Epic Games buys artist community ArtStation, drops commissions to 12%
One the same day as Fortnite maker Epic Games goes to trial with one of the biggest legal challenges to the App Store's business model to date, it has simultaneously announced the acquisition of the artist portfolio community ArtStation - and immediately lowered the commissions on sales. Now standard creators on ArtStation will see the same 12% commission rate found in Epic's own Games Store for PCs, instead of the 30% it was before. This reduced rate is meant to serve as an example the wider community as to what a reasonable" commission should look like. This could become a point of comparison with the Apple App Store's 30% commission for larger developers like Epic as the court case proceeds.
ArtStation today offers a place for creators across gaming, media, and entertainment to showcase their work and find new jobs. The company has had a long relationship with Epic Games, as many ArtStation creators work with Epic's Unreal Engine. However, ArtStation has also been a home to 2D and 3D creators across verticals, including those who don't work with Unreal Engine.
The acquisition won't change that, the team says in its announcement. Instead, the deal will expand the opportunities for creators to monetize their work. Most notably, that involves the commission drop. For standard creators, the fees will drop from 30% to 12%. For Pro members (who pay $9.95/mo for a subscription), the commission goes even lower - from 20% to 8%. And for self-promoted sales, the fees will be just 5%. ArtEngine's streaming video service, ArtStation Learning, will also be free for the rest of 2021, the company notes.
The slashed commission, however, is perhaps the most important change Epic is making to ArtStation because it gives Epic a specific example as to how it treats its own creator communities. It will likely reference the acquisition and the commission changes during its trial with Apple, along with its own Epic Games Store and its similarly low rate. Already, Epic's move had prompted Microsoft to lower its cut on game sales, too, having recently announced a similar 30% to 12% drop.
In the trial, Epic Games will try to argue that Apple has a monopoly on the iOS app ecosystem and it abuses its market power to force developers to use Apple's payment systems and pay it commissions on the sales and in-app purchases that flow through those systems. Epic Games, like several other larger app makers, would rather use its own payment systems to avoid the commission - or at the very least, be able to point users to a website where they can pay directly. But Apple doesn't allow this, per its App Store guidelines.
Last year, Epic Games triggered Fortnite's App Store expulsion by introducing a new direct way to pay on mobile devices which offered a steep discount. It was a calculated move. Both Apple and Google immediately banned the game for violating their respective app store policies, as a result. And then Epic sued.
While Epic's fight is technically with both Apple and Google, it has focused more of its energy on the former because Android devices allow sideloading of apps (a means of installing apps directly), and Apple does not.
Meanwhile, Apple's argument is that Epic Games agreed to Apple's terms and guidelines and then purposefully violated them in an effort to get a special deal. But Apple says the guidelines apply to all developers equally, and Epic doesn't get an exception here.
However, throughout the course of the U.S. antitrust investigations into big tech, it was discovered that Apple did, in fact, make special deals in the past. Emails shared by the House Judiciary Committee as a part of an investigation revealed that Apple had agreed to a 15% commission for Amazon's Prime Video app at the start, when typically subscription video apps are 30% in year one, then 15% in year two and beyond. (Apple says Amazon simply qualified for a new program.) Plus, other older emails revealed Apple had several discussions about raising commissions even higher than 30%, indicating that Apple believed its commission rate had some flex.
Apple's App Store commission structure called into question in antitrust hearing
Ahead of today's acquisition by Epic Games, ArtStation received a Megagrant" from Epic during the height of the pandemic to help it through an uncertain period. This could may have pushed the two companies to further discuss deeper ties going forward.
Over the last seven years, we've worked hard to enable creators to showcase their work, connect with opportunities and make a living doing what they love," said Leonard Teo, CEO and co-founder of ArtStation, in a statement. As part of Epic, we will be able to advance this mission and give back to the community in ways that we weren't able to on our own, while retaining the ArtStation name and spirit."