Apple on Wednesday announced a lowering of the App Store commission rate, one of the most significant changes to how iOS developers earn money in the iPhone maker’s digital app market history, as part of a new program for small businesses. The new App Store Small Business program, as it is called, will allow any developer who earns less than $ 1 million in annual sales annually from all of their apps to qualify for a 15 percent App Store cut – half of the 30 percent Apple standard fee – on all paid app revenue and purchases. Inside the app.
The company says that “the vast majority” of iOS app developers should be able to access the program, but Apple has declined to specify which percentage of the more than 28 million registered app makers will qualify. Apple has also declined to specify how much of its App Store revenue will be affected by the reduced commission. But the App Store, which generated nearly $ 50 billion in revenue in 2019 according to CNBC, is one of Apple’s most pivotal companies outside of the iPhone and is a pillar of the digital services strategy described by CEO Tim Cook as the future of the company’s business. .
The new Small Business Program comes into effect January 1, 2021. Developers will be required to apply for the program, and Apple says it will release more information about this process, other eligibility requirements and deadlines in December. Apple hasn’t explained why it chooses not to automatically enroll developers in the program, but it is possible that developer registration would reduce the likelihood of fraud or other violations that could arise if Apple simply registered everyone below the minimum automatically.
Apple has already clarified some software rules today. The company says it will look at developer revenue for 2020 to determine eligibility starting in January. New developers can also qualify right away. For app makers who cross the million dollar threshold at any time in 2021, they will be automatically removed from the program and subject to a record-breaking 30 percent cut. If a developer falls below the $ 1 million threshold in a coming calendar year, Apple says it can re-qualify for the program and the reduced commission rate.
Apple CEO Tim Cook described the move as a way to support small businesses, which he described in a statement as “the backbone of the global economy and the heartbeat of innovation”:
Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in societies around the world. We’re launching this program to help small business owners write their next chapter on creativity and thriving on the App Store, and build the kind of high-quality apps our customers love. The App Store has been an engine of unparalleled economic growth, creating millions of new jobs and an entrepreneurial pathway within the reach of anyone with a great idea. Our new program takes this progress forward – helping developers finance their small businesses, risk new ideas, expand their teams, and continue to create apps that enrich people’s lives.
This isn’t the first time Apple has lowered commission rates for some developers. The company’s most recent change of this size occurred in late 2016, when it first began allowing subscription services to keep an additional 15 percent of revenue if the subscriber stays registered through the iOS app for more than 12 months.
Apple has also reduced or exempted its App Store from certain services altogether, as it did for subscriptions to Amazon Prime Video and more recently in Prime Video rentals and in-app purchases, but the company often only cuts such deals behind closed doors and has no extension. These benefits go to developers that you don’t directly negotiate with.
This new program is sure to satisfy more professional app makers, indie game developers, and other members of the iOS ecosystem who have felt that the size and success of the App Store has not translated into tangible benefits for developers in recent years. Apple has weathered a rather difficult year of bad press, with much of it focused on cutting Apple by 30 percent of all paid app sales and in-app purchases and the many rules it imposes on developers before granting access to the App Store.
The series of controversies includes the launch of a European antitrust investigation into the App Store and Apple Pay; Public confrontation with Basecamp software maker on Hey developer email client; An unprecedented legal battle with Epic Games over including Epic’s in-app payment options in It is an electronic game; And a series of disagreements with Facebook, Microsoft and others over what Apple’s rivals and rivals feel are unfair restrictions on third-party iOS apps.
There have also been several small dust removals – like WordPress accused Apple of forcing it to add in-app purchases – and it typically centered around the App Store model and Apple’s many rules about payment options, commissions, and other financial elements of app distribution.
Dozens of popular app makers and well-known companies, from Tinder’s parent company Match Group to Spotify, have gathered together in recent months to criticize Apple for exercising potential monopolistic control over the iOS market and using its tremendous power to hurt competition and wring unreasonable fees from large and small developers.
The App Store Small Business program, despite its position as a way to provide comfort to app makers during the ongoing economic downturn caused by the COVID-19 pandemic, cannot be separated from the many controversies that Apple has found itself in over the past year. The company says the edge There is no single reason for her decision to launch the program now, and she refused to disclose whether the program was in operation prior to the outbreak of the pandemic.
However, Apple’s relationship with developers is clearly more fragile now than it has been in years past, and this new commission cut may help fix it.