Apple Execs Discussed Not 'Leaving Money on the Table' When Deciding Apple TV Subscription Fees

Apple executive emails revealed in the Epic Games vs. Apple lawsuit highlight how the company came to its conclusion to take a 30% cut on all App Store transactions in a way that ensured it wasn't "leaving money on the table."

app store blue banner
One email thread from 2011, spotted by The Verge, features Apple services chief Eddy Cue discussing the commission that the company should charge providers for content subscriptions accessed via Apple TV (an ‌App Store‌ on the set-top box didn't exist at the time.) Apple execs considered charging a 40% one-time cut, a 30% one-time cut, a 30% ongoing fee, or individualized deals with different providers.

apple tv deal
Apple's team eventually decided to require the same 30% fees as it does on the iTunes Store and the ‌App Store‌. Another email also discusses how Apple should negotiate referrals, where ‌Apple TV‌ apps link out to a provider's website for customers to subscribe directly to the service.

apple tv deal 1
One executive said they wanted to ensure they protected the 30% fee that had long been enshrined in the ‌App Store‌, but stated they would remain open to other deal structures.

"I don't want to do any deals where we get less than 30%. That is what it is on the app store and we can't be making a different deal here. If that is not possible than I want a one-time bounty but we need to very careful here so this doesn't spillover to the app store," one exec wrote. (The emails are threaded such that it's hard to tell who is replying to whom.)

Overall, the email thread appears to suggest that discussions evolved extemporaneously amongst Apple executives when it came to provider fees during the early development of the ‌Apple TV‌ platform, with maximum profit the main concern.

Amid increasing scrutiny over its ‌App Store‌ practices, Apple in November announced the Small Business Program, which saw ‌‌App Store‌‌ fees slashed to just 15% for developers earning under one million dollars per calendar year. The ‌‌App Store‌‌ commission remains at 30% for developers making over one million dollars per year.

The program has since received praise from many developers, but some larger developers including Epic Games criticized the move, saying it undermines the ‌‌App Store‌‌'s rules. ‌Epic Games‌ is ineligible for the reduced commission since it exceeds the $1 million earnings threshold. Apple said the program will benefit the "vast majority" of ‌App Store‌ developers.

Related Roundup: Apple TV
Buyer's Guide: Apple TV (Neutral)

Top Rated Comments

InGen Avatar
13 months ago
Are there any For-Profit companies that centre their decision making around leaving money on the table?

Breaking news: Companies that survive based on profit discussing making as much profit as possible.
Score: 50 Votes (Like | Disagree)
Dwalls90 Avatar
13 months ago

30% itself is way too high....
You should see the markup on tangible products to wholesalers or wholesalers to retailers.

EDIT: For the sake of clarity, the average markup of a wholesaler or manufacturer to a retailer or wholesaler is 20-40%. Apple is charging 30% by acting as a middleman. If you reject Apple's 30%, I suggest you reject every retailer where you purchase any services or goods from.
Score: 23 Votes (Like | Disagree)
robjulo Avatar
13 months ago
We love our customers!
Score: 22 Votes (Like | Disagree)
casperes1996 Avatar
13 months ago
Forget what the emails actually say. Look at how it's written! That's appalling! It's not properly capitalised! Noteworthy is that "the App Store" isn't even capitalised! And my Mac just automatically capitalised it for me as I wrote it here so there's no excuse for that. And there's even a word missing. "we need to very careful here". "be". Please write full sentences when you're an exec writing emails like this... And "than" is comparative. "Then" is the word you wanted there. God damn
Score: 16 Votes (Like | Disagree)
Kabeyun Avatar
13 months ago
So Apple leadership is figuring out how much to charge for something, and they go with their existing standard fee that’s also in line with the rest of the market. Is there supposed to be some sort of smoking gun here?
Score: 14 Votes (Like | Disagree)
genovelle Avatar
13 months ago

30% itself is way too high....
Who gets to decide that. Funiture and clothing have 300 and 400 percent markups. Jewelry too. Apple is successful because they generally require a 35% profit margin to release anything and to do a few things very well. They strayed from this while Jobs was in exile and nearly went out of business. Most of their competitors from that era no longer exist.

30 percent is actually much lower if you look at their costs. They manage the support, they eat the 3% credit card processing fees, they host the apps in cloud, they provide free marketing and drive the platform via ads and other methods, they maintain the platform, with constant and consistent updates to APIs and security. They protect companies from piracy that plagues other platforms, and keeps them from being run out of business.
Score: 11 Votes (Like | Disagree)

Related Stories

app store blue banner

Apple Highlights How the App Store Prevents Fraud Amid Legal Battle With Epic Games

Tuesday May 11, 2021 10:00 am PDT by
Apple today announced that, through a combination of automated technologies and human review processes, the company protected customers from more than $1.5 billion in potentially fraudulent transactions in 2020. Apple said secure payment technologies like Apple Pay and StoreKit (In-App Purchase) play an essential role in keeping users safe:With online data breaches frustratingly common,...
fortnite apple featured

Apple Seeks Early Motion to Reject Epic's Claim It's Being Denied iOS Access

Wednesday May 19, 2021 4:03 am PDT by
As part of the Apple vs. Epic Games legal battle, Apple has filed a motion asking for a judge ruling on one of the ten claims that Epic Games had made against it. Specifically, Apple is seeking a partial judgment on the claim that iOS is an "essential facility" and denies Epic's claim that it has been unlawfully barred from accessing it through the App Store. The claim, specified in court...
fortnite apple featured

Judge in Upcoming Epic v. Apple Trial to Limit In-Person Attendees

Friday March 26, 2021 1:21 pm PDT by
Apple and Epic Games lawyers are continuing to plan for their upcoming May 3 bench trial, and in a preparatory conference held today, the judge overseeing the case said that attendance will be limited due to the ongoing global health crisis (via Law360). U.S. District Judge Yvonne Gonzalez Rogers has been planning for an in-person trial because she believes that the case is significant...
fortnite apple featured

Apple's Phil Schiller Takes the Stand in Epic Games v. Apple Trial

Monday May 17, 2021 12:17 pm PDT by
Today marked the kickoff of the third week of the Epic Games v. Apple trial, and this week is notable because Epic has finished with its witnesses and we're now transitioning to Apple witnesses, including notable Apple executives. Apple Fellow and former marketing chief Phil Schiller, who is in charge of the App Store, took the stand today. Schiller will testify for up to nine hours, and...
General Snapcaht Apps Feature 2

Snap is 'Happy' to Pay Apple's 30% Commission Rate, Says Evan Spiegel

Friday May 21, 2021 9:36 am PDT by
Snap CEO Evan Spiegel today told CNBC that his company is "happy" to pay Apple's 30 percent cut of in-app purchases because of the benefits that Apple provides with its software and hardware. We really feel like Snapchat wouldn't exist without the iPhone and without the amazing platform that Apple has created. In that sense, I'm not sure we have a choice about paying the 30% fee, and of...
app store blue banner

App Store Ecosystem Responsible for Estimated $643 Billion in Billings and Sales in 2020, According to Apple-Commissioned Study

Wednesday June 2, 2021 10:00 am PDT by
The App Store ecosystem facilitated an estimated $643 billion in billings and sales in 2020, an increase of 24 percent year-over-year, according to an Apple-commissioned study done by Analysis Group economists. [PDF] The study, "A Global Perspective on the Apple App Store Ecosystem," comes as Apple awaits a decision in its ongoing trial with Epic Games, much of which focused on App Store...
Apple vs Spotify feature2

Spotify Executive Justifies Antitrust Pressure on Apple and Calls for Other App Store Payment Providers

Tuesday June 1, 2021 9:05 am PDT by
Spotify executive Horacio Gutierrez has explained in a wide-reaching interview with The Verge why the company believes Apple is a "ruthless bully" and what it would like to see change. Last month, Gutierrez penned an op-ed in the Wall Street Journal that chastised Apple and some of its business practices. Now, Spotify's head of global affairs and chief legal officer has expanded on the logic ...
fortnite apple logo 2

Judge in Epic vs. Apple Case Floats Potential Compromise

Wednesday May 12, 2021 3:54 pm PDT by
In the ongoing legal battle between Apple and Epic Games, the two companies are this week calling up their expert witnesses to argue their points before Judge Yvonne Gonzalez Rogers, who will make a decision in the case after a three week trial. Expert testimony is not as exciting as some of the leaked App Store documents that were highlighted last week, especially as much of what's being...

Popular Stories

AirPods Pro Gen 3 Mock Feature Red

AirPods Pro 2 Could Start a New Accessory Ecosystem

Friday January 14, 2022 2:34 am PST by
Apple's second-generation AirPods Pro could arrive alongside a new series of accessories, recent leaked images suggest. Alleged leaked photos of the next-generation AirPods Pro obtained by MacRumors showed a charging case with a metal loop on the side for attaching a strap. Apple has not used this design for any of its other AirPod models and it is unclear why it would be added in this...
netflix2

Netflix Again Raises Prices for All Plans, 4K Streaming Now $20 Per Month

Friday January 14, 2022 12:46 pm PST by
Netflix today updated the prices for its streaming plans, and all of its offerings are now more expensive. The Basic plan is now priced at $9.99 per month, the Standard plan is priced at $15.49 per month, and the Premium plan is priced at $19.99 per month. The Basic plan is $1 more expensive, up from $8.99 per month. This plan allows users to watch on just one screen at a time, and it limits ...
iPhone 14 Mock pill and hole 16x9 120hz

Analyst: All iPhone 14 Models to Feature 120Hz Displays, 6GB of RAM, and More

Friday January 14, 2022 7:02 am PST by
Apple is rumored to announce four new iPhone 14 models in September, and ahead of time, analyst Jeff Pu has outlined his expectations for the devices. In a research note with Haitong International Securities, obtained by MacRumors, Pu claimed that all iPhone 14 models will feature ProMotion displays, compared to only Pro models currently. ProMotion enables a variable refresh rate up to 120Hz ...
ios 15

Apple Releases Minor iOS 15.2.1 and iPadOS 15.2.1 Updates

Wednesday January 12, 2022 10:05 am PST by
Apple today released minor 15.2.1 updates for iPhone and iPad users, and the software comes one month after Apple launched iOS 15.2 and iPadOS 15.2 with a slew of improvements. The iOS 15.2.1 and iPadOS 15.2.1 update can be downloaded for free and the software is available on all eligible devices over-the-air in the Settings app. To access the new software, go to Settings > General >...
maxresdefault

Hands-On With LG's 32-Inch UltraFine OLED Pro Display

Wednesday January 12, 2022 1:12 pm PST by
LG in December announced the launch of its new 2022 32-inch UltraFine OLED Pro display, and in our latest YouTube video, we went hands-on with it to see how it compares to Apple's Pro Display XDR and whether it might be worth picking up depending on the price point. Subscribe to the MacRumors YouTube channel for more videos. Officially named the "32BP95E," the display features a resolution of ...
iPad Pro Big Ol Logo Orange

Next iPad Pro Might Feature Large Glass Apple Logo to Allow Wireless Charging

Friday January 14, 2022 10:44 am PST by
Bloomberg's Mark Gurman and Debby Wu last year reported that Apple had tested a new iPad Pro with a glass back for wireless charging capabilities. In a recent edition of his newsletter, Gurman said he expects the new iPad Pro to be released in 2022. While the new iPad Pro is still on track to feature wireless charging, 9to5Mac's Filipe Espósito today reported that Apple may have ultimately...
iPhone 14 Mock pill and hole

iPhone 14 Pro Now Rumored to Feature Both Pill-Shaped and Circular Cutouts

Wednesday January 12, 2022 9:26 am PST by
Apple is widely expected to remove the notch on iPhone 14 Pro models, but there have been conflicting rumors about the new design. Early rumors suggested that Apple would adopt a hole-punch design with Face ID somehow moved completely under the display, and later it was rumored that there would be a pill-shaped cutout instead. Now, display industry consultant Ross Young has claimed that...
fortnite apple logo geforce feature

Fortnite Coming Back to iOS Soon Thanks to Nvidia's GeForce NOW Service

Thursday January 13, 2022 11:19 am PST by
With the Apple vs. Epic Games lawsuit continuing on, there are no signs that Apple has any intention of allowing popular battle royale game Fortnite to return to the App Store on iPhone and iPad. Epic Games has found a workaround though, by partnering up with Nvidia. GeForce NOW, Nvidia's streaming gaming service, will soon add Fortnite support, allowing Fortnite to be played through a...
iMac 27 inch 2020 sale

Deals: Apple's 21.5-Inch iMac Hits Record Low Price of $599.99 ($499 Off) [Update: Out of Stock]

Thursday January 13, 2022 4:05 am PST by
Amazon today has a great deal on the 2017 Intel 21.5-inch iMac (2.3GHz, 8GB RAM, 256GB SSD), priced at $599.99, down from $1,099.00. This is the best price we've ever tracked on this model, and it's only available at Amazon. The sale price will be reflected after an automatic coupon is applied at checkout. Note: MacRumors is an affiliate partner with some of these vendors. When you click a...