Christopher Plowman, CEO of meditation app Insight Timer, is not happy. He doesn't think teachers who leverage their app marketplaces to reach students should have to share 30% of their revenue (fees on in-app purchases) with Apple, and has not done so in the past. For 12 months, Apple agreed. After Apple relaxes rules around in-app donations in 2022, Insight Timer now has options to adjust its digital donation feature, allowing Insight Timer teachers to collect “tips” on user profiles and during live events. . Apple has reviewed the app and approved it for release on the App Store. Now the tech giant has changed its mind and wants to collect fees from this content, Plowman said, and Insight Timer had no choice but to comply or shut down its iOS business.
The issue here is a bit complex, but it highlights the challenges developers have when navigating today's App Store and its ever-growing set of rules. These rules are often easily misunderstood by both app makers and Apple's app reviewers. Instead of working with some of Apple's development clients (the app makers that help Apple generate huge profits from its services sector), Apple's app reviews allow one rogue reviewer to It is often a haphazard process that can lead to reinterpretation of policies in different ways. It is influenced by others and in the process disrupts the developer's entire business.
That's what happened with Insight Timer, a popular meditation app with nearly 25 million installs and 3 million monthly active users. Like many App Store businesses, Insight Timer generates revenue by selling subscriptions. In 2023, it had approximately $20 million in subscription revenue, of which one-third (30%) was paid to Apple in accordance with its fee guidelines.
However, the company also offers a donation feature where customers can tip their favorite meditation teacher to show their appreciation for their time and effort.
“Our teachers are very engaged in our community. They spend a lot of time answering questions and recording video and audio responses,” Plowman explained. To do. When Apple added new rules for donations, its CEO realized there was an option to supplement teachers' incomes with larger digital chips. Plowman believed that because Insight Timer does not receive a portion of user donations to Favorite Teachers, those donations should not be subject to his Apple fees.
Image credits: insight timer
Section 3.2.1 of Apple's App Review Guidelines states that if an app allows an individual user to “make a monetary gift to another individual” and “100% of the funds” are used for Apple's in-app purchases , the company explains that apps can bypass Apple's in-app purchases. recipient of the gift. Insight Timer uses this option to allow users to tip meditation teachers, healers, musicians, and others who use the app to teach classes on things like meditation, stress management, well-being and spiritual enlightenment. Did. Insight Timer has implemented the ability to use Stripe as a backend payment provider, as permitted by regulation.
Users can choose to donate funds to teachers, but are not required to do so. Insight Timer's main business is selling premium subscriptions to the app that offer additional features such as offline listening, journaling, and unlimited access to courses. Her 50% of this revenue is distributed to teachers, so they don't have to rely on donations to fund their work. While the fee-free donation feature was live, Insight Timer users were donating about $100,000 a month to the app's teachers, Plowman said.
Apple appears to have celebrated this use case, with the tech giant approving a further 47 updates to the Insight Timer app over the course of 12 months. When questions arose, Insight Timer explained that Apple would approve the app since these were donations and they would not receive a portion of the proceeds.
Image credits: insight timer
Late last year, these approvals were suspended. An app reviewer told his Insight Timer that these donations are no longer considered monetary gifts, but have become “digital content.” That means they too will be subject to Apple's fees. This decision does not hurt Insight Timer's revenue, as the Insight Timer app's main business is subscriptions. Rather, it harms the teacher community, which generates additional funds through user donations. Now Apple wants his 30% of that revenue. That means the teacher will have her salary cut by 30%, so to speak, overnight.
Plowman said he went back and forth with Apple over the feature, trying to understand why Apple had previously allowed the donation option 47 times. — Subject to fees. Apple compromised by allowing donation links on teachers' profiles to be subject to the fee-free rule, but all other donations (from live events and meditations themselves) must be charged a fee. He said there is. Those links are also not allowed to point to donation links on the teacher's profile.
“So I thought, what's the point of building an ice cream stand across the street if you're not going to make customers cross the street to get ice cream?” Plowman argued.
In the end, the parties were unable to reach any resolution. Plowman was given until February to comply with Apple's decision or his business would be banned from the App Store.
He expressed his frustration in a LinkedIn post this week, calling for change from Apple's leadership, but without the vitriol common to Apple critics who oppose the App Store's fee structure, including Epic Games and Spotify. .
“So in the end we agreed,” Plowman said in an interview with TechCrunch. “I don't want to pick a fight with Apple. I don't want to pick a fight with Apple. I think the main cause of this problem is the lack of regulatory intervention. Apple is a publicly traded company, but it has shareholders. Apple. are doing what they are allowed to do,” he says.
Additionally, Plowman added that his company has 100 employees. It has investors. (It has raised about $30 million from Evolve Ventures, Altos Ventures, and Bridge Builders Collaborative over the past decade.) It has no choice but to comply.
Plowman believes the problems with Apple's reinterpretation of its rules are just one of the problems with the current fee model.
More broadly, Apple's rules are vague about what is or isn't digital content.
“If I'm a teacher, the time I spend sitting in front of a computer screen doing a workshop is my billable time. It’s like renting,” he said. Apple told them that if a monetary gift was a one-on-one donation, there would be no fee, but if a teacher ran a workshop with at least two teachers, it would become “digital content” that would incur a fee.
“Apple says that iPhone users and App Store users are Apple customers. And rightfully so. And based on that, [Apple] Plowman says he is entitled to a commission if he deems it appropriate. “But in that case, why don't companies like Airbnb and Uber pay anything to Apple?…If I'm an Insight Timer teacher…why do I have to pay a 30% fee?” ” he asks.
Apple did not immediately respond to a request for comment.