As a part of its latest Small Business Program, Apple will slash its commissions by 15% for developers whose annual revenue is less than 1 million, which is almost half of their former 30% commission. Though, if at any course of time during the year, any developer crosses the mark of 1 million, they will be charged at the former 30% for the remaining year. Further, new developers who haven’t yet released their apps will also be eligible for the reduced fee.
The reduced fee will be considered on a post-commission basis, which means the developers will still be able to earn up to 1.3 million in gross revenue. Moreover, Apple has stated that there will be no auto-enrolling and developers will have to register themselves for the program to reduce the possibility of frauds and deceits. The program is set to be implemented on January 1, 2021, and Apple will be sharing more details about the same in the upcoming month.
The App Store is one of the most pivotal streams of revenue for Apple, grossing approximately 50 billion in the last fiscal year, according to CNBC. So, such a cut in commission could impair the company’s profits. But, their top-grossing apps will be charged at the same 30%, which may cushion the blow to Apple’s financials significantly. Additionally, the discount for small businesses will also be capped, since after hitting 1 million in revenue, they will go back to paying the regular commission of 30%. The App Store offers more than 1.8 million apps but it’s a winner-takes-all situation. As per the analytics company Sensor Tower, almost 98% of developers will be eligible for this program but they make up only 5% of Apple’s revenue. Hence, Apple will still collect fat revenue from its top-grossing developers.
2020 has been a year of bad press for Apple, most of which targetted its high commission rates on paid apps and in-app purchases and the rules it imposed on developers before letting apps enter the App Store. The controversies didn’t just end there but went on to a public clash with Basecamp over Hey’s email client, lawsuits with Epic games over including in-app payment options in Fortnite, a series of tiffs with Microsoft, Facebook, and other Apple oppositions over unfair limitations on third-party iOS applications and conflicts with WordPress over forcing it to include in-app purchases. Such companies including Spotify and Tinder’s parent company Match group have come together to censure Apple for its monopolistic ways.
Hence, it can be seen that Apple’s relations with its developers are in hot waters. Whether their latest program will help them rebuild these relations or add fuel to the fire is a matter of intrigue for all.