-on and payment processing.
It's like whining "MasterCard doesn't do ANYTHING but collect interchange
fees!"

~~~
Zach_the_Lizard
MasterCard collects a _lot_ less than Apple does. Apple is more like
Braintree, adding value on top, but they (IMO) charge too much for what they
provide.

It's too bad their lock in effectively prevents alternate means of
distribution.

------
ksec
That is around 6 - 7 Million of users, their Annual Revenue is roughly $15B,
so ~5.6% of its users coming from iOS in App subscription. Not too much of a
risk I would say, and Netflix, just like Spotify doesn't want to fund Apple
Music / Apple TV development.

------
marco1
They dropped in-app subscriptions on Android as well in May 2018. But why?

Unless I’m mistaken, the Google Play Developer Policy allows you to use a
different payments provider, such as Stripe, in a case like Netflix or
Spotify’s:

> Developers […] must use Google Play In-app Billing as the method of payment,
> except for the following cases: […] Payment is for digital content that may
> be consumed outside of the app itself […]

Source: [https://play.google.com/intl/en/about/monetization-
ads/](https://play.google.com/intl/en/about/monetization-ads/)

At least in the past, Skype has been doing exactly that, for example.

------
ianai
I’m devaluing this disagreement. Tell me one reason that we at the consumer
level should care whether Apple or Netflix win this one? At my level, I see
the smartphone market dominated by Apple and Google. If you don’t like what
those two do then you can’t buy a smartphone. They own something like 99.9999%
of the market. This is basically super large corporation vs large corporation.
Wake me up for the fight to break up the duopoly.

Edit-My comment is on topic. I’m stating that the financial stakeholders
literally are not hacker news. But disrupting a duopoly definitely is HN-
worthy.

~~~
atombender
This isn't about consumers. This article is about Netflix's business.

Sure, new consumers of the iOS app will have to subscribe in a different way,
but this has a minimal impact on users.

~~~
ianai
If Netflix wins then Netflix will have a financial windfall. But very probably
there will be a carve out so that a company has to be Netflix-size to gain the
benefits.

------
moron4hire
I'm continually surprised by how few apps and services there are for
streamlining and automating as much as possible all of the various app store
submission processes. As an app developer--especially in the games market--it
seems obvious that you'd want to be in as many stores as possible. But there
is clearly a lot of overhead in submitting apps to the long tail of all of the
apps stores that are available. It's a high labor cost, especially for new
entrants.

------
ryanbertrand
Worth noting they will continue processing payments through iTunes for
customers who did their subscription through iTunes. Apple will not just go to
$0 from Netflix overnight.

------
aarbor989
I’m surprised it took them so long to do this. I forget which app it was
(maybe Spotify) but I remember them offloading the tax to the consumer by
having a 15% higher subscription fee from within iOS. From a consumer
standpoint I find the iOS subscription doesn’t add any value. Have you tried
finding where to cancel subscriptions from within iOS? It’s buried under so
many menu clicks it’s impossible to find without searching the web for help

------
ocdtrekkie
2019 may be the year the 30% cut officially dies. All in the last few months:

\- Epic Games refused to release Fortnite via the Play Store

\- Valve lowered it's cut from 30% for major publishers to keep them from
leaving

\- Epic Games then announced a store with a 12% cut for PC and Android (the
latter coming in 2019)

\- Discord followed by announcing a 10% cut

\- Netflix has pulled out of paying Apple's 30% cut

\- There's a pending antitrust case against Apple's Store that has, on
procedural grounds, already made it to the Supreme Court

~~~
pfranz
I feel like 30% works for one-time purchases between $1-10. Which is what I
figure most Apple App Store apps go for. No matter how you cut it you're still
going to pay credit card transaction fees. Most of the PC games are likely
between $10-60, where 30% makes less sense (the marginal bandwidth, storage,
etc isn't that much more expensive).

However, digital platforms like Apple's are a now a lot more mature and have
reached a scale where the costs should be coming down. I've been wishing for
decades that credit card fees would go down.

------
baxtr
_(Note, however, that Sensor Tower’s figures are based on the App Store’s 30
percent cut of transactions. After the first year, Apple’s cut on subscription
renewals is lowered to 15 percent. That’s not being factored in. But it gives
you a rough idea of Apple’s losses here.)_

Wait, what? They want to make a point by calculating figures which are off by
50%?

------
gigatexal
Many are talking about the steep 30% take which I thought for subscriptions
was changed down to 15%, anyways, having a single place and a single bill for
my iTunes subscriptions all handled by Apple is fantastic. I much prefer it.
But it’s a 15 to 30% “tax” and companies are willing to find alternatives.
That’s fine.

------
MarkMc
Does this mean Netflix is not abiding by App Store rules and will therefore
have its app delisted?

------
chiefalchemist
For those who are focused on the privacy aspect of this issue, perhaps
Privacy.com can help?

[https://privacy.com/](https://privacy.com/)

 __Full disclosure: I found it when it was mentioned on another HN thread a
couple weeks ago.

------
dman
I hope they pass some of the savings back to iOS customers by lowering their
subscription cost.

------
writepub
It's ludicrous for Apple to state they somehow increased business for Netflix,
because they allowed "sign-up" via iOS. That's like Google claiming they
allowed sign-up via chrome, or AT&T claiming they allowed sign up via their
Network.

Apple adds ZERO value via the app store, both for devs and for the consumers.

~~~
wrkronmiller
What Apple adds is non-zero. As the parent comment points out, Apple offers
discovery, billing, and distribution. The App Store is a single (theoretically
trusted) place for iOS users to search for apps.

Let's not forget that, at least in theory, Apple curates the App Store.
Neither Chrome nor AT&T does that in any substantial way.

Furthermore, Apple's business model is different from Google/Android's.
Android can be a loss-leader as long as it draws users to revenue-generating
Google services. Last I checked, iOS was one of Apple's primary sources of
revenue. In principle (if not practice) Apple's model is based on offering a
privacy and security-centric platform. For the privilege of accessing it, you
pay developer subscription fees and give Apple a cut of the money you make
through your app.

I think it's totally valid to argue what Apple offers is not worth the 15-30%
cut. Either way, though, Apple is adding more than zero value.

~~~
zaroth
Before Apple came out with the iPhone, the carriers had complete control over
the apps on your phone, and their access to the network.

Even initial iterations of the iPhone limited video streaming to WiFi only.
Apple blazed the trail enabling millions (billions?) of hours of Netflix
viewing. Apple devices are a primary use case motivating my initial Netflix
subscription for kids to watch in the car on the iPad.

Further, Apple iOS provides the SDK and APIs to enable Netflix to develop
their app in the first place, securely stream their content, etc.

The App Store is the only mechanism that Apple uses to charge companies for
exploiting the power of these devices for their own benefit.

It’s a lot more than just the seamless experience of installing and running
the app. It’s the whole stack that forms a cornerstone of how Netflix
customers experience the Netflix product.

When was the last time I consumed my Netflix on something that _wasn 't_ an
Apple device?? I can’t even remember!

~~~
pxeboot
While carrier app stores were a thing, it was quite common to download apps
from other sources before the iPhone. There were Java apps, Windows mobile
apps and others.

~~~
scarface74
How well do apps do now outside of the Google play store in developed
countries?

~~~
pxeboot
If you include the Amazon App Store, probably very well.

------
cinquemb
Some good news for share holders getting nervous about holding onto this debt
junkie this late in the cycle…

------
russellbeattie
The amount of money is just staggering to me. I'll never get the "app
economy".

------
ssvss
What is Apple's cut for apps like Wechat/Uber, is it 15-30% of each
transaction ?

~~~
dan1234
Uber’s transactions aren’t digital purchases, so Apple’s cut will be 0%.

~~~
ssvss
Does Google/Facebook have to pay an Apple cut for ads shown in youtube/fb app.

------
subfay
Slightly OT: Why are the loading times of Apple's Appstore so slow? Do the run
this rhing from ARM servers without any CDN or caching? Guess it's just the
lack of competition but wait, Google's Play Store loads fast, Sony's
Playstation store too.

------
ap3
I pay Netflix with discounted iTunes card saving about $1 a month, yay!

------
wufufufu
Wow, 30% for the first payment and then 15% for each renewal? Apple should
have custom rates for large volume subscription apps. The fact that they
didn't just cost them several million dollars at least.

~~~
askvictor
I thought they recently announced they were moving to such a system for large
businesses (i.e. Netflix and Spotify), basically to avoid this exact scenario
where those business drop the Apple payment platform altogether.

------
tanilama
Wow, won't be surprised that Apple takes such hefty amount of money by
essentially doing nothing. Now iOS's growth is slowing down, I see other big
players follow the suit.

------
ttty
What happens if Apple bans Netflix and provides a steaming and alternative?

I guess Netflix can sue them, but in the meantime will lose a lot of money.

~~~
praneshp
Ban them for what? It's not like Netflix is refusing to pay the tax and keep
using a feature.

