Ever since App store was launched by Apple seven years ago, for every app, subscription or any other product sold, Apple gets 30% of the total money spent.
But now, for the first time, Apple will lower its part of the commission, and that will be done on one main condition – if an app is able to retain a subscriber for more than an year, the company will split the revenue 85 to 15.
These changes will automatically apply to apps that already have more than a year old subscribers, which means extra revenue for a lot of companies. For instance, Spotify already has more than 20 million subscribers. So even if half those subscribers are more than a year old, then this could lead to $15 million extra subscription revenue for the company each month.
Apart from this news, Apple introduced another major change in the App Store. Up until now, apps from only a few categories like entertainment and media, could charge subscription fees from their users. But now, any app will be able to charge a subscription fee.
This is probably because Apple wants to increase the number of productivity apps on iOS. Currently, Appstore has 1.5 million apps on its platform, and it comes right after Google Play Store.
Other than these changes, Apple is also planning to add Search Ads to the Appstore. Right now, the only way to get paid attention on the Appstore is by being a ‘featured app’. These apps are displayed on top and their advertising fee is usually high, which a lot of companies cannot afford.
But the new search ads will work similar to the Google search ads. When a user searches a particular keyword on App Store, he will see some paid apps on top positions.
Location data will be used to present users with relevant ads but Apple will not share user data with any of the companies and users will be able to opt out of it if they want. Also, users below 13 years of age will not be shown ads.
The changes have been announced by the company just ahead of their annual Worldwide Developer’s Conference, or WWDC 2016. We can expect more announcement, but traditionally the event is more about software rather than hardware.