Why Online Creators Are Crazy About Apple Fees

This article is part of the On Tech newsletter. Here is a collection of past columns.

People who draw crowds on YouTube, TikTok, Instagram and other sites are increasingly asking their followers to pay to support them. We may do this to access extras like personal chats or a newsletter from our favorite online personality, or for the good vibes to support the online work we love.

And if there’s one thing that unites many people trying to make money from fan payments, it’s Apple’s irritation.

You may know that some app makers are angry about the fees Apple collects on certain digital purchases in iPhone apps. If you buy extra lives in a video game app or subscribe to a dating service on your iPhone, Apple collects up to 30 cents on every dollar spent.

But many people who earn income from working online also pay these fees to Apple, indirectly.

Here’s an example: let’s say you like this cycling channel on YouTube and click on the YouTube app on your iPhone to become a member for $5 a month. Your money is divided into three. Apple gets $1.50. YouTube takes $1.05. The cycling channel gets $2.45, which is less than half of what you think you’ll pay them.

Many internet creators argue that Apple doesn’t deserve so much of their revenue for what they see as the company’s fringe involvement in the relationship between online creative work and fans. And they say Apple’s fees — in addition to those of sites like YouTube, Facebook and Twitter — are making creative pursuits, which are already difficult, even harder.

“It’s a ridiculous tax that they levy for no reason,” online personality Hank Green said of Apple’s charges.

An Apple spokesperson told me that fees on a small minority of what people do in apps are just compensation for the company’s role in the internet economy and for making payment easier. stuff from our phones. People also feel more confident paying with the credit card on file with Apple than giving account information to people on YouTube or Instagram.

He pointed out that Apple doesn’t take a discount when people pay online personalities from a web browser or when people use virtual tip jars on apps like Twitch.

This week, On Tech focuses on the online creator economy, the people who are so good at entertaining or sharing information online that they make a job out of it. Tensions between creators and Apple will likely only grow as fan payments become more prevalent, both in popular apps and with niche subscription services like Patreon, OnlyFans and Substack. (OnlyFans and Substack don’t have apps. Patreon, a service that lets people pay musicians, online personalities, and podcasters, doesn’t remit creator fees to Apple.)

Apple’s fees may not be a huge burden on Green and other well-earning creators. But Jasmine Rice, co-founder of a service called Fanhouse that lets people subscribe to video creators, said payments to Apple can mean months of rent or other expenses for the vast majority of people who are scrambling to make an income from their online work.

Fanhouse publicly fought with Apple last year to pressure the company to change its creator pricing. Rice told me that her company had tried to persuade Apple to waive its commissions or take their share of the 10% commission that Fanhouse collects from creators rather than the total amount that fans pay. Apple said no, Rice said, and gave Fanhouse a six-month grace period to pay the full costs.

One thing I’ve heard over and over again from these online pros is that Apple not only stands in the way of creator revenue, but promising ideas as well.

Li Jin, an investor in internet creative companies, said she comes across business ideas that can’t get off the ground because Apple’s fees erode profit potential.

“There are a lot of mouths to feed, and the reduction in app revenue is really, really high,” Jin said. (She wrote more on this topic last year.)

The internet economy and creators’ earning potential would be much less if Apple didn’t help make smartphones the most popular computer in history. But now we see financial standards and systems established in the early days of digital life sometimes holding back the internet of 2022.

Tomorrow in On Tech: How an online personality is making money from digital work in a million different ways.