Apple Said to Revamp Revenue Model for In-App Subscriptions

Sources speaking with the Financial Times claim Apple is considering changing its 70/30 revenue model to make its platform more appealing to subscription-based apps such as Netflix, Spotify, Hulu, and others.


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.

The “Apple tax” was pioneered by Steve Jobs, and meant that the Apple got 30% of the price paid for the app or service, while the developer or service provider got the remaining 70%.

However, some developers called the Apple revenue model too rigid, and Jeff Hunter, a former Apple software developer and co-founder of the AnyList shopping app, even wrote an open letter urging Apple to adopt a tiered system.

Apple already has an answer for that, it seems. Re/code reported in April that the company has started testing a more generous split for some premium content services on its Apple TV set top box.

Changing the App Store’s terms of trade could improve the economics of online content businesses and reassure regulators that the company is not abusing its position as gatekeeper to one of the world’s most lucrative digital marketplaces.

That means Apple’s revenue model changes to 85/15, with the iPhone maker taking only half of its current “tax”, but only for subscription services such as the recently released HBO Now.