Fanhouse is a platform for YouTubers to get paid by fans. Apple wants 30% of the fees.
For Apple, buying 25 Gems in Random Hypercasual Game # 13 to beat a level faster is exactly the same thing as buying a quick, one-on-one chat with your favorite social media personality.
But it is not.
And therein lies the problem.
Fresh from its still pending legal dispute with the multi-billion dollar gaming conglomerate Epic, Apple is taking over a small startup in the creator economy Fan house. Fanhouse – that’s basically OnlyFans minus the nudity, according to The Verge – helps influencers make a few dollars by connecting with their fans. According to co-founder Jasmine Rice, we’re not talking about millions of dollars: it’s rents, meals, medical expenses.
But much of that revenue goes through their iPhone app, and Apple wants a 30% cut.
Since Fanhouse pays the creators 90% of their fans’ post and only keeps 10%, a 30% cut would come directly from individuals.
“I co-founded @fanhouseapp 8 months ago to allow YouTubers to monetize their content,” Rice said Posted on Twitter hours ago. “We pay the YouTubers 90% of the income. Now Apple is threatening to remove Fanhouse from the App Store unless we give them 30% of the creators’ earnings. That is theft and exploitation. “
The problems go beyond the percentages.
A virtual good can be sold billions of times with almost no marginal cost. For example, the gems I just mentioned are just combinations of 1 and 0 in a server somewhere. They are purely digital: can be copied, transferred, changed. Every time they are sold, 100% cash flow goes into the app. So a 30% cut on Apple isn’t very tough.
In a certain way, this also applies to a magazine, a song, a newspaper.
A service like Fanhouse, on the other hand, takes a long time to create and deliver. A private one-on-one conversation with a fan cannot be repeated a billion times: it actually has to occur a billion times for the income to be paid out that many times.
Not only does Apple’s pricing structure fail to recognize marketplace apps that enable transactions between two or more other parties and that the selling party must pay before it begins generating revenue. It also doesn’t recognize or differentiate between different types of in-app purchases.
That’s pretty clear in the Apple App Store Guidelines:
“If you want to activate functions or functions within your app (for example: subscriptions, game currencies, game levels, access to premium content or activation of a full version), you must use the in-app purchase.”
Some apps, such as content reader apps, cross-platform services, business services, apps that sell physical products outside of the app, or personal services, may use alternative payment methods, according to Apple:
“If your app enables real-time purchases of personal services between two people (such as student tutoring, medical advice, property visits, or fitness training), you can use purchase methods other than in-app purchase to collect those payments. One-to-few and one-to-many real-time services must use in-app purchases. “
Fanhouse clearly offers personal services so that buyers can be sent to purchase outside of the app. This would of course require building a separate shop, creating server functions to tell the app what was purchased, and managing customer financial data.
Above all, it would make the purchase process more difficult for customers because they would have to leave the app and enter credit card details on a website.
In all likelihood that would destroy the functionality of Fanhouse. And it’s not clear under Apple’s guidelines that Fanhouse could tell people in the app how to pay. Or whether Fanhouse could provide a link in the app for payment processing outside the app.
On the one hand, it’s not hard to believe that Apple is making money as a platform owner and payment processor. On the flip side, you buy things on your desktop computer every week without any of that purchase price going to Microsoft or Apple just because you used a MacBook or Surface Pro to visit a website and make a purchase.
Why should a phone – the most personal of all computers – be any different?
Apple argues that it doesn’t. Use the web browser and do what you want, Apple will tell you. But use our payment services in the App Store and pay for the Piper.
It is increasingly looking like this will be an untenable position for Apple.
At the very least, Apple needs to know more precisely what types of services are being offered or what products are being sold. And if Apple doesn’t voluntarily make changes, a government somewhere will likely force the company to do so.