Apple Just Cut Its App Store Commission in Half for Most Developers
Applies if you make less than $1 million in revenue per year
In an announcement that took the developer community by surprise, Apple finally decided to scale back on its prevalent 30 percent App Store commission rate. It’s a move that drastically alters how developers get paid for their work. And in this time of uncertainty, it has the potential to get developers back on their feet. Apple is calling it the App Store Business Plan. And here’s why you should look forward to it.
If you’re a developer building apps and services for Apple’s App Store, you are eligible for a reduced App Store commission of 15 percent, half of how much Apple used to charge. The only condition? Less than $1 million in revenue from the previous calendar year. It’s a lucrative proposition that could end conflicts that have plagued the Cupertino giant in the recent past. A good portion of Apple’s 28 million registered developers falls into this category, making the initiative all the more surprising.
While Apple’s established hardware does bring in a good portion of revenue, the $50 billion it earned from the App Store last year cannot be underestimated. And with the company’s efforts to broaden its digital reach with initiatives like the Apple One subscription service, it absolutely needs the support of the developer community. Apple has faced a considerable amount of backlash from moves like forcing WordPress to adopt in-app purchases and its feud with Basecamp. Its squabbles with giants like Facebook and Microsoft are well documented too. And while the developers behind Fortnite are still up in arms in an ongoing legal battle with the company, the App Store Business Plan is a compromise in the right direction.
Apple has reduced its rates before
This isn’t the first time Apple has offered this provision to its developers. Subscription-based services got to keep an extra 15 percent of their revenue in 2016 if a subscriber stayed signed up on said service for over 12 months. In fact, it even made a concession for Amazon’s Prime Video service by dropping its commission rate to 15 percent. Firms like Spotify picked up the pitchfork against Apple for giving Amazon special treatment, engaging in a tussle whose victor seemed uncertain. But today’s announcement might just shake things up. Apple’s new program has a lot to prove and will prove instrumental in alleviating the prior concerns of its developer base.
It remains to be seen if Apple’s motive was to counter the bad rep it had been receiving or whether it wished to soften the blow dealt to developers by an unprecedented pandemic. The move is proof that not even Apple can get away with unfair restrictions imposed on its developers. And while they did tell The Verge that there was no single reason behind the new program, there’s no doubt that Apple needed to strengthen its foundation. By targeting over 98 percent of its developer base that brought in less than 5 percent of App Store revenue last year, Apple is definitely playing it safe.
A meteoric drop in Apple’s commission rate can literally turn fortunes around for indie game developers and service providers who had earlier been subjected to the 30 percent cut. Amidst the ongoing COVID-19 pandemic, firms that were sinking now have a shot at stemming the tide. After waves of bad press, Apple might just don its snazzy suit and receive a hero’s welcome once more. Lifting the burden it placed on its developers is a bold move and it remains to be seen whether the folks at Google and Microsoft follow suit.
