IAP Required for Insight Timer Tips
The 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 that 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.
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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.
The change apparently comes after Apple allowed the app to use its own Stripe-based in-app purchase system for over a year.
Apple approved 47 Insight Timer updates that had the tipping functionality, but late last year, Apple’s review team decided that these payments weren’t considered tips, but digital goods purchases, which subjected them to the App Store in-app purchase fee.
App Store rule 3.2.1 vii says that apps can allow users to give a gift to another individual without using in-app purchase, so long as the gift is an optional choice and 100 percent of the funds go to the receiver of the gift. This was the case with Insight Timer, as it was not taking a cut of tips, but the individual to individual wording is what became murky, as well as an addendum to that rule that says a gift “connected to or associated at any point in time with receiving digital content” requires in-app purchases.
Just as homeowners don’t pay 30% of their Airbnb income to Apple - imagine the outrage - teachers shouldn’t have to pay Apple 30% of their donation income either. Many Insight Timer teachers are doctors, nurses and educators who return home from their day jobs to work in the evenings on Insight Timer for critical supplemental income. They give up their personal time recording audio replies to classroom questions, responding to user reviews, hosting live events, writing music, creating guided meditations and leading discussion groups. There’s nothing ‘digital’ about these experiences no matter how much the definition is contorted. The more teachers work, the more they earn. The correlation is obvious and the term ‘digital content’ simply does not apply.
Everything rests on Apple’s interpretation of the words “digital content”. When Apple wrote clause 3.1.1 it was most probably intended for Apple’s gaming developers. These companies make billions selling virtual items like ammunition upgrades, sharper swords, bigger shields, extra lives, golden coins and cooler Fortnite skins. These items are ‘digital content’ because they have no inherent value and cost nothing for gaming developers to digitally replicate. If Apple wants to take their 30% cut, fair enough. But virtual coins and ammunition upgrades are light years from the time spent by teachers working to engage with Insight Timer’s community. No reasonable person could miss the difference here.
Plowman’s argument makes sense to me, but Apple’s position seems to be consistent with their handling of events and classes facilitated with an app, which they temporarily changed during COVID-19. Then Apple announced that as of June 2022 it would be collecting the fees again. So why are we just hearing about this Insight Timer issue now, nearly two years later? Have they been getting an exemption all this time? Plowman says the dispute has only been going on for “months.” Was there a guidelines change in late 2023 that I missed? Or did Apple just suddenly decide to interpret the rules differently, as they did with WordPress?
Previously:
- Meta to Pass Along Fee for Boosted Posts
- Oak 2.5.2
- IAP Fees for Event Services, Deferred Again
- Apple Will Temporarily Stop Taking a 30 Percent Cut on Facebook Event Fees
- WordPress Bug Fixes Blocked Over IAP
- New App Store Review Guidelines: Gifts, Face ID, ARKit
- Apple Wants 30% of Tips From Chinese Chat Apps
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I can't find anything in Insight Timer's app description or their website that indicates they offer any sort of classes in the sense of, you show up at a particular time to watch or interact with a live instructor (a la Peloton). So to me, this seems consistent with Apple interpreting the sale of access to prerecorded media (i.e. audio files of meditation sessions and classes) as digital content.
Plowman is being quite disingenuous that "[t]here's nothing 'digital' about these experiences." His app is selling digital content, full stop. And if the tips are generated because of the digital content--i.e. the tip button being on the page with the digital content, which is what Apple is objecting to, from my understanding--then agree or disagree with Apple making the rule in the first place, but this is a black and white case of a violation of the rule as it stands.
> These [game IAPs] are ‘digital content’ because they have no inherent value and cost nothing for gaming developers to digitally replicate.
The first half of this sentence makes zero sense. They have value to the people purchasing them. You don't buy a Fortnite skin because you think it's worth nothing. You buy it because you think it looks cool or pretty or whatever, and you feel that's worth whatever Fortnite is charging you for it. It also took a skilled person time to create it. You don't have to enjoy Fortnite to understand that. And while the latter half of the sentence is true, he is literally selling access to files that "cost nothing for developers to digitally replicate."
In fact, all of the things in the last paragraph are true for his app (with "You buy it because..." adjusted to reasons for buying such a product).
If this was about an app that just sold access to in-person classes and had in-app tip jars for those classes, and Apple somehow decided those tips were related to digital content, his argument would make complete sense. But "won't you think of the teachers" is just a heart-tug to cover for the fact that he has no leg to stand on when he is quite literally selling what anybody else would define as digital content.
Other points:
- This does seem to show that Apple gives grace periods (or whatever you want to call it) to smaller operators, too, so that is somewhat heartening. The developer/public may disagree with Apple's position on the actual issue, but this does seem to mean it's not just Meta who's getting time to incorporate the requested (demanded) changes.
- It, of course, is not a good look that Apple seemingly changed its mind after approving so many releases. I don't even know what to say about that.
@Kevin I’ve not used the app, but it really sounds like there are interactive live events, not just pre-recorded media, and that’s the part that has tipping. If not, this is misleading reporting. I agree that “no inherent value” is not the right phrasing. It’s more like how a Fortnite skin has zero marginal cost, whereas selling a song or e-book is digital content but not zero marginal cost. Same with teaching/Q&A.
Smaller, but $20 million a year in revenue, so not that small. Yes, I would like to know whether Apple gave them an 18-month grace period after which they had negotiations for 3 months and then went public, or whether Apple didn’t even contact them until 18 months after the deadline so the whole time they thought they were in the clear.
