Apple’s Patreon fee will hurt the wrong people

Apple’s insistence on taking a slice of subscription sales made on iOS from Patreon seems short-sighted, as it effectively takes money from the pockets of creatives who probably aren’t earning that much.

Of course, from Apple’s point of view, its rules have to apply consistently and apparently it has not been consistently applying these against Patreon, which hasn’t had to cough up this cash until now.

The catch is that while Patreon has the scale to pay and still profit, many of the creative types using its service have nothing like those numbers. The choice they face — increase fees or swallow the fee — can (and probably will) demotivate some authors; it’s a choice they must make by November.

What makes this particularly difficult is it comes as changes in GDPR and online advertising have also eviscerated revenue at small websites, including my own. It’s hard not to think that disempowering small online publishers, while pouring investment into AI to replace them, is a form of cultural assassination — but perhaps that’s just me.

What else can Apple do?

Apple’s 30% fee only applies on subscriptions taken out using Patreon’s iOS app — no fee is applied to sales outside that app, so a subscription taken out using Patreon’s website should escape the charge.

But for creatives hoping to carve out an income on that service, the impact of Apple’s change means they will earn around $6 on a $10 subscription that used to generate roughly $9. That’s a big difference, and while potential subscribers may figure out how to sign-up elsewhere to escape Apple’s fee, it adds friction to the experience. And as we all know by now, friction anywhere in the customer journey affects sales.

Is there an alternative?

I think there is a viable alternative that both builds on work Apple is already doing around App Store fees in Europe while also protecting the interests of smaller creatives on Patreon — while still maintaining company policy. Why not extend the right to place a unique link within an author’s Patreon listing that leads to an external page for subscription sign-ups? This is not a million miles away from what Apple is offering in the EU, so the technology to support this already exists. 

Apple won’t want to do this, of course, because if it does so for Patreon — which is effectively a third-party provider of digital goods that works on an agency basis — then it will need to do the same thing for any other third-party digital store. That inevitably includes third-party games sellers and music-streaming services. 

A policy to nurture small creatives

There really is a big difference between million/billionaire-backed digital services and creatives trying to make a little cash writing. So perhaps Apple needs to develop a policy decision that recognizes that difference while also complying with Europe’s DMA. 

This can’t be a means-tested income, but given that developers on the App Store pay 15% or less, and some categories (including educational publishers) pay nothing, then surely there’s an opportunity to create some wriggle room? 

The spirit of Apple’s current developer deal sees apps that generate more than $1 million paying 30%, but even if Patreon does generate that, the creatives using its service just don’t. 

Where does the transaction really happen?

Maybe Apple’s policy could look more closely at where in the transaction to place the fee. When it comes to Patreon, there are three parties in the dance: platform provider Apple, subscription service provider, Patreon, and the people creating the content others sign up for.

If you think about the nature of that latter group, it is arguable that under Apple’s existing rules, if each creative offered their content on subscription via their own iOS app, they would pay nothing at all, as they would not generate a million dollars in sales each year. Patreon, however, generates around 80 cents for each $10 spent in the iOS app, according to its own data. 

Assuming that fee exceeds $1 million a year, then it is appropriate for Apple to charge a fee. But even then the impact on the creatives whose content is being subscribed to would come to just 24 to 42 cents out of every $10, which is far more reflective of the actual nature of the exchange. 

Complexity, consistency, creativity

While I recognize the need to maintain consistent policies around App Store fees and appreciate the challenges Apple faces, it feels sub-optimal to effectively charge small creatives using Patreon the same 30% fee that large entities generating millions of dollars pay. 

Perhaps another approach might be to create a new category within App Store policy that pays little or no fees, a “Community Benefit” category. This would join nonprofits, schools, and governments in being fee exempt, or it could be a much lower fee levied against Patreon’s actual commission rather than the total value of the exchange. Alternatively, Apple could lump Patreon purchases in as being the same as a reader app, which also pay lower commissions. 

Whatever Apple does decide, it seems important to note that the benefit Patreon provides to creative individuals sits miles away from the business model of competing app, game, or content stores. While I understand the complexity of building a nuanced and viable policy that recognizes that difference, I hope Apple works to figure something out. 

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