Apple Inc. is cutting by half the fees charged to most developers who sell software and services on the App Store, marking the biggest change to the store\u2019s revenue structure since the iPhone maker launched the service in 2008. That wasn\u2019t enough for some developers.<\/p>\n
The company is lowering the App Store fee to 15% from 30% for developers who produce as much as $1 million in annual revenue from their apps and those who are new to the store. The change will go into effect Jan. 1 as part of an App Store Small Business Program, Apple said Wednesday in a\u00a0statement. The new structure will apply to the \u201cvast majority\u201d of developers who charge for apps and in-app purchases on Apple\u2019s devices, the company said. It won\u2019t affect major apps, such as those from Netflix Inc. and Spotify Technology SA.<\/p>\n
The Cupertino, California-based technology giant said it\u2019s making the change to help small developers financially and to provide a way for them to invest in their businesses amid the economic struggles caused by the Covid-19 pandemic.<\/p>\n
Apple has faced ongoing scrutiny from government regulators and criticism from developers about the percentage of revenue it takes for App Store purchases. Alphabet Inc.\u2019s Google also charges similar fees to developers on its Android app store.<\/p>\n
Income from app developers has been key to Apple\u2019s growing services business, which reached almost $54 billion in revenue in fiscal 2020. The App Store is one of several products and offerings that make up the services unit, but is the biggest revenue driver, according to Toni Sacconaghi, an analyst at Sanford C Bernstein. He estimates the App Store alone will bring in $18.7 billion in 2021, about a third of Apple\u2019s total services revenue next year.<\/p>\n
Shannon Cross, an analyst at Cross Research, estimated the fee changes will reduce Apple\u2019s revenue by about $600 million in 2021, or just 3% of her firm\u2019s projection for App Store sales. Gene Munster of Loup Ventures estimated a larger hit of about $1.6 billion, or 0.5% of Apple\u2019s total annual revenue.<\/p>\n
Small developers make up the majority of App Store sellers. Sensor Tower, a firm that tracks App Store data, said 98% of App Store developers generate under $1 million in annual gross spending by consumers. The firm estimated that just 5% of Apple\u2019s App Store revenue in 2019 came from developers who took in less than $1 million during the year.<\/p>\n
The changes failed to appease one of the more vocal small developers who relies on Apple\u2019s ecosystem. \u201cIf you\u2019re a developer making $1m, Apple is STILL asking to be paid $150,000, just to process payments on the monopoly computing platform in the US. That\u2019s obscene!\u201d Basecamp Chief Technology Officer David Heinemeier Hansson wrote on Twitter.<\/p>\n
\nBUT WHAT DO YOU WANT FROM APPLE!? Simple:<\/p>\n
1) The choice to use a different payment processor, so we can have competition. Monopoly platform can’t mean monopoly payments.<\/p>\n
2) The right to tell customers that our software is for sale, without linguistic contortions.<\/p>\n
\u2014 DHH (@dhh) November 18, 2020<\/a><\/p><\/blockquote>\n