Apple looks for more money by changing the math on Patreon
App users, developers have little choice but to pay 'taxes' to tech giants like Apple, experts say
Content creators who use the online platform Patreon may need to increase prices for their supporters to make up for tech giant Apple claiming a 30 per cent share of any transactions completed within the platform's app on iOS devices such as iPhones or iPads.
Patreon lets individuals or companies charge people for the material they create, either as one-off or recurring monthly payments. Content on Patreon can include everything from podcasts and personal training, to music, comics and more. Much of it is digital, but creators can offer physical merchandise as well.
Starting in November 2024, Apple will require Patreon to pay a fee on any products and new memberships purchased through the Patreon iOS app.
Apple already applies this fee to many other apps and providers on their App Store. It did not enforce the fee with Patreon until recently, though the reason Patreon was exempt is unclear.
Apple did not respond to CBC News's requests for comment. In an emailed statement, Patreon says it doesn't have "much flexibility with this change" and is trying to prevent it from seriously disrupting creators' earnings.
It pointed out the new fee would not apply to existing memberships, but only to new transactions made within the app on Apple devices.
Patreon says it's "preventing disruption" to creator revenue, in part, by creating tools to automatically increase prices in the iOS app to maintain creator earnings.
The company also said it does not recommend that creators leave their prices as-is, because Apple's 30 per cent cut will come out of the money the content provider would have made — not out of Patreon's revenues.
Creators not pleased with this change
The move is getting mixed to negative reviews from some Patreon creators.
"I'm mad at Apple," said Ernie Smith, a Patreon user and editor-in-chief of the tech newsletter Tedium.
According to Smith, who is based in Virginia, Patreon should leave the Apple ecosystem, "cut their losses on this whole app thing" and just take payments on its website, where an Apple fee would not apply.
"When I signed up for Patreon it was just a website, you know?" he said, laughing.
For Edmonton-based Patreon user and podcast producer Craig Baird, the change might force him to raise his prices for his supporters.
The price hike might not feel drastic at first, he says, as the lowest tier for his own Patreon, Canadian History Ehx, costs $3 a month.
But nothing about the product he creates or Patreon itself has changed to justify this increase.
"It kind of feels like the Apple cost is just being transferred right to me," he said.
Currently, it's unclear what the dollar value of these increases might be. Podcasters such as Baird do not have specifics on how many users pay using the Apple ecosystem, and Patreon declined to provide that data to CBC News.
While it's possible to raise prices just for Apple users, App Store rules could mean he cannot actively tell people of cheaper alternatives.
Baird said he'll need to find a way to accommodate this change because many of his podcast listeners use Apple Podcasts, and would be automatically directed to the iOS Patreon app to pay if they clicked a link in his show.
'No choice' for app developers and users
Industry watchers and tech analysts point out that the Apple iOS system is one of the most popular operating systems for cellphone users in the world, and if app providers want access to iPhone users, they are beholden to the decisions of the tech giants.
"The app developers don't have any other choice other than to sort of pay these taxes, as you might call them, to the platform owners," said Mohammad Keyhani, an associate professor of entrepreneurship at the University of Calgary's Haskayne School of Business.
Apple had won and lost some court battles in recent years against Fortnite developer Epic over similar policies, with Epic losing several rulings over its attempts to bypass Apple's 30 per cent fee.
In one situation, a court ordered that Apple could not block developers from offering alternative payment methods that avoided the 30 per cent fee. But Keyhani says Apple reacted by instead charging a 27 per cent fee on anything that used alternative payment methods.
Developers who try to find alternatives to any of these fees risk being banned from the Apple App Store.
He said governments may begin to pay attention as companies such as Apple or Google become gatekeepers of not just what's happening on devices around the world — but how customers pay for what they choose to do.
"Governments, judges, judicial systems around the world are going to realize that now, these companies really have … established a taxation system on all sorts of value creation that happens in the economies under their control, which is the app platforms," said Keyhani.
However, London, Ont.-based tech analyst Carmi Levy isn't sure Canadian authorities would move quickly to intercept the behaviour of those companies.
"Canada tends to be a laggard in terms of introducing new laws that would curb the excesses that we're seeing in the technology industry," said Levy.
He noted that those who rely on services that, in turn, rely on Apple platforms will need to accept that they may not get as much of a say as they'd like.
"The sad fact, if you're a creator who uses Patreon to raise subscription revenue and drive your career, is that someone else built the playground and someone else gets to make the rules. And in this case, [that's] Apple."
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