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Apple Halves App Store Cost for Small Developers – Review Geek



App Store icon on a phone screen
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Epic̵

7;s battle with Apple over App Store earnings appears to be having an effect. Apple says it plans to cut the standard 30% revenue split for apps and in-app purchases to 15% from January 1, in an initiative it calls the App Store Small Business Program. But there’s a catch: Only developers who make less than $ 1 million a year are eligible.

Apple proudly claims that this will mean higher profits for most of the developers in the App Store, who must qualify for the Small Business Program from 2020 based on previous year earnings. If a developer makes more than $ 1 million in total from their apps, the default rate of 30% applies for the rest of the year. If the developer earns less than $ 1 million in a calendar year, they will be eligible for the lower rate starting next year.

App analytics firm Sensor told the New York Times that about 98% of current App Store developers would be eligible for the smaller 15% discount. But that 98% of developers actually bring in less than 5% of the App Store’s total revenue. Per App Annie, today’s top-grossing apps in the App Store are:

  1. YouTube
  2. Tinder
  3. Roblox
  4. Battlegrounds from Player Unknown
  5. Pokemon Go
  6. Candy Crush Saga
  7. Bumble
  8. Pandora
  9. Homescapes
  10. Hulu

The biggest earners in the App Store all come from fairly large companies, otherwise their earnings easily exceed $ 1 million once they start to become popular. The App Store, and its Android equivalent the Play Store, are incredibly lucrative and have attracted some of the largest publishers in the world.

To put it bluntly, while the vast majority of app developers qualify for this smaller split, Apple will still reap the financial benefits of the 30% split for all apps that actually generate profits. The Small Business Program is no doubt a boon to smaller developers, but on the scale of apps that really matter, it’s a lot like a publicity stunt. Apple’s announcement states:

In 2019 alone, the App Store ecosystem facilitated $ 519 billion in trade worldwide, more than 85 percent of which belongs exclusively to third-party developers and companies of all sizes.

Importantly, it doesn’t say how many of those billions came from the 98% of developers who each made less than a million dollars. According to Sensor, it’s less than $ 26 billion. Which would mean Apple is dropping about $ 13 billion in revenue here, assuming every qualified developer signs up for the program and stays below $ 1 million in App Store revenue.

There is no way that a company like Epic, maker of it now banned Fortnite, may be eligible under these conditions. While the Small Business program could go a long way toward mitigating regulators looking at an antitrust case, it won’t stop Epic or the more boisterous movers and shakers in the app publishing world from aiming for a more lucrative way to get apps on iOS without Apple supervision.

Source: Apple, New York Times




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