More Details Emerge on Apple’s New Streaming Compensation Formula; Will Apple TV+ Have to Share Subscriber Data?
The WGA and SAG-AFTRA strikes from 2023 could be convincing providers to try something new when it comes to paying top talent.
To say that streaming services used to spend with nearly reckless abandon would be undeniably true, but that was simply a reflection of how the economics of streaming used to work. Services didn’t have to worry about Wall Street breathing down their necks to show a profit as they were fighting to build scale; every service in the industry was scrambling to attract their unique audience, and grabbing big-name content creators in overall deals that paid huge sums up front was the way to make a splash. At the time, it was all about who could outspend the competition, but the market has changed drastically over the past year. These days, streaming success is measured the same way across all streamers: profit, and it is leading providers to reexamine every item in their budgets, including compensation for artists and creators. A new report from Bloomberg provides details about Apple’s new plan to pay its producing partners, and suggests that other streamers are working on similar updates to their compensation arrangements as the industry continues to evolve.
Key Details:
- Apple’s new payment system would award bonuses based on three criteria.
- Netflix and Prime Video are considering new payment formulas as well.
- Apple still won’t share internal metrics with talent, but more data transparency of any kind is a boon to producers and talent.
News that Apple was considering a new way to compensate creators for its original shows first circulated in early May. Bloomberg’s report has more specific details on what the company is exploring doing in the future, instead of simply plunking down large sums of cash up-front for shows without knowing how well they’ll perform.
Apple is considering awarding bonuses for shows that draw bigger audiences based on a points system. Three criteria will determine if a show earns points: the number of new subscribers attracted to Apple TV+ by the show, how much time they spent watching, and the program’s cost relative to the size of its audience. Bonuses could reach as much as $10.5 million per season if a show maxes out these metrics.
Apple is still seeking feedback for its new system, and the plan isn’t finalized yet. Some in Hollywood believe the arrangement will lead to higher-quality titles since talent will have more incentive to create a hit when they’re working on shows. Others are skeptical that big Hollywood studios are simply trying to protect their bottom lines and have an excuse to pay less for streaming content. Streamers were already expected to start slowing their content spends in 2023 and onward, but the WGA and SAG-AFTRA strikes gave providers added incentive to reconsider the way they compensate the talent behind top streaming shows.
Will Streamers Have to Share More Data with Creators?
It’s not just Apple TV+ that’s thinking about making changes to its compensation formula; Bloomberg reports that Netflix and Amazon are both mulling overhauls as well and that Prime Video is still deciding which data point to build its new system around. Both services will have full plans ready in the coming months.
Apple and Amazon are some of the most secretive when it comes to revealing key metrics about their audience sizes. Neither reports their subscriber totals to the public regularly, and Netflix promised that starting in 2025, it would no longer provide this number either. But performance-based bonuses for content creators would seem to suggest that these services will have to start sharing some data with the talent responsible for their top shows, at least.
Not so fast, says Bloomberg. Its report indicates that Apple will allow its rankings to be audited, but that it will still not give anyone outside the company raw data. Creators will simply have to trust that Apple’s data is accurate, and if other streamers decide to follow similar policies it may be difficult for producers to see real proof of their show’s success or failure. Nevertheless, any advances in data transparency are a win for creators; getting more information from streamers was a big issue for both SAG and the WGA in their concurrent strikes last year, and even tiny steps forward in that regard could help them materially the next time they try to bring studios to the table.
It will be fascinating to see what effects these new payment formulas have on producing new streaming hits. Content creators could be incentivized to work harder, but they also may take fewer chances in pitching ideas in favor of shows they think will be massive successes and thus pay more. Only time will tell, but streamers are searching for any way possible to cut costs these days, and new compensation formulas may become important parts of that overall strategy.
Apple TV+
Apple TV+ is a subscription video streaming service for $9.99 a month that includes high-quality original shows and movies including Best Picture winner “CODA,” popular sitcom “Ted Lasso,” and dramas like “The Morning Show” and “Severance.” Apple TV+ is also home to MLB baseball games on Friday nights and MLS Season Pass.