The Leadership Letter

Real correspondence from the people running real companies — and what it reveals about leadership.

How to Negotiate When You're the Whale but Not the Favorite

When you're a top customer paying a rack-rate meant for someone else, quantify the mismatch and name the comparable — don't complain, benchmark.

From Adrian Ong, SVP Operations at Match Group, to Apple's Carson Oliver, January 24, 2019:

"In the last couple of weeks, it has come to my attention that Netflix and Apple had an agreed upon rev share deal at 15% (but obviously they're no longer using in-app billing for new customers – an interesting approach that more of us are pondering for our strongest brands). Can you confirm if this is true?

The main point and why we feel strongly about discussing rev share is that we're driving almost 100% of the revenue growth for you and that we're episodic and therefore never truly benefit from the 15% terms for subscribers > 1 year (vs companies like Netflix that were probably achieving roughly an 18% rev share assuming the 30% based on avg customer retention).

Dating as a category is episodic — the average subscriber stays only 4–5 months. As a top grossing partner, we never are able to take advantage of the 15% rev share since the intent of our apps is to actually have people meet and leave our apps. Other top grossing partners such as our colleagues at Netflix have an average subscriber length of 43 months, which means their average rev share works out to be approximately 18% — much closer to the 15% than the 30% commissions we pay.

Being in the payments space for a very long time, we also know that the 30% rate is arbitrary since i) we know that other categories are not forced to use IAP and ii) the cost of accepting payments is only <2–5%."

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Court Exhibit
Epic Games, Inc. v. Apple Inc.
4:20-cv-05640 (CAND), Doc. 528-15, filed 2021-04-29
January 28, 2019
Public domain
View the primary source →