Projekto.Biz | All About Marketplaces Fees (taking money like "Vegas" slot machines...)
Source: The Verge, August 2021
Apps are just one example of how online platforms for small businesses and independent creators have shifted the world we live and work in. Membership platforms, like Patreon, allow creatives to charge monthly payments in exchange for new videos, comics, and essays. Video services like Twitch and YouTube allow creators to monetize their time through advertising revenue. And marketplaces like Etsy and Amazon allow people to sell an assortment of products directly to customers around the world.
The cut each platform takes varies significantly: Apple notoriously takes 30 percent of many digital in-app purchases; Twitch takes a 50 percent cut of subscription fees and a cut of advertising; eBay asks people to buy space and then pay a fee. Here are the various fees each platform takes, divided into four categories: app stores, creator platforms (including memberships, video services, and more), digital marketplaces, and games marketplaces.
App stores are where an enormous number of businesses operate. Whether someone is selling a line of jewelry on Etsy or spending oodles of money in Roblox, app stores are the gateway to reaching people who shop on their phones and computers. Approximately 80 percent of Americans shop online, according to the Pew Research Center, and more than half of those shoppers use a mobile device like a phone or tablet.
Apple App Store: 30 percent standard commission on apps and in-app purchases of digital goods and services; sales of physical products are exempt. Subscription commission falls to 15 percent after one year.
Developers that make less than $1 million yearly in App Store sales can receive a 15 percent commission through Apple’s App Store Small Business Program for as long as they qualify.
Google Play: 30 percent standard commission on apps and in-app purchases of digital goods and services; sales of physical products are exempt. Subscription commission falls to 15 percent after one year.
Google takes 15 percent in fees on developers’ first $1 million in Play Store revenue every year. After the $1 million threshold, the rate goes back up to 30 percent.
Galaxy Store: 30 percent standard commission on purchases through the app store, but it can be negotiated with Samsung.
Amazon App Store: 30 percent standard commission on apps and in-app purchases. The subscription commission is 20 percent on video apps and 30 percent on everything else.
Developers that make less than $1 million per year in app store revenue can receive a 20 percent commission and 10 percent in “promotional credits” for Amazon Web Services through Amazon’s Appstore Small Business Accelerator Program for as long as they qualify.
Microsoft Store: 15 percent commission on apps and 12 percent commission on PC games are starting in 2022. A 30 percent commission on all apps, games, and in-app purchases on Xbox consoles.
Non-game sellers can also use their own payment system and avoid Microsoft’s commission entirely as of July 28th, 2021.
While app stores largely fit into the logic of their real-life, physical counterparts, an ever-growing breed of creator platforms allows people to monetize their personality and creativity more directly. Whether glued onto an existing social network like Facebook or reinventing old forms of entertainment like Clubhouse, creator platforms have found familiar ways to earn a buck on the backs of creator popularity.
Patreon: There are three types of plans creators can enroll in, and each plan comes with a different cut.
Lite plan: Patreon takes 5%
Pro plan: Patreon takes 8%
Premium plan: Patreon takes12%
The tiers are geared toward different types of creators and businesses. The pro tier lets a creator offer tiered memberships to fans, while the premium tier provides a dedicated contact at Patreon who can provide support.
Then, there are payment processing fees. For creators in the United States, Patreon takes 5 percent plus 10 cents for payments of $3 or less. Payments over $3 result in a 2.9 percent cut plus 30 cents going to Patreon.
OnlyFans: OnlyFans takes 20 percent of subscription fees and other earnings, like tips. Creators can set their subscription fees between $5 and $50 per month.
Tips max out at $100 for new users and go up to $200 for users who have had an account for four months or longer. You can tip $500 per day as a new user, with the limit increasing over time.
Twitter: Twitter offers an array of ways for creators to make money. Super Follows allows creators to offer subscriptions of $2.99, $4.99, or $9.99 per month in exchange for perks like exclusive tweets. Ticketed Spaces allow creators to charge for access to live audio events, with ticket prices ranging anywhere from $1 to $999.
For both products, Twitter takes a 3 percent commission on payments (after payment processing and in-app purchase fees, such as Apple’s 30 percent cut) until creators earn their first $50,000 on the platform, after which Twitter takes 20 percent. The features are only available to select users for now.
Creators can also receive money directly through Twitter’s Tip Jar feature, which is currently in beta and only available to some users. Twitter doesn’t take a cut, but payments are subject to the processing fees of whatever third-party payment service is linked.
Facebook: Facebook lets creators offer monthly Fan Subscriptions and receive support directly from their followers. Facebook plans to take up to a 30 percent cut each month, but the company has announced it won’t be taking any fees until 2023. Apple and Google do take their typical cut on mobile, though, reducing creators’ share to 70 percent.
Facebook also offers a tipping feature for live streams called Stars — basically its answer to Twitch’s Bits. Creators get 1 cent per star, but (like Twitch below) viewers buy them for more than a penny each. If a viewer is buying only a few dollars at a time, Facebook might take upward of 18 percent of the money spent on tips. Creators also need to meet Facebook’s eligibility requirements to enable Stars.
Bulletin, Facebook’s newsletter product, currently doesn’t take a cut of subscriptions, though Facebook has so far limited the platform to a select group of higher-profile writers and personalities.
YouTube: Creators primarily make money on YouTube through ad revenue. YouTube takes 45 percent of revenue from ads and gives creators 55 percent, according to Variety.
YouTube also has a number of ways for creators to get paid directly by viewers:
The platform lets channels offer memberships, which are monthly subscriptions that run between $1 and $100 in the US.
Similar to several Twitch features, YouTube’s Super Chat, Super Stickers, and Super Thanks features give fans the ability to tip creators in exchange for perks like better comment placement in a Livestream chat, custom stickers, and animations. Prices range from $1 to $500 for pinned Super Chat comments, $1 to $50 for Super Stickers, and $2 to $50 for Super Thanks.
YouTube takes 30 percent of the revenue earned on memberships and Super features once taxes and applicable app store fees are deducted.
Creators can also sell merchandise from select retailers directly to subscribers via the merch shelf underneath videos. YouTube doesn’t take a cut of merch sales, but creators may be subject to different fees depending on which of the 31 different supported retailers they partner with.
YouTube also shares revenue from YouTube Premium subscriptions based on the amount subscribers who watch a creator’s videos. The company has not disclosed how that money is divided, but YouTube tells The Verge most of the revenue from Premium goes to creators.
Twitch: A creator can start making money from ads, subscriptions, and donations once they become a Twitch affiliate, which takes a certain amount of streaming and followers.
Twitch typically takes 50 percent of subscription fees. Subscription pricing varies by country to reflect the local cost of living. As an example, a base subscription is $4.99 per month in the US but around $1.20 per month in Turkey.
Twitch also offers streamers a way to be paid via donations using a virtual currency called bits. Twitch pays creators 1 cent per bit, so after receiving 100 bits, a streamer gets $1. The catch is, that viewers, pay extra upfront to buy those bits: 100 bits cost $1.40 to buy on the web or around $2 to buy on mobile to account for app store fees. That means anywhere from 29 percent to 50 percent of the money spent toward tipping is being lost to fees.
Streamers frequently accept donations through third-party payment platforms, too. Twitch doesn’t take a cut of these, but the platforms themselves may come with their own deductions for payment processing.
On top of subscriber fees, streamers also earn ad revenue — usually around $3.50 for every 1,000 views of an ad on their channel. For both subscriptions and advertising, bigger streamers may get better deals.
Clubhouse: Live social audio app Clubhouse allows listeners to pay creators directly via a “Send Money” button. The clubhouse doesn’t take a cut of the payments, and the person leaving the tip is asked to cover the payment processing fee from Stripe.
Spotify: Through its subsidiary Anchor, Spotify allows podcasters to offer subscriptions. Spotify won’t take a cut until 2023, after which the company will charge a 5 percent commission. Creators have to cover payment processing fees out of their share.
Apple: Subscriptions in Apple Podcasts are subject to the same rules as other subscriptions on Apple platforms: there’s a 30 percent commission to start, but if subscribers stick around for a year, the commission drops to 15 percent. Creators also have to pay $19.99 per year to offer subscriptions in the first place.
Discord: Through its live audio feature, Stage Channels, Discord offers creators the ability to sell tickets to their audio events. The feature is currently in a limited beta, and Discord hasn’t announced if it will keep a portion of ticket sales or when the feature will be available for everyone.
Tumblr: A subscription feature, called Post Plus, lets creators offer subscriber-only posts for $3.99, $5.99, or $9.99 per month. Tumblr takes a 5 percent commission on subscription fees, and for subscriptions made through iOS or Android, creators will lose an additional 30 percent to the respective platforms.
Substack: The newsletter platform takes 10 percent of subscription fees. Substack lets writers choose how much they want to charge newsletter subscribers per month or year. (There’s also a free tier.)
Wattpad: The fiction publishing platform Wattpad offers a limited form of monetization for certain creators. Invite-only Paid Stories allows fans to purchase coins to unlock entries in an ongoing story or novel.
Currently, Wattpad sells coins in several different packages (you can get nine coins for 99 cents, for example) and chapters are usually priced at three coins each (though some go for more). Wattpad says writers receive the “majority of the revenue from the program,” but it has not publicly disclosed the exact split.
Kindle Vella: Amazon has its own take on Wattpad’s Paid Stories, called Kindle Vella. Writers who publish with Vella receive royalties based on the number of tokens spent on an “episode” in their story, with the token cost determined by the episode’s length (one token per 100 words).
Writers get to keep half of whatever a reader spent on the tokens they used to unlock their story, minus taxes and fees. The complicating factor is that Amazon offers tokens at different price points — you can buy 200 tokens for $1.99 or 1,100 tokens for $9.99 — so payouts can vary.
At those price points, for example, a writer who receives 100 tokens would either get $1 or 90 cents.
Digital marketplaces for physical goods are at the core of online shopping. Many of us use Amazon on a daily or weekly basis or peruse eBay at work to keep an eye on the latest auctions. But while large businesses can be built on these platforms, their terms can be complicated to navigate and tend to ensure the platforms make a cut on just about every sale that goes through.
Facebook and Instagram: Facebook collects either 5 percent per shipment of products sold (one order can include multiple shipments if items are mailed separately) or a flat fee of 40 cents for shipments of $8 or less. This covers taxes, and payment processing fees, and applies to all checkout transactions on both Facebook and Instagram.
Facebook is waiving the selling fee for all orders shipping through June 30th, 2022.
Amazon: Amazon is a complicated one. First, businesses can choose between using a professional selling plan, which costs $39.99 a month, or an individual seller’s plan, which has no monthly fee. Those on the professional tier do not have to pay a sales fee on items sold, while those on an individual seller’s plan pay $1 per sale.
Amazon then takes a commission on each sale, including shipping fees. This fee depends on what the item is, typically ranging from 8 to 20 percent. There’s also a $1.80 closing fee for products listed under media categories, including books, DVDs, music, game consoles, and more.
Etsy: Etsy charges a 20-cent fee for people to list each item for sale. Then, for every product sold, Etsy takes a 5 percent transaction fee, and a payment processing fee of 3 percent plus 25 cents.
The company also runs an advertising program that’s somewhat controversial with sellers. Etsy pays to advertise their products on sites like Google and then takes up to a 15 percent fee (but no more than $100) if they lead to a sale. Small sellers can opt-out, but larger sellers have to participate; for them, Etsy only takes a 12 percent referral fee.
eBay: Generally speaking, eBay sellers might pay a small fee to list a product and a 12.5 percent commission on the sale price.
Fees can vary significantly depending on product category and listing type, though. eBay also offers paid premium store features that can reduce fees. It’s a fairly complicated series of options — you can get a sense of some possibilities for paying stores from this chart.