After Year Long Rumors, Apple Has Finally Slashed Down Subscription Commission For Its App Store

Apple Inc., the Cupertino based consumer electronics developer is going to reduce subscription commission for its App Store from 30% to 15%. The tech giant has been charging commission at this rate since inception of the App Store seven years back. However, the reduced tariff will be applied if an app can retain a subscriber for more than one year.

The change in revenue policy will be applicable immediately for the apps that are being used for more than a year. The new offer will help many app developer companies to earn some extra revenue.

Spotify, for example, has recorded a total subscriber of 20 million during the same period of the previous year. If Spotify has been able to retain just half of those subscribers, the new tariff rate will fetch some additional $15 million subscription revenue per month. The additional revenue figure has been estimated probably in a conservative manner, reports BBC.

Apple has been considering adopting the policy for more than a year. Reduction in the so-called Apple tax or subscription commission will help improve the economics for the subscription models. Moreover, the new policy will enable Apple to prove that the tech giant is not abusing its control over the App Store, according to a report published in the Financial Times.

Most popular apps on the Apple’s App Store are Facebook, Instagram, Snapchat and You Tube. But major portions of the app based revenue are generated from games. The gaming apps offer free downloads and in-app purchases for playing the game further. Subscription of apps may generate some extra revenue for Apple in a market where iPhone sales are too slow, reports USA Today.

Developing a serious business on top of any computational platform, monetization is essential. It is difficult to describe its meaning for sustainable healthy business, comments Itai Tssidon, the co-founder of Lighttricks. His firm has developed FaceTune photo retouching app which is available in the App Store for $3.99.  

Many companies offering subscriptions encourage consumers to download the app from App Store with advice to sign-up and register from their own website bypassing the ‘Apple Tax’. Software updates for mobile devices, computers, Apple Watch and TV set-top box will be displayed in the conference.

Apple is scheduled to host some 5,000 app developers at its Worldwide Developer Conference in San Francisco on June 13. During the conference, Apple will respond to developer requests for more promotional offers for the apps in ‘App Store’.   

The App Store has been launched in 2008 and now runs with 1.5 million apps. Now a day, demand for Apple iPhone has been decreased sharply and hence the tech giant is in a deliberate attempt to increase the app subscription. Instead of purchasing a new iPhone, consumers are getting more interested over Uber, Google Maps, Airbnb, Instagram and others. These apps have changed lives and entrenched industries.  

The Cupertino giant uses a services umbrella in accounting its revenue generated from the App Store. The service umbrella has contributed less than 10% of Apple’s total sales revenue during the fiscal year ended on September 26, reveals a regulatory filing. It is not clear whether reduction in Apple Tax will slash down the revenue earning.