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Apple's email terminating app affiliate fees
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Apple’s Termination of App Store Affiliate Payments Is Unnecessary, Mean-Spirited, and Harmful

In a terse email message to iTunes affiliates, Apple announced that it would be ending affiliate payment for Mac and iOS apps sold through the App Store as of 1 October 2018.

With the launch of the new App Store on both iOS and macOS and their increased methods of app discovery, we will be removing apps from the affiliate program. … All other content types (music, movies, books, and TV) remain in the affiliate program.

Apps bought via an iTunes affiliate link currently earn the affiliate 7% of the purchase price, although Apple attempted to drop that rate to 2.5% a year ago. After backlash from developers and publishers, the company reduced just the in-app purchase rate to 2.5%.

Industry Response

Unsurprisingly, the news elicited harsh reactions from the Apple media world, with publications like TouchArcade seeing it as an existential crisis and others bemoaning the loss of small but welcome bits of revenue.

Although TidBITS is enrolled in the iTunes affiliate program and our previous content management system programmatically added the affiliate code to appropriate URLs, we earned too little money from it (roughly $1000 since 2014) to focus on it or even remember to move the feature forward to our new site.

We’ve also always been somewhat uncomfortable with the inherent conflict of interest involved with affiliate fees—there’s an unavoidable link between publication revenues and encouraging sales. It just feels unseemly; not so much so that we’ll leave the money on the sidewalk, but enough that we’ve avoided adjusting our editorial mix to favor articles that generate income via affiliate fees.

Why Is This Happening?

Historically, affiliate programs work well for large retailers because they incentivize small players to promote specific products. An affiliate program is a lucrative long-tail play for the retailer because it brings in a lot of cumulative sales from numerous affiliates, most of whom don’t make much but are happy with the incremental revenue. Many fewer companies and publishers, such as Wirecutter, earn significant amounts because they’ve built their entire revenue model around recommending products that generate affiliate fees.

The problem with this approach, of course, is being at the mercy of the company offering the affiliate program. This latest news brings to mind an old saying among Mac developers: “Always remember that Apple is not your friend.”

So why is Apple eliminating affiliate fees for apps and in-app purchases now? The letter to affiliates puts it quite bluntly—Apple believes that the redesign of the App Store for iOS and macOS will improve app discovery enough that there’s no reason to incentivize independent media outlets to review apps. Apple says that the new Mac App Store will have in-depth stories written by a global team of App Store editors, and while you probably won’t see their bylines on those stories, we’ve been watching Apple hire experienced industry writers for those positions. Of course, as it becomes ever harder for publications to survive, it’s not surprising that journalistic talent is being forced to make the jump to industry.

Unpleasant Behavior for Little Gain

Even though affiliate fees have never been an important part of our revenue model, I still think Apple’s move is unnecessary, mean-spirited, and harmful:

  • Unnecessary because Apple is posting record profits and massive increases in the Services category, even with the affiliate fees. The timing of this news, coming as it does just days after Apple announced $53.3 billion in revenues and $11.5 billion in profits, just makes Apple look unnecessarily stingy (see “Apple’s Q3 2018 Results Break Records Again,” 31 July 2018).
  • Mean-spirited because Apple loves to talk about the $100 billion it has paid to app developers without ever acknowledging the amount that it has paid to affiliates. Either Apple paid out significant amounts of money in affiliate fees, at which point it could have crowed about that fact, or it didn’t pay out much, at which point it could have maintained the program.
  • And harmful because a company that just hit $1 trillion in market valuation and that prides itself on being on the side of the light shouldn’t be clawing back money from small companies and individuals who have devoted their time to promoting Apple and Apple-related products.

It’s bad enough when Apple builds the features of a popular app into macOS or iOS, effectively killing the app without recompensing or even notifying the developer. (This is called getting “Sherlocked,” a term that dates to when Apple built the features of Karelia’s Watson app into Sherlock 3 in Mac OS X 10.2 Jaguar.) At least in the case of Sherlocking, there’s an argument that Apple could have been working on the app independently, or that the functionality is so important that Apple should provide it to all users.

But what, apart from the 7% affiliate fees for recommended apps, does Apple gain from kicking small publishers to the curb? Enough will survive this that App Store editorial will still have competition, so Apple can’t benefit by monopolizing all app coverage. And how would monopolizing coverage of independent apps help Apple anyway? More coverage equals more sales—it’s a simple equation. It’s not as though Apple supports industry media with advertising either.

It’s also worth noting that the democratization of media technologies has had an unanticipated consequence. Any media-savvy organization, whether it’s a multinational corporation or full-fledged government, can increasingly control public perception not just by manipulating social media but also by bringing content creation and dissemination in-house. It’s all about control in a media world that no longer has gatekeepers. Apple pulled out of Macworld Expo years ago because it could just as easily hold its own product release events, and now we’re seeing Apple do the same to industry publications by competing with them via App Store editorial.

In the end, I’m disappointed in Apple. Not surprised, since Apple has never acknowledged that the media plays a vital role in the broader Apple ecosystem, but disappointed that a company that puts so much effort into bringing joy to users can simultaneously behave so callously to some of its greatest supporters.

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Comments About Apple’s Termination of App Store Affiliate Payments Is Unnecessary, Mean-Spirited, and Harmful

Notable Replies

  1. SD

    Google has never offered affiliate bonuses for links to apps!
    So why is Apple ‘mean spirited’ to offer pay outs for 10 years, when Google hasn’t paid out a dime?

  2. Uh, because Apple isn’t Google, and has a completely different business model? Unlike Google, Apple doesn’t sell you out.

  3. To me, friends are those who help each other. I think that Apple should continue to support its friends, namely companies and small business that have helped and supported Apple in some cases for a decade. Apple is now on top of the heap and it needs to remember how it got there.

  4. I agree with every word you say. But honestly, looking at Apple’s actions during the last 5 or so years, can we really be that surprised?

  5. SD1

    Google has never offered affiliate bonuses for links to apps!

    Though it wasn’t specifically for apps, Google shut down its affiliate program around 2013. Though they didn’t give a reason at the time, it was kind of obvious they didn’t need the headache of running it when it didn’t generate much revenue compared to what they earned from advertising. They acquired it when they bought DoubleClick back in the late 90s, and had better ways to make profits by getting ads in front of precisely targeted audiences, via their AdSense program, and to target different iOS devices:

    https://www.google.com/ads/affiliate network/

    Apple started selling ads in the App Store about a year or two ago. They’ve also been bragging about how much smarter their App Store search algorithms have become, and they also offer the ability for advertisers to run test versions:

    https://searchads.apple.com/

    Search Ads Basic is pay per install, which is great for developers:

    https://searchads.apple.com/basic/?cid=G-Q318Test-IBT-SL2

    After expanding to Mexico, Canada, Australia and New Zeeland, they just began rolling out in Europe and Asia last week:

    https://adexchanger.com/mobile/apple-finds-success-with-app-store-search-ads-hits-new-markets-in-asia-and-europe/

    So why is Apple ‘mean spirited’ to offer pay outs for 10 years, when Google hasn’t paid out a dime?

    I agree they aren’t any more or less mean spirited than Google; they’re just focused on becoming the first two trillion $ company. They’re reportedly talking to Pinterest and Snap about selling ads for apps on their apps. It could be very profitable for developers too:

    https://www.mobilemarketer.com/news/report-apple-mulls-app-network-with-snap-pinterest-to-grow-ad-business/524886/

  6. It’s odd that they retained other media within the program. If it’s a headache, then surely that would be too.

    Your points about search ads are very interesting Marilyn, and seem on point to me. If Apple can shift away from community led to professional service they will.

    Actually the more I think about it, the more what you say makes sense. They don’t have to payout, instead they get paid. It explains why this is happening on the App Store as opposed to other media, charts and popularity being determined externally (at least on the surface) within music and film. And I wonder if Screentime data will end up informing rates for ads within significant apps.

  7. Because Apple’s behavior in this case is mean-spirited in isolation, regardless of what any other company may or may not do.

  8. I think this is of tremendous benefit to end users. For years, an approach to monetization in apps has been to try to sell people other apps. That practice drove a wedge between what was good for users and what was good for developers, making it no longer about providing a good app but about providing an app that people would download and be teased into getting another app, which would tease into getting another app. It’s been a mess, and the practice should be a lot less common after the affiliate program is shuttered.

    Far from “mean spirited,” I’m always impressed when Apple can make a simple change to align their own and others’ interests with their users.

  9. No. Well-researched recommendations for products are good for both the buyers and the sellers. The Wirecutter is a tremendous source of information. While I don’t always agree with all its conclusions, I consistently learn things from the stories (and the reader feedback). Ditto with Appshopper and Toucharcade – clearinghouses that will definitely be damaged by this decision.

    People are not dumb. They are suspicious. They don’t get “teased” into buying an app through low-quality reviews placed solely for an affiliate payback. They naturally gravitate towards sources that can be trusted. And affiliate sites like The Wirecutter could not exist without affiliate referrals.

    Are you suggesting that all media referral systems should disappear? If not, where exactly are you drawing the line?

    One other note: I’m really disappointed with the timing of this announcement. Apple timed it one day after the quarterly investor call. Could they really not stand any questions about dropping this program?

  10. I can do this, too:

    No. 1% useful is not worth 99% useless spam. Apple is eliminating the economics of app spam. More power to them.

  11. Really? Do you have any stats on how common this practice was? I’ve never heard of it being a concern, since presumably people would only consider downloading a promoted app if the first one was any good. That doesn’t seem like an abusive situation.

    Plus, if Apple were concerned about that sort of app behavior, I think they’d deal with it in the App Store guidelines, not in a back-handed way that hurts many other parties.

  12. tommy
    Tommy Weir

        August 3
    

    It’s odd that they retained other media within the program. If it’s a headache, then surely that would be too.

    They are probably making a lot more money on movies, music and books. From the results of the past few quarters, it’s clear that services are contributing more and more to Apple’s cash pile. The app affiliate program was probably loosing more money than it was making. Because it’s curated and heavily controlled the program is expensive to maintain, they probably are loosing money even with the reduced commission rate. And redesigning, rebuilding and maintaining the even more heavily curated search isn’t cheap or inexpensive to maintain.

    Other than TidBITS, there are very few sites I trust on app recommendations. My personal experience is that there are so many sites that seem to exist just to make money off of recommendations that they end up promoting a lot of junk. And as more and more companies give away the app for free and make money from in app purchases, subscriptions, advertising, sponsorships, etc. the prognosis looks worse for business that depend on affiliate revenues anyway. Personally, I’m surprised Apple kept the commissions going as long as they have.

    There are many sites out there, including TidBITS, that are doing well because they earned the trust of readers because they provide objective reviews and excellent advice. They are in business because they are not dependent on App Store commissions. There are probably millions of Android focused app review sites out there that have thrived even though they never received a cent in commission from Google in years. The sites that are commission dependent need to adjust.

    Your points about search ads are very interesting Marilyn, and seem on point to me. If Apple can shift away from community led to professional service they will.

    Thanks! And I think the pay per install ad program will especially help small developers, as will better search and increased discoverability.

  13. [quote=“tewha, post:11, topic:5582”]
    I can do this, too:[quote]

    Perhaps. But if you make a claim, you have to provide the source of your data.

    Where exactly does that 99% number come from?

    I don’t go to “useless spam” websites that promote the buying of apps. I go to trusted sites, like Appshopper, to shop for apps. I look at editorial entries from Tidbits, iMore, MacRumors, and others. I have no idea where your 99% number comes from. Unless you provide actual data, it appears you pulled it out of your… ear.

    Apple is throwing out the baby with the bath water.

    Tewha: you failed to answer my question: “Are you suggesting that all media referral systems should disappear? If not, where exactly are you drawing the line?”

    Please answer now. I find The Wirecutter incredibly useful, and (somehow!) I manage to avoid the “99% useless” spam of low-content Amazon affiliate links. Why are you seeing so many spurious referrals? Explain how you came up with that bizarre claim!

    Just like Apple app affiliate links, the world would be a far worse place if Amazon affiliate links disappeared.

  14. I think it’s just really bad timing and strategy, plus horrible copywriting. They need a better PR department.

  15. floatingbones

        August 3
    

    Well-researched recommendations for products are good for both the buyers and the sellers. The Wirecutter is a tremendous source of information. While I don’t always agree with all its conclusions, I consistently learn things from the stories (and the reader feedback).

    There is a big difference between The Wirecutter’s review policy and virtually all other sites that earn App Store commission:

    Do your affiliate commissions make you biased?

    Up front: Our writers and editors are never made aware of which companies may have established affiliate relationships with our business team prior to making their picks. If readers choose to buy the products we recommend as a result of our research, analysis, interviews, and testing, our work is often (but not always) supported through an affiliate commission from the retailer when they make a purchase. If readers return their purchases because they’re dissatisfied or the recommendation is bad, we make nothing. There’s no incentive for us to pick inferior products or respond to pressure from manufacturers—in fact, it’s quite the opposite. We think that’s a pretty fair system that keeps us committed to serving our readers first.

    https://thewirecutter.com/about/

    And the big majority of what they review is gear, not apps.

    People are not dumb. They are suspicious. They don’t get “teased” into buying an app through low-quality reviews placed solely for an affiliate payback. They naturally gravitate towards sources that can be trusted. And affiliate sites like The Wirecutter could not exist without affiliate referrals.

    You might not be “dumb,” but I’ve earned a living working on many projects that convinced many very intelligent and educated people to buy things they don’t really want or need. Including, for quite a few years, cigarettes.

  16. I put you in the same bucket as TWiT, MacRumors, MacStories, iMore, AppShopper, TouchArcade, and (yes!) TidBITS. You all do your due diligence on (most of) your recommendations. I trust you.

    And, sometimes, even The Wirecutter blows it. Your information and discussion of Nordic Walking poles was incomplete. You should have found an instructor from California or (even better) an instructor from Europe to explain it to the audience. No biggie. I still trust you. :smile:

    This is a strange question. Since I’m not registered with any company providing affiliate compensation, I don’t have any “bias” here. What led you to that bad assumption?

    Listen: I don’t even mind if developers have affiliate links to their own apps. If they make a compelling case for their product, I have no problem with the dev getting a few more percentage points on any app purchases. David Smith’s excellent blog article about workouts++ comes to mind here. Mr. Smith is clearly “biased” about which app he’d like you to buy, but he makes a passionate case.

    It’s a distinction without a difference. Any of your writers/editors who are curious can look up the affiliate links themselves.

    This is also true for app store app purchases.

    All of the websites I mentioned also have the EXACT same commitment. Rene Ritchie (iMore) is the embodiment of commitment to his audience, as is Federico Viticci of MacStories, Arnold Kim of MacRumors, and Adam Engst of TidBITS. Outstanding people all, and all have an outstanding product. Rewarding them with a commission from purchases made through their recommendation is entirely appropriate.

    That was your choice.

    Really, Wirecutter is great, but it is hardly a unique source of greatness. It doesn’t take a huge amount of smarts to trust the app-recommending websites I listed above. Anyone who knows the “site:” keyword can find out pretty well anything they need in that list of top-shelf sources.

    And Adam is dead right: these publishers play a critical and positive role in the app ecology. Hurting these indie businessmen very un-Apple thing to do.

    I am mystified with @tewha’s comment that 99% of the affiliate-supported writings he sees are “useless spam”. That just doesn’t add up!

  17. If humans stopped buying what they don’t need, where would we be? Hmmm, question for another day. In the interim The Wirecutter rocks. Took 95% of my “Tommy, which X should I buy?” enquiries away. I am happy to point family and friends there. Their version of due diligence is exemplary and open with regard to process and metrics. A very smart purchase by the NYT.

    In regard to Apple, timing and spirit of it was poor. Doesn’t surprise and can’t see it being rolled back.

  18. Big companies with affiliate programs tend to throw the affiliates under the bus once they have served their purpose of building the business. Amazon used an affiliate program to help it get off the ground, and I became part of it to market my books. For a year or two, it was a nice little source of supplementary income that also gave readers a good deal on my books. Then Amazon started changing the rules and the income became a trickle. They haven’t killed the program, but they’ve squeezed it down to the point that it’s hard to make much money.

  19. Hmm, isn’t it interesting that this happens right when Apple exceed $1,000,000,000,000.00 US market capitalization. :wink:

  20. I still don’t really understand how this worked; was it similar to Amazon’s affiliate program?

  21. I’ll bet they had it this scenario in mind when they initially cut the commission rate…if profits didn’t improve, it was probably not worth maintaining the program. Since they couldn’t predict the if and when of the trillion $ mark, at least someone in the PR department should have advised the powers that be to hold off on the announcement when they heard the news.

    Amazon has been reducing commissions on affiliate programs (they have quite a few) for quite some time, and I have a feeling that down the road, they might end some of them.

  22. Amazon has been one of the pioneers in online affiliate programs, if not the biggest pioneer. They have a lot more programs than Apple, as they have a whole lot more products and services. If I remember correctly, the commission rates vary pretty widely, and a lot of them are based on a sliding scale. There’s also a variety of commission structure between countries.

    Like Apple, their commission rates have been trending downward. But a few years ago, Amazon got hit with a big problem…Walmart started an affiliate program similar to theirs.

  23. Thanks. Since I do all of my App Store purchases through iTunes, I never ran into an affiliate.

  24. That is a major problem with Apple: they act like Scrooge McDuck! It would cost them to keep the affiliate programs what, maybe 0.01% of their $11,520,000,000.00 3rd quarter profit?

  25. To be honest, I can’t compare because I don’t have any of the original rates, and because the current version runs 12,560 words (according to Nisus Writer when I cut and pasted the document into it). I recall Amazon adjusted its rates to favor large-scale merchants, and pushed changes that would have changed my web site into an pure Amazon sales site. The clicks and sales being counted dropped like a rock in 2001, and some time afterwards I gave up on it as anything other than a way of making it easier for people to buy my books.

  26. Adam Engst

    jeff1:
    Then Amazon started changing the rules and the income became a trickle. They haven’t killed the program, but they’ve squeezed it down to the point that it’s hard to make much money.

    Here’s what Amazon’s rates look like now:

    https://affiliate-program.amazon.com/help/operating/policies#Associates%20Program%20Fee%20Statement

    Woah! I didn’t know that Amazon paid out bounty rates, especially on free trials… and there are so many options with which hunters can collect bounties. And the rates here are very generous for one shot deals.

    One of the big reasons why Amazon started its affiliate plans was not just to sell things, but also to accumulate as much data on anyone as they could. Twenty+ years in, there are more efficient and effective avenues online with which to get people to click on links, and better ways collect data and sell stuff. Communications and the WWW have evolved, and affiliate programs aren’t bringing in the bacon anymore.

    Devices running Google’s Android didn’t start hitting the market until 2008, and Google had plenty of time to scope out iTunes, App Store as well as all Amazon’s affiliate programs and decided that an affiliate program wasn’t going to be worth it for them, either in terms of revenue or data collection. My thinking is that Apple stuck with the program for much longer than it was really worth, esp. since selling data isn’t their thing.

    But Amazon’s bounty programs must be doing OK if they are shelling out $3.00 for a free trial.

  27. I don’t think I do either, but I do remember a point many years ago when revenue from those affiliate links dropped off radically for us too.

    It would take me a bit of time to massage the Amazon data to find out by how much, and of course, since we don’t think about affiliate revenue at all when brainstorming articles, there’s no telling how much the decline might be to us writing about fewer products that could be purchased in Amazon.

  28. “disappointed that a company that puts so much effort into bringing joy to users can simultaneously behave so callously to some of its greatest supporters.”

    Disappointed? Really? When the whole history of Apple has involved kicking its greatest supporters in the teeth multiple times?

  29. I agree. For a company which makes technology For The Rest Of Us, Apple can be pretty cold and small-minded.

    Of course, for the biggest company to not be completely cold is perhaps remarkable.

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