If an application is sold on the App Store, 30% of the earnings go to Apple’s cash register. This basic rule has various additions and modifications, since the launch of the iOS software business in 2008, but at some point it applies to all developers. This will not be the case from the beginning of the new year. The company, quite possibly in the biggest change in the rules of the App Store since its inception, decided to reduce the fee. Developers with revenue below $ 1 million will pay only 15% as of January 1, 2021.
The App Store is one of the largest application distribution platforms in the world and the only place to officially download applications for more than a billion active iOS devices. Because Apple has a huge impact on the entire mobile software market, it’s often referred to as a monopoly (or a duopoly with Google). According to some, typically Spotify or Epic Games, a company abuses its position to exploit others.
“Companies like Spotify, which are larger and may be pioneers, may account for 30% fee (moreover traveling directly into the hands of a competitor) it is difficult to compete with a solution directly from Apple, “ mentions for CzechCrunch Martin Mazanec from Fitify, where he co-develops a virtual fitness trainer . We asked him and other Czech developers how they perceive fees and what this reduction can mean for them. However, for large companies, the indicated problem will continue to apply.
Apple is currently on the cutting edge with Epic Games, the creator of the hit Fortnite
Photo: Apple / Epic Games
Everything was strongly started by the mediated fight, which was started by the game publisher Epic Games. In his hit Fortnite , he launched an alternative payment system to circumvent Apple’s solution, which must be used according to the rules of the App Store and provides the company with a standard 30% of every purchase in the application. Fortnite was then immediately deleted from the App Store and there has also been a threat that Epic will completely lose access to the iPhone manufacturer’s platforms.
The game studio has purposefully defined its step against fees in the App Store and at the same time launched a campaign in the name of their significant reduction. In the past (along with allegations of competitive disadvantage), Spotify also requested the same, and later Microsoft and Facebook joined in with milder attacks. In general, the discussion about fees is quite complicated (30% of sales are taken by all other platforms in addition to Apple) and neither side is unequivocally right.
across the board. The amount of this “tax on the use of the App Store” is halved after a certain time offered by the application developer. On the other hand, the cost of running the platform is not estimated too high, so it is still appropriate to talk about possible changes to make companies that offer alternatives to standard iOS equipment more competitive.
However, because of its influence, Apple also has the ability to significantly improve conditions for developers. This could happen now, after years of resisting criticism of charges, even in the face of suspicions of monopolistic practices. As of January 1 next year, all developers whose revenue from the App Store has not exceeded $ 1 million in the last 12 months will suddenly increase their profits by 15%.
Thank you mainly to smaller studios
In the Czech Republic, this applies, for example, to the studio About Fun behind the game WarFriends . “The $ 1 million limit applies to us, among other things, because the App Store makes up only a small part of our total revenue. Nevertheless, we very much welcome the change and we perceive the impact mainly in increasing the potential for return on the acquired player. This will allow us to expand the user base to scale more and reinvest the money earned, “ explains studio director Petr Vodák.
For the other developers we asked, the changes do not apply, still however, he sees them positively as a real help to others. “Competition is still growing in the App Store, various prepaid services are gaining momentum, many games are free, which also reduces people’s willingness to buy them. Especially for smaller studios, whose situation is becoming increasingly difficult, it is a welcome step, “ says Jakub Dvorský, whose Amanita Design also has two titles in the Apple Arcade game subscription service offer.
Jakub Dvorský, founder of Amanita Design studio
Photo: Nikon Czech Republic / YouTube
Fitify, which creates a virtual fitness coach, then emphasizes the already mentioned fee modifications after a certain period of sale in the App Store. “iOS is a minority platform for us, because we started here later and still don’t catch up with Android in terms of revenue – thanks to that, we will fit into the limit. Reducing fees is, of course, pleasant for us. On the other hand, some of our customers have been subscribing for more than a year, so we’ve only paid 15% of Apple’s payments for some time, “ says Martin Mazanec.
Sensor Tower quoted by the newspaper The New York Times the fee reduction on the App Store will apply to up to 98% of developers on the platform. Apple CEO Tim Cook says it will allow developers to “fund their small businesses, take risks with new ideas, expand teams, and continue to build people’s life-enhancing applications.”
But as Jakub Dvorský of Amanity notes, actually This is a very clever strategic step. While Steam, for example, recently cut the same fees for the richest companies, Apple has focused on the opposite end of the market. “From a PR point of view, this is a more sympathetic approach, although as a result it releases significantly less money than Steam .” The 98% of developers mentioned last year accounted for only 5% of the platform’s total revenue last year.
This is also why large companies such as Epic, Spotify or Basecamp are protesting again, for which nothing will change at all. They call Apple’s decision an attempt to divide the developers and weaken the movement to reduce fees across the board. “Apple hopes to get rid of enough critics to block the blockade of competition and 30% tax on most in-app payments,” says Epic boss Tim Sweeney. As the New York Times mentions, his company collects 12% fees.
Widespread changes in conditions would also be welcomed by Czech developers. For example Miloš Endrle from Geewa says that charges are important to perceive in time – in 2008, when competition in the App Store was minimal, 30% of revenue for a quality, secure platform with great marketing potential was acceptable.
completely different. A new game will be added to the App Store about every half minute, and the marketing effect is therefore a hundred times lower than it was a few years ago. The developer must look for other ways to gain customers, which means additional investment for him. That’s why 30% of these are outdated from today’s point of view, and it’s time for both Apple and others to change, “Endrle describes.
Miloš Endrle, founder of the Geewa game studio
Photo: Nguyen Duy McLavin / CzechCrunch
On the other hand, for others, the current situation still makes sense. “It is a long-term industry standard and almost everyone takes 30% except Epic. Compared to Apple, other platforms are also open to alternatives, but in my opinion the price for closedness is bought primarily by security. Nevertheless, the reduction of fees is, of course, a positive change for most developers, “ says Petr Vodák.
Lubo Smid from STRV has a similar opinion. Although the lower taxes for access to the App Store apply to a large part of the customer’s customer, their amount is considered acceptable. Nevertheless, it expects further changes. “It’s true that these fees seem high to me, but the App Store and Google Play today give developers the best way to reach mobile users. Therefore, even a high fee of 15 to 30% makes sense. I think it will decline in the future as alternatives develop, “he comments. comments.