Apple is making enemies among creators by hitting Patreon with a 30% tax — but there's a loophole (2024)

But there is a third option that Patreon isn't promoting. Creators could (and likely will) recommend that their fans make any transactions on Patreon's website, rather than the iPhone app. That means creators — and Patreon — both wouldn't lose money to Apple. Apps like Substack and Netflix already operate in this way, where subscriptions are handled off-app and once a user logs in, they can access their subscriptions within the iOS app.

For years, Patreon had been able to skirt Apple's App Store fees. In 2021, Patreon CEO Jack Conte told The Verge that Apple had not told the startup explicitly that it needed to pay up.

That changed at the end of 2023 when Apple first came down on Patreon by enforcing its 30% fee on any commerce purchases made in the Patreon app. And now, Apple is expanding that to all transactions made within the Patreon app, including subscriptions. If Patreon doesn't oblige, Apple is threatening to remove the app.

Creators are frustrated and confused

"Creators are freaking out," said former Patreon exec Avi Gandhi. "We live in the age of digital gods, and Apple's App Store is certainly one of them."

Across Reddit and Discord, Patreon users are vocalizing their frustrations with Apple and Patreon alike. Some want Patreon to scrap its iOS app entirely, others want Patreon to eat the fee (which wouldn't be financially possible), and then there are those who are just angry with Apple.

"Apple has gone from 'Think Different' to 'Think Extortionate,'" Laurel Kilgour, a research manager for the American Economic Liberties Project, wrote in a press release shared on Wednesday. "This outrageous 30% revenue cut — nearly 2.5 times more than Patreon's most premium membership tier — is especially egregious given Apple's ongoing, worldwide legal battles over its monopolistic practices."

But rest assured, creators will find ways around Apple's fee.

Already, creators are discussing ways that they can circumvent Apple's fee by having their fans make transactions outside of the Patreon iOS app.

Patreon is not explicitly promoting that solution for creators, likely to try to not ruffle the feathers of Apple any further. And it needs its iOS app because that is where users are.

"If we don't do this, Apple might kick us out of the App Store, which would be terrible for creators and terrible for Patreon because iOS is actually now the most used platform for communities on Patreon," Conte said in a YouTube video posted on August 12.

Apple and Patreon did not provide comment to Business Insider.

Apple isn't seen as a friend in the creator economy

Patreon isn't the only startup creators are using to build businesses around their communities and content.

Other platforms, like Kajabi, Mighty Networks, Passes, and Substack are either already being taxed by Apple or navigating these issues in real time.

"This is what happens when you build on rented space versus owned space," Kajabi CEO Ahad Khan told BI. "You're building your business on a platform that can change revenue share policies kind of whenever they feel like it."

For instance, Kajabi helps creators make branded mobile apps, but creators understand that if they put that app on the Apple App Store and there are in-app transactions, they will be taxed by Apple. Each creator has to decide what makes sense for their business, in the end, Khan added.

Similarly, Mighty Networks also helps creators make apps listed on the Apple App Store and has had to deal with Apple's fees for years.

"When in-app purchases are triggered on any Mighty network, we don't take a cut at all," CEO Gina Bianchini told BI. "So we essentially give back anything that we would be taking to the creator."

Meanwhile, other platforms, like Substack and Passes, are navigating these questions as they build out their mobile app presence.

Substack's cofounder Hamish McKenzie wrote that the startup doesn't "think that Apple should be wholly blamed" and is working with Apple to bring in-app purchases to the Substack app.

"We're doing everything in our power to make the implementation of in-app purchases as creator-friendly as possible," McKenzie wrote.

Passes CEO Lucy Guo told BI that its iOS app would have higher prices than on its website to offset the impact on creators' earnings.

"We believe that Apple should make exceptions when it comes to creators," Guo said in an email. "The Apple tax hurts individual creators who rely on Passes as their main source of income."

Suffice to say, when it comes to the creator economy and Apple, things are complicated.

"I don't actually fault Apple," Bianchini said. "Apple's not the most evil thing in the world, but they're also not everybody's friend either."