Why Online Stars Are Mad at Apple

This article is part of the On Tech newsletter. Here is a collection of past columns.

People who draw a crowd on YouTube, TikTok, Instagram and other sites are increasingly asking their followers to pay to support them. We might do this for access to extras like personal chats or a newsletter from our favorite online personality, or for the good vibes from backing online work that we love.

And if there’s one thing that unites many of the people trying to make money from fan payments, it’s irritation at Apple.

You might know that some app makers are angry over the fees that Apple collects from some digital purchases in iPhone apps. If you buy extra lives in a video game app or subscribe to a dating service on your iPhone, Apple collects as much as 30 cents of each dollar that you spend.

But many people who earn income from their online work also pay these fees to Apple, indirectly.

Here’s one example: Let’s say that you love this cycling channel on YouTube and click in your iPhone’s YouTube app to become a member for $5 a month. Your money is split three ways. Apple gets $1.50. YouTube takes $1.05. The cycling channel receives $2.45, or less than half of what you think you’re paying it.

Many internet creators say that Apple doesn’t deserve such a big chunk of their earnings for what they see as the company’s marginal involvement in the relationship between creative online work and fans. And they say that Apple’s fees — on top of those from sites like YouTube, Facebook and Twitter — make creative pursuits, which are already difficult, even harder.

“It is a ridiculous tax that they are taking for no reason,” the online personality Hank Green said about Apple’s fees.

An Apple spokesman told me that the fees on a small minority of what people do in apps are fair compensation for the company’s role in the internet economy and for making it easy to pay for stuff from our phones. People also feel more confident paying with the credit card on file with Apple than with handing over account information to people on YouTube or Instagram.

He emphasized that Apple doesn’t take a cut when people pay online personalities from a web browser or when people use virtual tip jars on apps such as Twitch.

This week, On Tech is focusing on the economics for online creators, the people who are so good at entertaining or sharing information online that they make it a job. The tensions between creators and Apple are likely to only grow as fan payments become more prevalent, both within popular apps and from specialist subscription services like Patreon, OnlyFans and Substack. (OnlyFans and Substack don’t have apps. Patreon, a service for people to pay musicians, online personalities and podcasters, doesn’t hand over fees from creators to Apple.)

Apple’s fees may not be a huge burden to Green and other creators who earn a good living. But Jasmine Rice, a co-founder of a service called Fanhouse for people to subscribe to video creators, said that payments to Apple can amount to months of rent or other expenses for the vast majority of people hustling to earn income from their online work.

Fanhouse picked a public fight with Apple last year to pressure the company to change its fees for creators. Rice told me that her company tried to persuade Apple to waive its commissions or take its cut from the 10 percent commission that Fanhouse collects from creators rather than the full amount that fans pay. Apple said no, Rice said, and gave Fanhouse a six-month grace period to pay the full fees.

One thing that I’ve repeatedly heard from these online professionals is that Apple is standing in the way not only of creators’ earnings but also of promising ideas.

Li Jin, an investor in internet creator companies, said that she comes across business ideas that can’t get off the ground because Apple’s fees erode the profit potential.

“There are many mouths to feed, and the cut of in-app revenue is really, really high,” Jin said. (She wrote more about this topic last year.)

The internet economy and income potential for creators would be far smaller if Apple didn’t help make smartphones the most popular computer in history. But we are now seeing the norms and financial systems established in the early days of digital life at times holding back the internet of 2022.

Tomorrow in On Tech: how one online personality makes money from digital work a zillion different ways.