Apple Store Offers Incentive For Subscription Model
Written by Alex Denham   
Monday, 13 June 2016

Apple has made some major changes to the way the App Store is organised. The new deal will give developers a larger slice of the revenue from apps sold by subscription - so long as customers maintain their subscriptions for over a year.

 

Under the existing model, developers get 70 percent of the purchase price, with Apple keeping 30 percent. If developers change the one-off sale to a subscription model, Apple will cut its share of the takings to just 15 percent for those subscriptions lasting over a year, giving the developer 85 percent of the proceeds.

Apple acknowledges that the option won't be right for all developers, saying on its developer website that:

"Although all categories of apps will be eligible, this business model is not appropriate for every app."

The suggestion is that apps that have regularly updated content or on-demand use of a service will be the suitable options.

iPhone developers face a variety of problems. The Apple Store has over 1.9 million apps, so the chances of potential customers ever finding your app is minuscule, and if you then want to charge enough to make it worth developing, there's always a cheaper choice.

A second problem is the sluggish nature of the iPhone market. While iPhone sales were running at record highs, there were always new potential customers, so you could use new sales to subsidise the need to improve and maintain an existing app. As sales of iPhones drop, developers are left with the problem of providing ongoing support for customers without income from new sales.

A move to a subscription model would provide an alternative to this dilemma, but customers don't like getting locked in to paying on an ongoing basis. 

Alongside the announcement of the subscription model, Apple announced the introduction of search advertising to the App Store, so that developers can pay to bump their apps to the top of any search results. Only one paid search result will be displayed per search, and it will be differentiated with a blue background, as in the example below:

 

searchad

 

The reason Apple gives for offering this is to:

"help developers find their audiences"

but the result is more likely to be that companies who have enough financial backing will win out over smaller developers.

Larger developers such as Facebook and Snapchat have by far the largest share of downloads in the App Store, according to a recent report from app analytics specialists Sensor Tower. It revealed that the top one percent of app publishers accounted for around 94 percent of revenues in the App Store in the first quarter of this year.

appdev

More Information

Apple Developer Store Announcement

Apple Developer App Store portal

Developer Insights

Apple Search Ads Info

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Last Updated ( Monday, 13 June 2016 )