Apple To Offer iOS Developers 85-15 Revenue Split; Debut Paid App Store Search Ads (theverge.com)

Apple says it will now take a smaller cut of commission from app developers provided they have customers who stick with their subscription model for longer than a year. Phil Schiller, Apple's Senior Vice President of Worldwide Marketing, told The Verge in an interview that the company will revise the 70-30 split for such developers to 85-15. In addition, the company will also begin showing search ads for apps in its iOS App Store search results. Also, the company says it is speeding up app review times "to the point where 50 percent of submitted apps are now reviewed in 24 hours, and 90 percent are reviewed within 48 hours." From the report: If the new subscription model becomes widely adopted, it will represent a fundamental shift in the economics of the App Store. Developers will be incentivized to sell their apps for a recurring fee instead of a one-time cost. It could change the way consumers pay for certain apps, but it also presents a massive opportunity for developers, many of whom feel the app economy has been become moribund in recent years. And as iPhone sales growth slows, a move to app subscriptions is another way for Apple wring more profits from its existing user base.Apple columnist John Gruber has more details.

Comments

Will that push Google to do the same?

[JcMorin]

Google currently have the 70/30 as Apple had. https://support.google.com/goo...

Re:Will that push Google to do the same?

[MobileTatsu-NJG]

Shush. That amount is only horrible when Apple does it, even if the developers do end up making more money than with Google for it.

Re:Will that push Google to do the same?

[alvinrod]

30% is hardly bad when you consider that you don't have to deal with payments at all or any refunding of those. If your average sale price is low (as it tends to be with apps) then transaction fees could eat up close to that amount alone.

Re:Will that push Google to do the same?

[Solandri]

Difference is an Android developer doesn't have to pay Google 30% if they don't want to. They can always release their Android app via a different store, or offer a direct download from their website. Heck, they can set up their own store if they want (as Amazon has done). They have to pay 30% only if they want to sell it in Google's store. This makes it exactly like the brick and mortar analogue, where the retail store takes a cut of the price where your product is sold.

But with Apple, the only way to distribute your app to users is via their App Store, where you have to pay the Apple tax (be it 30% or 15%). In any other industry, this would be an illegal market restriction. What if you could buy gas for your Ford car only from Mobil gas stations? Not for any technical reason, but because Ford said they needed to do it to insure the quality of the gasoline you put into your Ford vehicle?

But it's Apple, so people's eyes glaze over and their brain shuts down. Even Apple's argument that it "needs" to do it for security doesn't fly. They're responsible for securing their hardware and OS. If people want their apps secured, there should be multiple companies competing to provide that service. And the people can choose which of these protection services they prefer to use. Exactly like Google does - you can use their Play store and whatever screening/protection they provide, or you can use someone else's store, or you can choose to use a store which doesn't purport to offer any protection at all. In an ideal world, Google would have their own iOS store, and Apple would have an Android store, and other companies would have their own stores for both platforms. And whichever company provided the screening and protection services customers want most would end up gaining a larger share of the market. (Apps would also be interchangeable between stores too, like it doesn't matter if you buy your TV from Best Buy or Target, but that's another argument.)

Re:Will that push Google to do the same?

[Anubis IV]

Even Apple's argument that it "needs" to do it for security doesn't fly. They're responsible for securing their hardware and OS. If people want their apps secured, there should be multiple companies competing to provide that service. And the people can choose which of these protection services they prefer to use. Exactly like Google does - you can use their Play store and whatever screening/protection they provide, or you can use someone else's store, or you can choose to use a store which doesn't purport to offer any protection at all.

You say Apple's argument "doesn't fly", yet we can link the fact that Android accounts for 99% of malware on smartphones directly back to Google's choice not to lock-out other stores. The malware is rarely from Google Play: it's almost all from other sources.

It's pretty hard to suggest that Apple doesn't have valid security concerns, given the above. You can argue that users should have the ability to make those choices, and you'd have a valid point, but given the evidence, Apple would have no-less-valid of a point in suggesting that the best way to secure the device is to lock that ability off to begin with. And the evidence backs them up.

Mind you, I'm not suggesting Apple got it right or Google got it wrong. Not at all. I'm merely pointing out a logical incongruity in the arguments you're presenting. Apple's approach is certainly heavy-handed, but the effects are obvious. It's fine and well to talk about "an ideal world", but in practice what we see is that there's a real cost to the security of the platform if you allow untrusted apps onto your OS. Neither approach is right. Both approaches have benefits and drawbacks, and different companies weigh them differently.

I don't pay for app subscriptions

[el_smurfo]

Have never paid for an app subscription on my PC. Have never paid for an app subscription on my Phone. I pay for many media subscriptions and I have no problems paying for major feature upgrades to my apps, but when I buy an app, I want to own it. When a mobile app like Pushbullet goes subscription, equivalent competitors like "Join" always spring up as people don't want to pay a recurring cost for a one time service (I don't care about server costs, as a MITM server should not be a part of an app like Pushbullet anyways, as Join has proven).

App review speedup is real, and it's spectacular

[SuperKendall]

You might look skeptically upon Apple's claim that review times have sped up. How could they possibly have sped up to the process to a day from a week?

Yet, it is the case. Every single person I know submitting iOS apps has had every app approved within a day, sometimes just a few hours.

And it's not like they are just not looking at anything, in one case I head about someone who submitted an app update, the reviewer found a crashing bug, the developer fixed and resubmitted and it was approved - all within the same day!

That alone was a HUGE boon to app development as it made a lot of customers very cranky a change could not go out quickly. It should also eliminate a ton of emergency review requests developers were sending to Apple, so it probably helps Apple also.

My feeling on subscriptions for apps

[Zontar_Thing_From_Ve]

Is simply that I won't pay for such apps. Ever. I already have enough reluctance to pay once for apps and it wasn't helped when an app that I used a lot turned into abandonware and stopped fully working after some iOS updates. Apple deliberately has no way to complain to them that old apps no longer work so the mostly broken app still is available for purchase on their store. So good luck with this change, Apple, but I'll opt out of buying apps with subscriptions. I'm not really into this whole "subscription thing".

Re:My feeling on subscriptions for apps

[Dixie_Flatline]

It sounds like you have trouble paying for people's work at all. But here's the thing: nobody cares and you won't be missed. You weren't paying ANYWAY.

I have a few apps that I immediately buy when they have to put out a new revision to fund their development. The one that comes to mind most immediately is tweetbot. I always buy the new version because I want them to make more of them and keep up with Twitter's API. That doesn't come for free. I will absolutely pay a subscription to that app to make sure that there's always a new version ready for me.

I also use an RSS reader called Newsify that I really like. They monetize by providing a subscription to a bunch of services that I have absolutely no interest in. I don't pay that subscription fee. But if they have a subscription option--say, $5/year--that I can pay that just makes sure they stick around and make changes to the app, I'll pay that.

I don't know why you have such trouble paying people for their honest hard work for applications that you actually use. The other option is to let them fill the app with ads, and we've seen how well that's been going for the web in general. No thanks.

Re:My feeling on subscriptions for apps

[Anonymous Coward]

An app you paid a dollar for once (or got for free) was abandoned by its developers? Why on earth might that be?

Re:My feeling on subscriptions for apps

[swb]

But if they have a subscription option--say, $5/year--that I can pay that just makes sure they stick around and make changes to the app, I'll pay that.

I might buy into this, but....

1) You must update the app significantly at least once during the subscription period. Not just fucking bug fixes.

2) No ads, spam, tracking or unnecessary permissions

3) A means of exporting any persistent data I create in the app

4) a contact email for the app that actually gets responses. I don't care if its the actual developer or some kind of customer service team. I've bought apps where the dev was responsive and I've bought them where their was no support or response when the app didn't work.

5) App subscriptions with prompts to renew them for each subscription period. I am totally uninterested in buying into hard to cancel subscription models.

I'm more than happy to spend money on decent apps, I am not happy to just move into a parasitic environment where every app is a perpetual subscription for nominal bug fixes only, full of tracking, with no means of moving out my data and no support. Fuck that.

Re: Missing from all of this: the customer

[danomac]

Not even an episodic game with new content released regularly?

Which means the game is never, ever finished which will lead to really crappy games. I will never subscribe to an app on a phone, it's ludicrous.

I never bought into the DLC on other platforms for the same reason. And for those that say DLC makes the game better: Sure it does, because they finally finished the damn game!

What about other media types?

[dgatwood]

Suddenly, it would make more sense to sell books as apps. Is Apple considering doing this for books, too? If they did, it would hit Amazon pretty hard.

You must be joking, opposite is true

[SuperKendall]

Using iphone apps reminds me of being in America, with all the horrible street side advertising billboards

Wha?

Pretty much ALL Android apps are like that. The only option they really have is ads so all have them.

SOME IOS apps also have ads. But there are still a great many you can simply pay for, and have no ads at all.

Now with subscriptions, there need be no ads for many more apps because the recurring revenue ads were providing can be replaced by user revenue - meaning FEWER "billboards". Yet you are whining about not wanting to use iOS, instead of running to it to avoid the flood of Android App Ads.

Re: Apple is feeling pressure

[Karlt1]

Apple isn't going down to 15% universally. It's only for subscriptions and only after the first year. Apple could care less about competing with a no profit margin $70 Android phone.

Market share means nothing without profit.

Re:Missing from all of this: the customer

[Anubis IV]

Ok, then don't. Few of us actually want to pay anything, but at the same time, most of us can also recognize that there are whole categories of features and apps that have intrinsic, ongoing costs...costs which developers have few ways to recoup now, meaning that those apps never get built and those features never get added. It's lose-lose.

In some cases, we've seen successful launches of promising, niche apps get released to great acclaim, only to have few or no additional updates because the revenue dried up after everyone in the niche community bought it and sales fell off a cliff (and ad impressions were negligible because it's niche), leaving the developers with no way to sustain the business. For some apps, we see them use a high up-front cost to sustain the business until they launch version 2, but then they have to launch version 2 as a separate app with its own up-front cost. That may work for enterprise apps aimed at businesses willing to pay for something they need, but it's generally untenable when dealing with typical consumers.

And what of apps with features that carry an ongoing cost for the developer? Plenty of apps feature a server-side component that carries an additional cost for the developers that run them, but right now they either need to cover that expense from the up-front payments they receive when people buy their apps (thus limiting how much they can reasonably offer), or else they need to keep their costs below what they earn from ads, since that's the only other option available. I've seen developers admit to NOT adding much-sought features that have ongoing costs because they'd have no way to build a business around them. With these changes, however, they'll be able to offer different subscription tiers that could cover the ongoing costs incurred in providing the features offered in each tier. End result: users get the features they want that currently aren't being provided, while the developers have a means of supporting their business in a sustainable fashion. It's win-win.

Am I suggesting that I prefer subscription pricing? By no means! But I also understand the reality of the situation and can see that subscription pricing enables developers to build viable businesses around whole categories of apps and features that were previously impossible to sustain. Granted, it may be unappealing to pay ongoing costs, but if that's the actual cost to make those apps and features a reality, I'd rather not bury my head in the sand and pretend that things are fine as they are.