Apple has announced a new initiative that reduces its App Store commission to 15 percent for small businesses earning up to $1 million per year, down from its current 30 percent. The new rate, Cupertino California, will come into effect on January 1st, 2021.
Comprehensive details of what is required will be released in early December, however the essentials of the program’s criteria are already noted:
- Existing publishers who made up to $1 million in 2020 for all of their apps, as well as publishers new to the App Store, can qualify for the program and the reduced commission.
- Publishers who surpass the $1 million threshold will be charged the standard commission rate for the remainder of the year.
- If a developer’s business falls below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the year after.
This is one of the most substantial changes to how services and sellers on the App Store can earn money. In 2019, the App Store generated an estimated $50 billion in revenue, with 70 percent of app sales going to publishers. Apple itself is said to have generated about $15 billion in revenue. An estimated 98% of publishers will be eligible for the new programme, however these publishers are claimed to make up just 5 percent of the App Store’s revenue.
Apple faced bad press this year, many of it focused on Apple’s 30% cut of all paid app sales and in-app purchases – and the many rules it imposes on publishers before it grants entry into the App Store. For example, the European antitrust investigation and big app makers such as Spotify, Tile and Match criticised Apple for exerting potentially monopolistic control over the iOS marketplace.
It is evident Apple’s relationship with publishers is on much shakier ground now than in years past, and this new commission reduction may very well help repair it.