Apple just put Amazon's Jeff Bezos in a tricky position
Brent Lewis
Amazon CEO Jeff Bezos explained why earlier this month:
When we sell those devices, we want our player - our Prime Video player - to be on the device, and we want it to be on the device with acceptable business terms. You can always get the player on the device. The question is, can you get it on there with acceptable business terms?
Well, Apple just changed its business terms - now it's up to Amazon to decide if they're "acceptable."
On Wednesday, Apple announced that it will take a smaller share of money from app developers who sell subscriptions through Apple apps.
Previously, Apple took a 30% cut of any transaction initiated through an Apple app - including monthly fees. That's a big issue for TV services like HBO Now, which would see a substantial proportion of its revenue go to Apple while it provides an (often expensive) service. (That's why if you sign up for Spotify from an iPhone, it will charge you more than if you sign up from a browser.)
Now, Apple is letting developers keep 85% of revenue if their customers continue to subscribe to a service for longer than a year. After 12 months, Apple's cut is effectively halved.
This change has less to do with iPhone apps than it does with new streaming video services on Apple TV.
In fact, Apple has already quietly been offering TV partners a deal with a 15% cut for most of the past year. Recode's Peter Kafka writes:
While Apple and its partners have never talked about it publicly, my understanding is that a handful of video services, including Netflix, Hulu Plus and pro-baseball's MLB.TV, give Apple 15 percent of their monthly fees for any subscriber who signs up on Apple TV.
As of now, most of the apps on Apple TV only stream video to people who have pay TV subscriptions, such as DirecTV or cable.
But this tweak means that a channel that wants to provide a paid experience that you can sign up for on Apple TV will be able to keep more money from those subscriptions than they used to - possibly encouraging them to take a second look at signing up new customers through Apple's set-top box.
Whether Bezos finds these new terms to be more "acceptable" remains to be seen. Bezos may not want to send any revenue from Amazon's Prime subscription to Apple, but the change might be enough to bring him back to the table.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
- I'm an interior designer. Here are 10 things in your living room you should get rid of.
- Higher-paid employees looking for work are having a tough time, and it could be a sign of a shift in the workplace
- A software engineer shares the résumé he's used since college that got him a $500,000 job at Meta — plus offers at TikTok and LinkedIn
- 7 scenic Indian villages perfect for May escapes
- Paneer snacks you can prepare in 30 minutes
- Markets crash: Investors' wealth erodes by ₹2.25 lakh crore
- Stay healthy and hydrated: 10 immunity-boosting fruit-based lemonades
- Here’s what you can do to recover after eating oily food