In a reversal, Apple is demanding 30% of the donations to meditation app Insight Timer’s teachers
Reading Time: 4 minutesThe CEO of meditation app Insight Timer, Christopher Plowman, is frustrated. He doesn’t think the teachers who leverage his app’s marketplace to reach their students should have to share 30% of their income with Apple — its commission on in-app purchases — and for the past 12 months, Apple had also agreed. After Apple loosened its rules around in-app donations in 2022, Insight Timer took advantage of the option to adjust a digital donations feature which allowed Insight Timers’ teachers to collect ‘tips’ from their user profiles and during live events. Apple reviewed the app and approved its release on the App Store. Now, the tech giant has changed its mind — it wants to collect a commission from this content, and Insight Timer had no choice but to comply or have its iOS business shut down, Plowman says.
The issue here is somewhat complex, but highlights the challenges developers have with navigating today’s App Store and its ever-growing set of rules, which are often open to misinterpretation by both app makers and Apple’s app reviewers alike. Instead of pairing a rep to work with a subset of Apple’s developer clients — the app makers who help Apple generate massive profits from its Services division — Apple’s App Review is often a hit-or-miss process where one rogue reviewer can reinterpret Apple’s policy differently from others, upsetting a developer’s entire business in the process.
That’s what happened with Insight Timer, a popular meditation app with around 25 million installs and 3 million monthly active users. Like many App Store businesses, Insight Timer generates revenue by selling subscriptions. In 2023, it earned around $20 million in subscription revenue, with a third of that (30%) paid to Apple, per its commission guidelines.
However, the company also offers a donation feature that allows customers to tip their favorite meditation teachers to thank them for their time and effort.
‘Our teachers are very engaged with our community. They spend a lot of time answering questions, recording video replies and audio replies and that sort of thing,’ explains Plowman. When Apple added a new rule around donations, the CEO realized he could take advantage of the option to help supplement the teachers’ income with larger digital tips. Because Insight Timer doesn’t take a cut of users’ donations to favorite teachers, those donations shouldn’t be subject to Apple’s commission — or so Plowman believed.
In section 3.2.1 of Apple’s App Review guidelines, the company explains that apps can route around Apple’s in-app purchase if the app enables individual users to ‘give a monetary gift to another individual’ and ‘100% of the funds’ go to the receiver of the gift. Insight Timer capitalized on this option to allow its users to tip meditation teachers, healers, musicians, and others who use its app to teach classes on meditation, managing stress, finding happiness or spiritual enlightenment, and more. Insight Timer implemented the feature using Stripe as the payment provider on the backend, as the rule permits.
Users can opt to donate funds to the teacher, but they don’t have to. Insight Timer’s main business is selling premium subscriptions to its app which offer additional features, like offline listening, journaling, and unlimited access to its courses. 50% of this revenue is shared with the teachers, so they don’t have to rely on donations to fund their work. During the time the commission-free donations feature was live, Insight Timer’s users donated roughly $100,000 per month to the app’s teachers, Plowman says.
Apple appeared to have blessed this use case, as the tech giant went on to approve 47 more updates to Insight Timer’s app over the course of a 12-month period. When a question arose, Insight Timer explained that these were donations — it doesn’t take a cut of that revenue — and Apple would approve the app.
Late last year, those approvals stopped. An app reviewer told Insight Timer that these donations were no longer considered monetary gifts — they were now ‘digital content.’ That meant they were also now subject to Apple’s commissions. This decision doesn’t hurt Insight Timer’s bottom line, as the app’s main business is subscriptions. Instead, it hurts the community of teachers who generate additional funds via users’ donations. Now, Apple demands a 30% of that revenue, which means the teachers are getting a 30% pay cut overnight, so to speak.
Plowman says he went back and forth with Apple over this feature, trying to understand why the donations option that Apple had previously allowed — 47 times! — was now subject to commission. Apple compromised and said it would allow the donations’ link on teachers’ profiles to be subject to its commission-free rules, but all other donations — from live events, from meditations themselves — had to be commissioned. It wouldn’t allow those links to point to the donation link on the teachers’ profiles, either.
‘And I was like, well, what’s the point of building an ice cream stand across the road if you won’t let the customers cross the road to buy the ice cream?,’ Plowman argued.
In the end, the two parties didn’t reach any sort of resolution. Plowman was given until February to comply with Apple’s decision, or his business would be shut out of the App Store.
He expressed his frustration this week in a LinkedIn post where he’s asking Apple’s leadership for change, but without the vitriol common to Apple’s critics, like Epic Games and Spotify, when they argue against the App Store’s commissions structure.
Plus, Plowman adds, his company has 100 employees. It has investors. (It’s raised around $30 million over the past 10 years from Evolve Ventures, Altos Ventures, and the Bridge Builders Collaborative.) It has no choice but to comply.
Plowman believes the issue with the change in Apple’s interpretation of its own rules is only one of the problems with the current commission model.
More broadly, Apple’s rules are murky around what is or is not digital content.
‘If I’m a teacher, sitting in front of a computer screen conducting a workshop, that’s my billable hours. That’s like an Uber driver giving someone a lift or someone leasing their house,’ he said. Apple told him if the monetary gift was a one-to-one donation, then it’s commission-free, but once the teacher runs a workshop with at least two people, it becomes commissionable ‘digital content.’
‘Apple says that iPhone users and App Store users are Apple customers. And, fair enough, we can say that. And on that basis, [Apple] says it’s entitled to take commissions when it seems fit,’ Plowman says. ‘But in that case, why do companies like Airbnb and Uber not pay anything to Apple?…If I’m a teacher on Insight Timer…why do I have to pay the 30% fee?’ he asks.
Apple has not returned a request for comment at this time.
Ref: techcrunch
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