Revenue Sharing

Revenue sharing simply means splitting income. Two partners work together, and the earnings from the joint business are divided according to a fixed percentage key. A well-known example is Apple's App Store: anyone selling an app there usually keeps 70 percent of the price, while 30 percent goes to Apple. The difference from a normal rent or fee is important. With a fee, you always pay the same amount, regardless of how the business performs. With revenue sharing, you pay a lot when a lot is sold, and little or nothing when nothing is sold.

Who bears the risk

The core of this model is the distribution of risk. A young developer often has no money for large upfront payments. With revenue sharing, they can still get started, because they only pay once money starts coming in. The platform, in turn, earns more if the product becomes a success.

This creates a shared interest. Both sides want as much to be sold as possible, because both profit directly from it. A platform that only collects a fixed fee would not have this interest to the same degree. Economists call this an alignment of incentives.

In the AI industry, this topic has become especially relevant. Publishers and music labels accuse AI companies of using their content for training without payment. Several providers are responding with revenue-sharing models: anyone who contributes text or music receives a share of the revenue. Whether these shares are fair is currently one of the industry’s biggest points of contention.

The distribution key in detail

The first crucial question is what the percentage actually applies to. With gross revenue, everything customers pay counts. With net revenue, costs are deducted beforehand, for example for servers, payment processing, or advertising. A 50 percent share of net revenue can be worth significantly less than 30 percent of gross revenue. This is precisely where most conflicts arise in practice.

Rates are also often tiered. Apple reduces its share for small providers from 30 to 15 percent. Other contracts work the other way around: above a certain revenue threshold, the platform’s share increases. Sometimes a minimum payment is added, a so-called guaranteed amount, which is paid even when sales are weak.

With AI content, the calculation becomes more complicated. A chatbot might answer a question drawing on a thousand sources at once. Who then gets which share? Some providers measure how often a source appears in answers and distribute payments accordingly. Others pay a flat annual fee. So far, there is no recognized standard procedure.

From YouTube ads to AI deals

In everyday life, most people encounter this model through video platforms. YouTube passes on about 55 percent of the advertising revenue displayed alongside videos to channel operators. Spotify works the same way: a large part of subscription fees flows to labels and artists, distributed according to play counts. Anyone who writes a book knows this principle as royalties.

In business news, the term currently appears mainly in connection with contracts between AI companies and media houses. OpenAI, Google, and others have signed agreements with publishers in which payments are tied to the use of their content. New AI search engines are also advertising that they share revenue with websites instead of merely taking their visitors away.

A common misconception is that revenue sharing is automatically fair. The percentage alone says little. Whoever sets the calculation basis, measures the sales figures, and controls the accounting holds the real power. That’s why, whenever a headline mentions a revenue-sharing deal, it’s worth asking how much money actually ends up arriving in the end.