4 ms·

> whether or not Netflix derives value from their relationship with Apple, or not I think that's a very different question than whether or not Apple has a stro

> whether or not Netflix derives value from their relationship with Apple, or not I think that's a very different question than whether or not Apple has a strong argument that Netflix ought to pay them for that value. As an example, Apple extracts value from its customers who sign up for Netflix on its platform. But Apple is not paying any of that money back to its customers, and I doubt it would try to argue that it has an obligation to do so. The way I see it is: - Apple customers pay Apple for strong hardware and a vibrant platform that supports their favorite content/apps. - Developers pay Apple for support/moderation on the app store. I don't see the loose ends here where Netflix owes Apple anything beyond maintenance costs. Of course both Apple and Netflix benefit from each other. But the argument that Apple is providing Netflix a service by giving them access to those customers twists the relationship that Apple should have with its customers, sets up a bad incentive structure for the company, and feels very analogous to the kind of double-dipping behavior that we called out with ISPs. The fact that Netflix gets value from Apple's relationship with its own user base does not create some kind of extra obligation for Netflix. Sometimes people/companies do things that happen to benefit other companies as a side effect of selling a product. It doesn't immediately mean everyone else who benefits is obligated to pay them money. > The same could be said of AWS. Amazon didn't create it solely for Netflix's sake. I don't think that's analogous at all. Netflix is directly in the category of customer that AWS is designed to serve. AWS is a hosting service that is sold to Netflix and to companies like Netflix, companies that needs hosting. On the other hand, iOS does not exist for app developers, it exists for consumers. It's a weird perversion of that relationship to treat Netflix like they're a customer. Consumers are the customers. Plenty of companies invert that relationship (Facebook, Google, etc); those are products where advertisers are the customer and consumers are a product that is given a benefit in the form of a free service. Apple (often to its credit) went a different direction. But it doesn't now get to pretend that it's in both positions at the same time :) An analogous situation between AWS and iOS would be if Amazon started charging me as a consumer for access to Netflix's servers in addition to charging Netflix for hosting costs, and if AWS then argued that this was a fair price because I was benefiting from Netflix's increased performance on their servers. > Many ISPs have a local monopoly over broadband access. ISP monopolies made the problem worse, but their arguments about Netflix paying their "fair share" would have been disingenuous even if they were not monopolies. Customers paid ISPs for access to websites, there was nothing "fair" about ISPs trying to double-dip and charge companies and consumers twice for the same service. Similarly, Apple customers (the people who buy its hardware and subscribe to its cloud services) pay Apple for access to the market it created. It's not unfair for Netflix to profit off of that market without compensating Apple, because Apple is already being compensated by its real customers. For an Apple exec to argue that its customer base is a service they provide to other companies is a perversion of that relationship. And pretty selective, because again, it's not like Apple is reducing prices or paying out parts of its Netflix profits to consumers for the value they provide Apple by forming that market. At least Facebook is free. Outside of basic maintenance costs for the stuff jacurtis mentioned, stuff that's necessary to keep the app store free to access: "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)", what is Apple providing for Netflix that hasn't already been paid for by consumers? That's the analogy I see with the ISPs: not the monopoly stuff necessarily, more the illogical feeling that multiple different parties are somehow simultaneously responsible for paying Apple multiple times for the same service or else they're freeloading. Of course, ultimately Apple will try to extract as much value as possible out of their position, they're a company, that's what they do. They will charge Netflix because they can. But as consumers and onlookers, we don't have to pretend that they have a moral argument or buy into their public justifications about why they have the setup that they have. Netflix is not freeloading on Apple and Apple is not providing a fantastic well-priced service for developers; Apple is exploiting a position of power that allows them to charge both customers and developers twice for the same product (market access).

JohnBooty 5y ago
I think that's a very different question than whether or not Apple has a strong argument that Netflix ought to pay them for that value. Capitalism is awful in a lot of ways, but this is kind of its core thing. Apple extracts value from its customers who sign up for Netflix on its platform. As opposed to what? Google/Microsoft/Roku/Sony/whoever not extracting value from their app stores? The difference here is that Apple treats end users as customers and charges them money directly. Google and the others extract plenty of value from you. But they do it by advertising to you and selling your information. You can like one model better than the other, but either they're gonna extract value from you. It's just a matter of how you want it done. At least Facebook is free. (actual laugh out loud) Okay. I don't think that's analogous at all. Netflix is directly in the category of customer that AWS is designed to serve. AWS is a hosting service that is sold to Netflix, a company that needs hosting. Well, nobody likes a middleman. Do you also hate Netflix because they're a middleman between you and the actual performers in the shows you watch? They don't pass your entire subscription fee onto the directors, writers, and actors. And even when they get paid, their agents keep some of it. I'm not necessarily loving Apple taking a cut. I don't know if it's worth 15%. But I was initially responding to the question posed by the the great great great grandparent post (or whatever) claimed that Apple's app store provided zero value or something close to it, which I think is absurd. You may not like what they're selling and that's fine, but that's different from them offering zero value.
- danShumway 5y ago
  > The difference here is that Apple treats end users as customers and charges them money directly. It sounds to me like you're arguing it's valid for Apple to both treat its end users as customers and sell them to companies like Netflix as a product. Look, I admire that Apple tries to have a direct relationship with customers. What went on with Netflix was contrary to that goal. It is movement in the direction of Facebook/Google/etc. And Apple should be better than that. > At least Facebook is free. (actual laugh out loud) I also really genuinely don't understand the derision about this. If I'm going to be a product (and it sounds to me that you're arguing Apple has a right to treat me like a product) then of course I would like to get some benefit out of that. Or, don't treat me like a product. I don't understand what's ridiculous about wanting a company to pick a lane on what relationship they'll have with their customers and commit to whether they're going to sell to them or not. I don't get why it would be beneficial to me as a consumer for a company like Apple to try and simultaneously extract value from me directly and extract value from me indirectly as an asset they can sell to other companies. Like, go ahead, make fun of Facebook for giving me a product for "free", but you're arguing that it's valid for Apple to be Facebook in the sense that it's selling access to me, and then to also directly charge me substantial amounts of real money for the privilege of being its product that it sells to developers. Facebook is evil, but it doesn't have the guts to try and make me pay for the privilege of being sold to another company. > claimed that Apple's app store provided zero value or something close to it, which I think is absurd. I think offering value and offering a service are two different things and we should treat them as two different things. It's too easy otherwise for rent extractors to suck up value out of systems. Apple's argument is that it deserves a certain payment structure because it controls access to a market. Or course it's worthwhile to try and figure out whether Apple is providing a real service by acting as a middleperson in both directions simultaneously, or whether it's just collecting extra rent. > Do you also hate Netflix because they're a middleman between you and the actual performers in the shows you watch? They don't pass your entire subscription fee onto the directors, writers, and actors. They most definitely do pass on a portion of that subscription fee to directors, writers, and actors. Netflix pays companies to be on their service, not the other way around. And of course it is reasonable to ask whether or not the percentage Netflix takes is fair or whether they're just extracting rent from a captive market. But this is kind of a silly comparison, Netflix's relationship to studios is almost a complete inverse of Apple's relationship with developers. Netflix courts content producers and pays for content to be either licensed to them or created for them in-house. Typically, when we get into a scenario where both consumers and producers are paying a middleperson to connect them, we should ask questions. We should ask if there are terms being imposed by that middleperson to make it difficult to reach out to customers in any other way (for example, a ban on mentioning other payment methods). We should ask if there are lock-in mechanisms that are designed to artificially increase the cost for consumers to leave the platform. We should ask how many distribution methods exist (are there only 2 streaming services in the world?) and whether or not the current market is competitive. And we should definitely ask what the value add of that middleperson is and what they think their value add is and what they think is their primary service that they sell. A responsible, positive middleperson doesn't sell a market, it sells services that make it easier to interact with that market, or it licenses and resells content from another market. I think it's a really reasonable question to ask what about the market access that Apple is arguing that developers "owe" them for hasn't already been payed for. We want middlepeople to provide a service that justifies using them over direct access, we don't want them to just be rent-seekers and we don't want their position of power to largely exist only because of restrictions and platform limitations that they created.

JohnBooty 5y ago

I think that's a very different question than whether or not Apple has a strong argument that Netflix ought to pay them for that value. Capitalism is awful in a lot of ways, but this is kind of its core thing. Apple extracts value from its customers who sign up for Netflix on its platform. As opposed to what? Google/Microsoft/Roku/Sony/whoever not extracting value from their app stores? The difference here is that Apple treats end users as customers and charges them money directly. Google and the others extract plenty of value from you. But they do it by advertising to you and selling your information. You can like one model better than the other, but either they're gonna extract value from you. It's just a matter of how you want it done. At least Facebook is free. (actual laugh out loud) Okay. I don't think that's analogous at all. Netflix is directly in the category of customer that AWS is designed to serve. AWS is a hosting service that is sold to Netflix, a company that needs hosting. Well, nobody likes a middleman. Do you also hate Netflix because they're a middleman between you and the actual performers in the shows you watch? They don't pass your entire subscription fee onto the directors, writers, and actors. And even when they get paid, their agents keep some of it. I'm not necessarily loving Apple taking a cut. I don't know if it's worth 15%. But I was initially responding to the question posed by the the great great great grandparent post (or whatever) claimed that Apple's app store provided zero value or something close to it, which I think is absurd. You may not like what they're selling and that's fine, but that's different from them offering zero value.

danShumway 5y ago
> The difference here is that Apple treats end users as customers and charges them money directly. It sounds to me like you're arguing it's valid for Apple to both treat its end users as customers and sell them to companies like Netflix as a product. Look, I admire that Apple tries to have a direct relationship with customers. What went on with Netflix was contrary to that goal. It is movement in the direction of Facebook/Google/etc. And Apple should be better than that. > At least Facebook is free. (actual laugh out loud) I also really genuinely don't understand the derision about this. If I'm going to be a product (and it sounds to me that you're arguing Apple has a right to treat me like a product) then of course I would like to get some benefit out of that. Or, don't treat me like a product. I don't understand what's ridiculous about wanting a company to pick a lane on what relationship they'll have with their customers and commit to whether they're going to sell to them or not. I don't get why it would be beneficial to me as a consumer for a company like Apple to try and simultaneously extract value from me directly and extract value from me indirectly as an asset they can sell to other companies. Like, go ahead, make fun of Facebook for giving me a product for "free", but you're arguing that it's valid for Apple to be Facebook in the sense that it's selling access to me, and then to also directly charge me substantial amounts of real money for the privilege of being its product that it sells to developers. Facebook is evil, but it doesn't have the guts to try and make me pay for the privilege of being sold to another company. > claimed that Apple's app store provided zero value or something close to it, which I think is absurd. I think offering value and offering a service are two different things and we should treat them as two different things. It's too easy otherwise for rent extractors to suck up value out of systems. Apple's argument is that it deserves a certain payment structure because it controls access to a market. Or course it's worthwhile to try and figure out whether Apple is providing a real service by acting as a middleperson in both directions simultaneously, or whether it's just collecting extra rent. > Do you also hate Netflix because they're a middleman between you and the actual performers in the shows you watch? They don't pass your entire subscription fee onto the directors, writers, and actors. They most definitely do pass on a portion of that subscription fee to directors, writers, and actors. Netflix pays companies to be on their service, not the other way around. And of course it is reasonable to ask whether or not the percentage Netflix takes is fair or whether they're just extracting rent from a captive market. But this is kind of a silly comparison, Netflix's relationship to studios is almost a complete inverse of Apple's relationship with developers. Netflix courts content producers and pays for content to be either licensed to them or created for them in-house. Typically, when we get into a scenario where both consumers and producers are paying a middleperson to connect them, we should ask questions. We should ask if there are terms being imposed by that middleperson to make it difficult to reach out to customers in any other way (for example, a ban on mentioning other payment methods). We should ask if there are lock-in mechanisms that are designed to artificially increase the cost for consumers to leave the platform. We should ask how many distribution methods exist (are there only 2 streaming services in the world?) and whether or not the current market is competitive. And we should definitely ask what the value add of that middleperson is and what they think their value add is and what they think is their primary service that they sell. A responsible, positive middleperson doesn't sell a market, it sells services that make it easier to interact with that market, or it licenses and resells content from another market. I think it's a really reasonable question to ask what about the market access that Apple is arguing that developers "owe" them for hasn't already been payed for. We want middlepeople to provide a service that justifies using them over direct access, we don't want them to just be rent-seekers and we don't want their position of power to largely exist only because of restrictions and platform limitations that they created.