On Wednesday, Apple announced a reduction to its long-standing commission rate for the App Store, one of the most significant changes in the way iOS developers make money in the history of the iPhone maker’s digital app market as part of a new small app business. The new App Store for Small Business, as it’s called, will allow any developer who earns less than $ 1 million in annual sales from all of their apps to qualify for a 15 percent reduction in the App Store of Apple’s standard 30 percent fee on all paid app revenue and in-app purchases.
The company says “most”
The new small business program will take effect on January 1, 2021. Developers will be asked to apply for the program, and Apple says it will publish more information about this process and other requirements and eligibility deadlines in December. Apple did not explain why it chose not to automatically enroll developers in the program, but it is possible that requiring developers to enroll may reduce the potential for fraud or other abuse that could occur if Apple simply automatically registers everyone below the threshold.
Apple did write some of the rules of the program today. The company says it will look at developer revenue for 2020 to determine eligibility starting in January. New developers can also qualify immediately. For those application vendors that exceed the $ 1 million threshold at any time in 2021, they will be automatically removed from the program and are subject to a standard 30% discount. If the developer falls below the $ 1 million threshold in the next calendar year, Apple says it could retrain for the program and reduce the 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 beating heart of innovation”:
Small business is the backbone of our global economy and the heart of innovation and opportunity in communities around the world. We are launching this program to help small business owners write the next chapter on creativity and prosperity in the App Store and build the quality apps our customers love. The App Store is an engine of economic growth like no other, creating millions of new jobs and a path to entrepreneurship accessible to anyone with a great idea. Our new program brings this progress forward – helping developers finance their small businesses, take risks for new ideas, expand their teams and continue to make applications that enrich people’s lives.
This is not the first time Apple has reduced commissions for certain developers. The company’s most recent change of this magnitude occurred in late 2016, when it first began allowing subscription services to retain an additional 15 percent of revenue if a subscriber remains registered through the iOS app for more than 12 months.
Apple has also completely reduced its discounts from the App Store or released certain services, as it did for Amazon Prime Video subscriptions and more recently for Prime Prime rentals and purchases, but the company often reduces such deals only behind closed doors and has usually not expanded these benefits for developers with whom you do not negotiate directly.
This new program is sure to delight more app makers, independent game developers and other members of the iOS ecosystem, who have experienced the scale and success of the App Store, which has not brought tangible benefits to developers in recent years. Apple went through a tough year of bad press, much of it focusing on Apple’s 30 percent reduction in all paid app sales and in-app purchases and the many rules it imposes on developers before allowing it to enter the App Store.
The series of controversies includes the launch of a European antitrust investigation on the App Store and Apple Pay; public showdown with software maker Basecamp over developer’s email client Hey; an unprecedented legal battle with Epic Games to include its own payment options in the Epic app in Fortnite; and a series of disagreements with Facebook, Microsoft, and others over what Apple’s competitors and competitors see as unfair restrictions on third-party iOS apps.
There were also much smaller dusts – such as when WordPress accused Apple of forcing it to add in-app purchases – and they usually revolved around the App Store model and many Apple rules around payment, commission and other financial options. application distribution elements.
Dozens of big-name app companies and well-known companies, from the parent company of Tinder Match Group to Spotify, have banded together in recent months to criticize Apple for exercising potential monopoly control over the iOS market and for owning its huge force to harm the competition extracting unreasonable fees from large and small developers.
The App Store’s small business program, while positioned as a way to offer relief to app makers during the ongoing economic downturn caused by the COVID-19 pandemic, cannot be separated from these many controversies in which Apple ended up in the last year. The company tells On the edge there is no reason why he decided to start the program now and refused to say whether the program worked before the pandemic.
Still, it’s clear that Apple’s relationship with developers is now on a much more volatile basis than in years past, and this new commission cut could go a long way in repairing it.