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Apple by comparison demands 15% which is 3.5x as much of a cut. Apple provides credit card processing, and approval into the App Store (plus acco

Apple by comparison demands 15% which is 3.5x as much of a cut. Apple provides credit card processing, and approval into the App Store (plus according to a comment in this email, it sounds like they keep Netflix in the App Store promotion rotation as "free" ad-space). This isn't anywhere near the value that AWS provides That's debatable. To put it mildly. Apple provides them access to, literally, nearly a billion potential customers who, on average, spend twice as much on app store purchases relative to Android users. [1] Apple spends billions of dollars to do this, by creating (by many measures) best-in-class hardware devices, including designing their own bespoke in-house CPUs that trounce the majority of their consumer level competition. It's not directly comparable to what AWS does, so I'm not sure we could possibly quantify how valuable it is to Netflix vis-a-vis AWS. However: it sure isn't nothing, and may well be 3.5x the value that AWS provides. [1] https://timesofindia.indiatimes.com/gadgets-news/iphone-users-spend-more-money-on-apps-than-android-users-report/articleshow/83947757.cms https://timesofindia.indiatimes.com/gadgets-news/iphone-user...

CardenB 5y ago
Apple doesn’t provide access to these customers. Maybe a small portion are limited to iOS access for Netflix. In reality there are many general service platforms that provide access to Netflix in combination with ISPs. If chrome had a 15% fee to allow users to access websites then I think it would be pretty damaging to innovation on the web.
- wolverine876 5y ago
  > If chrome had a 15% fee to allow users to access websites then I think it would be pretty damaging to innovation on the web. It would also be very damaging to Chrome, because users would promptly download another browser. People generally carry one phone and switching to another is much more costly than switching browsers.
richardw 5y ago
Apple’s value is the set of customers who sign up first on iOS rather than web (edit: and who couldn’t be nudged to the web). I’d guess the number isn’t the full billion, but enough that Netflix doesn’t want to lose them.
- JohnBooty 5y ago
  Anecdotally, there are a lot of "app only" users out there who aren't familiar with opening up a browser application and typing in a URL. I don't know what percentage of users we're talking about, there. But I have experienced plenty of users that are comfortable with tapping an app on their phones, and even installing one from an app store, but aren't comfortable with using a web browser. It's not just older, non-technical users. Lots of kids have never known anything but apps. You know how your "average" Mac/PC user would have looked at you funny if you told them to open a terminal or command prompt 15 years ago? That is how many kids view a web browser these days - a slightly weird relic of an earlier time. (Just to be clear: I detest this state of affairs!)
  - ipaddr 5y ago
    To be fair those kids are not paying for netflix and a browser is an app or a siri command away. There are people who watch tv and others who pay the cable bill.
  - richardw 5y ago
    That’s very interesting. I wouldn’t have guessed that.
brokencode 5y ago
That’s an extremely charitable assessment. Everybody knows what Netflix is already. There is little need for Netflix to market its service. They benefit from marketing specific shows, but I really doubt they benefit from marketing the app itself. And even if they did, 15% of their revenue for marketing? Forever? That is some amazingly expensive marketing. Apple is extracting rent, plain and simple. If they truly cared to partner with Netflix and make them successful, they wouldn’t have launched their own competing product that they get to host on their App Store rent-free.
- fiddlerwoaroof 5y ago
  And iOS is Apple’s walled garden: if Netflix doesn’t like the membership fee, they can always give up the iOS user base.
  - brokencode 5y ago
    Sure, it’s Apple’s right to charge whatever extortionate fees they want on their platform. They just shouldn’t act surprised when governments around the world start hitting them with antitrust lawsuits and new regulations. Or how about this: maybe they could do the right thing even if they make less profit? Because they make limitless amounts of money as it is? Nah, that doesn’t sound right.. it’s better to keep on inviting the wrath of higher powers so that they can juice the earnings per share.
ls15 5y ago
> Apple provides them access to, literally, nearly a billion potential customers Are they providing them access or are the not denying them access?
- JohnBooty 5y ago
  There are a lot of things I hate about Apple's App Store, but it provides some significant services. It is not a simple "pipe" between developers and users. For developers it provides seamless and secure payments, SDKs, APIs, an IDE, and app distribution and updates to roughly a billion customers. For end-users, it provides a mostly seamless experience, and (unlike other app stores) a nearly airtight guarantee that an app won't be fraudulent, won't install spyware, won't fuck up your machine, and can be easily uninstalled if you don't like it. There are myriad flaws, and we can choose hate the overarching concept of folks needing an "app store" instead of simply running apt-get or whatever like Real Computer Users™. We can certainly choose to hate many things about it, like Apple's gatekeeping w.r.t. adult/controversial apps or their maddening review process. But the things they do provide are significant and clearly have value to many. So yes, I think it's appropriate to think of them as "providing access" and not merely "not denying it."
  - ls15 5y ago
    The services are significant, but at the same time, Apple commoditizes the users, which only works, because they are gatekeeping all software installations. If users were free to install alternative app stores after a big fat security warning, I doubt that Apple's 30% share would work as today.
danShumway 5y ago
> Apple provides them access to This is in many ways the same argument that ISPs used during the net neutrality debates as to why Netflix should have to pay them extra money. Netflix was using all the bandwidth, and ISPs were keeping that access fast... blah, blah, blah. Many of the objections that I had to ISPs trying to double-dip on bandwidth fees back then also apply to this idea that Apple's product to Netflix is its customers. The thing is that Apple provides a platform for their customers to access Netflix. Apple benefits heavily from Netflix being on their platform, they would lose a lot of customers if every content provider decided to leave iOS tomorrow. Those customers pay Apple for a phone that they can use to watch their favorite TV shows, they pay Apple for a device that can keep pace in capabilities with other tablets and phone OSes on the market. So the argument that Apple deserves compensation for maintaining a market that is itself regularly compensating them is the same kind of double dipping that ISPs tried to engage in. I pay my ISP for an Internet connection so that I can access websites. People pay Apple for good hardware with a good app store. That's the arrangement; the deal isn't really happening on Netflix's side of the table. It's very difficult to argue that Apple has invested in best-of-class hardware for Netflix's sake. They did it so that people would pay them money to buy phones. Apple is not selling their phones at a loss, and they were clear during the recent trial with Epic that they do not look at the app store as a revenue target. Taking fees for maintenance is one thing, but it's very difficult to seriously argue that Apple had an idea for a 3rd-party platform and then made an attractive phone in order to support that platform. We all know that it's the other way around. This talk about Apple being the gatekeeper that graciously allows companies access to a market is also a somewhat dangerous road to go down, because it creates a lot of perverse incentives for the company. I have no doubt that some parts of Apple's leadership do think of their customer base as an asset that they offer other companies. And I think that attitude can help explain some of Apple's lock-in behavior and refusal to work with other platforms, because when users are an asset to be horded and leveraged, it becomes more important to force them to be loyal and to make it harder for them to switch platforms based on your future business decisions. I feel like one of the biggest lessons of the modern Internet is that it's dangerous for consumers when companies start referring to their customer base as a product. Apple is occasionally a breath of fresh air in that regard. But in this case, not so much.
- 5y ago
pentae 5y ago
> Apple provides them access to, literally, nearly a billion potential customers On the flip side, if Apple were to no longer provide access to Netflix to those customers, they would be downright hostile about it and would be a watershed moment for Android. What % would change their next phone to one that "Has Netflix"? 10%? 20%? What would it cost Apples reputation to no longer support the juggernaut media consumption app? billions, probably. Apple knows how much time people spend watching Netflix on their devices, they are not in a position to be negotiating. I know anecdotally my mother would be on the phone almost immediately asking what android tablet to buy if this was to ever happen.

CardenB 5y ago

Apple doesn’t provide access to these customers. Maybe a small portion are limited to iOS access for Netflix. In reality there are many general service platforms that provide access to Netflix in combination with ISPs. If chrome had a 15% fee to allow users to access websites then I think it would be pretty damaging to innovation on the web.

wolverine876 5y ago
> If chrome had a 15% fee to allow users to access websites then I think it would be pretty damaging to innovation on the web. It would also be very damaging to Chrome, because users would promptly download another browser. People generally carry one phone and switching to another is much more costly than switching browsers.

richardw 5y ago

Apple’s value is the set of customers who sign up first on iOS rather than web (edit: and who couldn’t be nudged to the web). I’d guess the number isn’t the full billion, but enough that Netflix doesn’t want to lose them.

JohnBooty 5y ago
Anecdotally, there are a lot of "app only" users out there who aren't familiar with opening up a browser application and typing in a URL. I don't know what percentage of users we're talking about, there. But I have experienced plenty of users that are comfortable with tapping an app on their phones, and even installing one from an app store, but aren't comfortable with using a web browser. It's not just older, non-technical users. Lots of kids have never known anything but apps. You know how your "average" Mac/PC user would have looked at you funny if you told them to open a terminal or command prompt 15 years ago? That is how many kids view a web browser these days - a slightly weird relic of an earlier time. (Just to be clear: I detest this state of affairs!)
- ipaddr 5y ago
  To be fair those kids are not paying for netflix and a browser is an app or a siri command away. There are people who watch tv and others who pay the cable bill.
- richardw 5y ago
  That’s very interesting. I wouldn’t have guessed that.

brokencode 5y ago

That’s an extremely charitable assessment. Everybody knows what Netflix is already. There is little need for Netflix to market its service. They benefit from marketing specific shows, but I really doubt they benefit from marketing the app itself. And even if they did, 15% of their revenue for marketing? Forever? That is some amazingly expensive marketing. Apple is extracting rent, plain and simple. If they truly cared to partner with Netflix and make them successful, they wouldn’t have launched their own competing product that they get to host on their App Store rent-free.

fiddlerwoaroof 5y ago
And iOS is Apple’s walled garden: if Netflix doesn’t like the membership fee, they can always give up the iOS user base.
- brokencode 5y ago
  Sure, it’s Apple’s right to charge whatever extortionate fees they want on their platform. They just shouldn’t act surprised when governments around the world start hitting them with antitrust lawsuits and new regulations. Or how about this: maybe they could do the right thing even if they make less profit? Because they make limitless amounts of money as it is? Nah, that doesn’t sound right.. it’s better to keep on inviting the wrath of higher powers so that they can juice the earnings per share.

ls15 5y ago

> Apple provides them access to, literally, nearly a billion potential customers Are they providing them access or are the not denying them access?

JohnBooty 5y ago
There are a lot of things I hate about Apple's App Store, but it provides some significant services. It is not a simple "pipe" between developers and users. For developers it provides seamless and secure payments, SDKs, APIs, an IDE, and app distribution and updates to roughly a billion customers. For end-users, it provides a mostly seamless experience, and (unlike other app stores) a nearly airtight guarantee that an app won't be fraudulent, won't install spyware, won't fuck up your machine, and can be easily uninstalled if you don't like it. There are myriad flaws, and we can choose hate the overarching concept of folks needing an "app store" instead of simply running apt-get or whatever like Real Computer Users™. We can certainly choose to hate many things about it, like Apple's gatekeeping w.r.t. adult/controversial apps or their maddening review process. But the things they do provide are significant and clearly have value to many. So yes, I think it's appropriate to think of them as "providing access" and not merely "not denying it."
- ls15 5y ago
  The services are significant, but at the same time, Apple commoditizes the users, which only works, because they are gatekeeping all software installations. If users were free to install alternative app stores after a big fat security warning, I doubt that Apple's 30% share would work as today.

danShumway 5y ago

> Apple provides them access to This is in many ways the same argument that ISPs used during the net neutrality debates as to why Netflix should have to pay them extra money. Netflix was using all the bandwidth, and ISPs were keeping that access fast... blah, blah, blah. Many of the objections that I had to ISPs trying to double-dip on bandwidth fees back then also apply to this idea that Apple's product to Netflix is its customers. The thing is that Apple provides a platform for their customers to access Netflix. Apple benefits heavily from Netflix being on their platform, they would lose a lot of customers if every content provider decided to leave iOS tomorrow. Those customers pay Apple for a phone that they can use to watch their favorite TV shows, they pay Apple for a device that can keep pace in capabilities with other tablets and phone OSes on the market. So the argument that Apple deserves compensation for maintaining a market that is itself regularly compensating them is the same kind of double dipping that ISPs tried to engage in. I pay my ISP for an Internet connection so that I can access websites. People pay Apple for good hardware with a good app store. That's the arrangement; the deal isn't really happening on Netflix's side of the table. It's very difficult to argue that Apple has invested in best-of-class hardware for Netflix's sake. They did it so that people would pay them money to buy phones. Apple is not selling their phones at a loss, and they were clear during the recent trial with Epic that they do not look at the app store as a revenue target. Taking fees for maintenance is one thing, but it's very difficult to seriously argue that Apple had an idea for a 3rd-party platform and then made an attractive phone in order to support that platform. We all know that it's the other way around. This talk about Apple being the gatekeeper that graciously allows companies access to a market is also a somewhat dangerous road to go down, because it creates a lot of perverse incentives for the company. I have no doubt that some parts of Apple's leadership do think of their customer base as an asset that they offer other companies. And I think that attitude can help explain some of Apple's lock-in behavior and refusal to work with other platforms, because when users are an asset to be horded and leveraged, it becomes more important to force them to be loyal and to make it harder for them to switch platforms based on your future business decisions. I feel like one of the biggest lessons of the modern Internet is that it's dangerous for consumers when companies start referring to their customer base as a product. Apple is occasionally a breath of fresh air in that regard. But in this case, not so much.

5y ago

pentae 5y ago

> Apple provides them access to, literally, nearly a billion potential customers On the flip side, if Apple were to no longer provide access to Netflix to those customers, they would be downright hostile about it and would be a watershed moment for Android. What % would change their next phone to one that "Has Netflix"? 10%? 20%? What would it cost Apples reputation to no longer support the juggernaut media consumption app? billions, probably. Apple knows how much time people spend watching Netflix on their devices, they are not in a position to be negotiating. I know anecdotally my mother would be on the phone almost immediately asking what android tablet to buy if this was to ever happen.