The CEO of meditation app Insight Timer, Christopher Plowman, is facing a frustrating dilemma. Plowman believes that the teachers on his app should not be forced to share a 30% commission with Apple for in-app purchases. For the past 12 months, Apple had agreed to this, but now their position has changed. Plowman’s company had to quickly comply with their demands or risk being shut down from the iOS market.
The problem at hand pertains to the complexities of navigating the current App Store and its constantly evolving set of rules. These regulations are often open to misinterpretation, which can result in major setbacks for developers, as we see with Insight Timer’s situation.
Insight Timer is a popular meditation app with 25 million installations and 3 million monthly active users. The app generates revenue by selling subscriptions, with a portion of that revenue (30%) being paid to Apple. However, the company also offers a donation feature that allows users to tip their favorite meditation teachers as a gesture of gratitude.
“Our teachers are highly involved with our community,” explains Plowman. “They dedicate a considerable amount of time answering questions, recording videos and audio responses, and so on.” When Apple changed their rules around donations, Plowman saw an opportunity to enhance the teachers’ income by allowing larger digital tips. Since Insight Timer does not take a cut of these donations, Plowman believed that they should not be subject to Apple’s commission.
In section 3.2.1 of Apple’s App Review Guidelines, it states that apps can bypass their in-app purchase system if they enable individual users to send “monetary gifts” to others and 100% of those funds go directly to the recipient. Insight Timer utilized this rule to allow users to donate to meditation teachers, healers, musicians, and other individuals who use the app to teach various subjects related to meditation, stress management, happiness, and spiritual enlightenment. The company implemented this feature using Stripe as the backend payment provider, as allowed by Apple’s regulations.
It’s essential to note that users are not obligated to donate to teachers, as Insight Timer’s primary revenue stream comes from premium subscriptions. These subscriptions include additional features like offline listening, journaling, and unlimited access to courses. 50% of this revenue is shared with the teachers, allowing them to earn an income outside of donations. During the time the commission-free donations feature was active, Insight Timer’s users donated around $100,000 per month to teachers, according to Plowman.
Apple initially appeared to approve of this use case, as they went on to approve 47 updates for Insight Timer’s app over the course of a year. If any questions arose, Insight Timer clarified that these were donations, and Apple would give the green light.
Last year, however, the approvals suddenly halted. An app reviewer informed Insight Timer that these donations were no longer considered monetary gifts but rather “digital content.” This meant that they were now subject to Apple’s commission. While this decision does not significantly affect Insight Timer’s revenue, it greatly impacts the community of teachers who rely on donations for additional funds. Now, Apple is demanding a 30% cut of these donations, resulting in a considerable pay cut for the teachers.
Plowman engaged in discussions with Apple, trying to understand why donations that were previously deemed acceptable were now subject to commission. Apple eventually compromised, allowing donations through a teacher’s profile to be exempt from the commission, but not donations from live events or meditations themselves. Apple also did not permit these donations to link back to the teacher’s profile for users to donate commission-free.
“What’s the point of having an ice cream stand if the customer can’t cross the road to buy the ice cream?” argued Plowman.
In the end, the two parties reached no resolution, and Plowman had until February to comply with Apple’s decision, or else his business would be removed from the App Store.
This week, Plowman expressed his frustration in a LinkedIn post, asking for change from Apple’s leadership. He did so without the antagonism that characterizes other companies’ criticisms of the App Store’s commission system, like Epic Games and Spotify.
“I ultimately agreed,” Plowman told TechCrunch. “I don’t want to pick a fight with Apple. This issue is primarily due to regulators not stepping in. While Apple is a publicly traded company with shareholders to consider, they are operating within their rights,” he explains.
Furthermore, Plowman highlights the fact that his company has 100 employees, investors, and no other option but to comply.
Plowman firmly believes that this issue goes beyond a single rule interpretation change and sheds light on the issues with Apple’s commission model.
When it comes down to it, Apple’s rules are unclear on what constitutes digital content. Plowman uses the example of a teacher conducting a workshop in front of a computer screen; in his opinion, this is a billable service like an Uber driver giving a ride or someone renting out their property. However, Apple disagrees and considers workshops with two or more participants as digital content, making it subject to commission.
“Apple considers the users of the iPhone and App Store to be their customers, and I can understand that,” Plowman acknowledges. “But if that’s the case, why do companies like Airbnb and Uber not pay a commission to Apple? If I’m a teacher on Insight Timer, why should I have to pay a 30% fee?”
At the time of writing, Apple has not responded to a request for comment.
