With its annual Worldwide Developers Conference quickly approaching, Apple may be axing off the 30 percent fee media companies pay on subscriptions in its App Store, reported the Financial Times late last week (June 5).
Apple is in talks to update its commercial terms with music, video and news companies, changing its longstanding 70/30 “Apple tax” which has been around since iTunes was launched over 10 years ago, sources close to the matter told the Financial Times.
“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,” the Financial Times reported. “Apple paid out $10 billion 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,” they added.
The announcement of these potential changes comes at a time where rumors of an Apple-branded music subscription service continue to swirl. Many are expecting Apple to unveil the streaming service at today’s WWDC event.
The service may provide access to an on-demand library of content and a comparable subscription price, rivaling that of Swedish giant Spotify. Apple sells around 80 to 85 percent of the music downloads, but is nowhere near that within the streaming business. It has also been losing download sales, with a 13 percent fall last year, adding insult to injury.
“Apple has so far only taken a few tentative steps into streaming with iTunes Match and iTunes Radio, but this sounds like it could be the next big thing in online music delivery,” TechCrunch reported in its coverage of what to expect from WWDC. “This service will be partly based on what Apple got out of the Beats acquisition, but it’s more about the relationships that were built for that platform than the tech behind Beats Music itself,” they explained.
According to the Financial Times, adjusting Apple's current terms may open the door for Apple devices to become a more attractive platform for content creators, especially as Google, Facebook and Snapchat are incorporating more news articles and videos into their apps and services.
While Apple’s rumored streaming service may be a highlight of today’s WWDC, attention will also be focused on what’s next for Apple Pay and Apple Watch.
To check out what else is HOT in the world of payments, click here.