Apple announced this week a less painful twist for sellers tied to its iTunes marketplace than some of the company’s partners had anticipated.
But a commission cut still potentially curbs the incentive to invest in building or publicizing apps.
Many of the nifty programs found in the App Store charge users nothing for downloads. They make money primarily in two ways:
They collect data about users’ behavior and sell that information to marketers. Or they put tiny advertisements on the screen when someone is using the app. When someone clicks through the ad and makes a purchase, the app maker gets a commission.
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Other partners draw commissions by putting similar links on their websites, often when they are rating or recommending what’s sold in the App Store.
In April, Apple announced that commissions on those sales would drop to 2.5 percent from the previous 7 percent level beginning in May. Over the weekend, Apple clarified that the cut would only apply to purchases made within an app — not for music, movies, books, paid iOS apps and TV.
“We’d like to clarify some changes being made to the Affiliate Program,” the Apple statement said. “Commissions for all iOS in-app purchases will be reduced from 7 percent to 2.5 percent globally, and all other content types … will remain at the current 7 percent.”
The shift caught the tech trades by surprise.
“It’s still unclear,” wrote the website 9to5Mac, “as to what exactly happened here. Apple’s original announcement seemed pretty straight forward in saying that all app purchases would be cut to 2.5 percent, so it’s possible that the company backtracked due to outcry from affiliate users. … The move to cut affiliate rates for in-app purchases only makes sense seeing that a lot of in-app purchases are renewing subscriptions. Apple last year reduced its revenue share for subscription purchase from 70-30 to 85-15, and these affiliate rate changes align with that.”
The commission rates apply to partners in the iTunes Affliates Program, including websites and apps that link to iOS and Mac programs.
“With ad revenue in decline, affiliate commissions are one way that many websites that write about apps generate revenue,” wrote website MacStories last month before the clarification. “Many developers also use affiliate links in their apps and on their websites to supplement their app income. This change will put additional financial pressure on both groups.”
If commissions on click-to-buy advertisements drop, apps become potentially less profitable. That could discourage some developers from creating and refining their offerings in the App Store.
Yet there’s hardly a paucity of apps available. According to Statista, iTunes offers about 2.2 million apps. The Google Play Store that caters to Android phone users offers about 2.8 million apps.
“Apple may also be less worried about attracting outside publicity, given the overall success of the iPhone and the App Store,” wrote AppleInsider.com, “and an improved review system introduced alongside iOS 10.3.”
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