The creative economy is running into the Apple Tax – this startup is fighting back

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Apple clashes with the platform Fan house on whether it should be allowed to reduce in-app payments to creators. The incident underscores how little Apple knows about the creative economy, with the likely outcome being less money in the maker’s pockets — and more money for one of the world’s most profitable companies.

The founders of Fanhouse — which is basically OnlyFans without nudity — say the platform will be kicked out of the App Store in August if it doesn’t pay more than 30 percent of the fees people pay to creators. One of the creators of Fanhouse, the streamer bread witchcraft, says that cut would mean losing two months’ rent from her earnings to date. The company doesn’t have many options to cut back, but it is launch a campaign today to pressure Apple to relax the rules around payments to creators.

Fanhouse is just the latest company to clash with Apple over App Store terms that are increasingly seen as steep and dominant. Sure, it’s a small app, and its disappearance won’t necessarily pose any problems for Apple, but the situation ties into the challenges maker-focused apps face in the App Store. As the creative economy continues to grow, the rules mean Apple will take more money from not just companies, but individuals as well.

“People are using this platform for survival, starting with me, our very first creator,” Jasmine Rice, a fanhouse maker and one of the platform’s co-founders, tells The edge. “I use this to pay the bills for my family. I use this to pay for my mother’s medical expenses.”

Fanhouse, which launched in 2020, initially slipped past the App Store bouncers and offered payments on the web without a hitch. Now that Apple has seen the potential for profit, it has given Fanhouse the same ultimatum it gives (almost) everyone: Fanhouse must pay or be taken out of the store.

The app only costs a 10 percent discount, so the creators of the platform could be earning a lot less soon. Rice says she’d be happy to give Apple 30 percent of Fanhouse’s own profits. But once that 30 percent has to cut back on creators’ profits, it starts to hurt people, not just the platform. “This money really means a second job for some people, that they have a place to live, that they can afford college tuition,” Rice says. “And we’ve tried to explain this to Apple.”

Fanhouse allows creators to request a subscription to access a private social media feed where they can post updates about their lives or publish photos and videos. Creators can also monetize tips, or they can post “locked” updates that fans have to pay to watch. Each account also has a public feed that can be viewed without a subscription, which may be why the app has been able to slip through the App Store undetected until now.

Apple told The edge it’s working with Fanhouse to bring the app into line with the rules. The referenced company: the guidelines for in-app purchases and said Fanhouse had previously been dismissed for a similar violation.

Apple is demanding a 30 percent discount on in-app purchases of “digital” goods, such as: Fortnite skins or Netflix subscriptions, although there are some exceptions. The figure is reduced to 15 percent for multi-year subscriptions and apps that earn less than $1 million. (Fanhouse has over $1 million in revenue, but it pays out almost everything to creators.) And it’s up to Apple to decide what qualifies as a “digital” good and what doesn’t. For example, Apple allows Patreon to offer third-party payment solutions to makers instead of using in-app purchases, avoiding the cost. Other apps don’t have that privilege. Apple and Patreon have not responded to a request for comment on the arrangement.

Apple’s App Store rules didn’t even acknowledge the makers until this week. On Monday, they updated with a new section stating that creator-created content and experiences are allowed in apps — as long as they’re properly moderated and monetized for Apple.

The problem is likely to become more acute as platforms offer more ways for creators to get paid. Twitter plans to take a 20 percent discount on ticketed audio rooms later this year, from which Apple will take another 30 percent if fans pay on their iPhones. Facebook waives next year’s discount on fan subscriptions and other sources of revenue for creators, but Apple will still take 30 percent when purchases are made through its store. Twitch is already giving Apple a 30 percent discount on subscriptions and tips through iOS, but it’s raising prices there so that viewers have to cover the extra cost.

Other creator-focused services simply aren’t offered on iOS due to Apple’s rules: Spotify doesn’t let listeners pay for podcast subscriptions despite offering them, and OnlyFans isn’t available on the platform at all because of Apple’s ban on “overtly sexual or pornographic material.” the newsletter means of creation criticized this policy last month, writing that “Apple is now one of the main barriers to independent creators doing well on the web.”

Apple is currently in a legal battle with Epic, the maker of Fortnite, about its App Store charges. Apple is happy with the cut: it brought in $64 billion last year, according to a CNBC analysis. During the trial, Apple CEO Tim Cook said allowing other payment options “would essentially sacrifice our total return on our IP.”

“I think it speaks to the creator’s illiteracy,” said Breadwitchery, a narrative game streamer who works part-time as a community manager for Fanhouse. “Those companies like Apple, don’t you think if you invest in creators and treat them well, they’ll be motivated to create more content and make more money?”