Apple mulled 40% take of subscription fees in 2011

Documents made public as part of a U.S. House probe into Apple’s business practices reveal the company discussed taking a 40% cut of App Store subscription revenue.

In an email dated 2011, Apple SVP Phil Schiller forwarded a strategy that would take a 40% slice of service subscription fees. The House Judiciary Committee produced the correspondence in a tweet posted during today’s antitrust hearing.

“For recurring subscriptions, we should ask for 40% of the first year only but we need to work a few deals to see what is right,” Schiller wrote.

The suggestion was in response to a fee structure proposed by Jai Chulani, Apple’s director of worldwide product marketing for Apple TV & Digital Media products. At the time, Chulani said Apple should take a 30% “bounty” of one-time transactions, while asking for an ongoing 30% fee on continuing subscriptions for digital content services.

Subscriptions were a relatively new concept for Apple and it appears the company was hashing out how best to balance platform cost structures. Subscriptions for services like those offered by MLB and NBA, and recurring subscriptions for products like Hulu, were discussed by name in the email.

“I think we may be leaving money on the table if we just asked for about 30% of the sub,” Chulani’s email reads.

Apple ultimately settled on a 30% cut of third-party subscriptions, identical to fees levied on developers in the App Store. The company in 2016 updated its app subscription policy, reducing its take of developer revenue to 15% for customers who maintain a subscription for more than one year.

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