Some big changes are at hand for the Apple App Store, as multiple reports are emerging that Apple is looking in earnest for ways to wring more revenue out of it. Those reports also reflect a necessity for those more diverse revenue streams since, these days, those blockbuster iPhone products aren’t filling up the coffers as fast as they once did.
Thus, Apple is changing up the App Store pitch some by offering incentives to encourage subscription-based models and charging developers for prominent placement within the U.S. App Store search.
Part of that change to subscription models seems to entail lowering its cut to 15 percent from 30 percent after the first year in the store. Developers for iOS with subscriptions that originate in the App Store will see the cut Apple takes on the service cut in half at the one-year mark; the first-year charge will remain at 30 percent.
Apple SVP of Worldwide Marketing Phil Schiller further noted that subscriptions will be defined broadly and made more widely available. Going forward, games and all other kinds of apps will be able to support subscription services, as opposed to the handful that can today.
Apple will also begin showing Search Ads for apps within its App Store, taking something of a play from the Google book, which already shows search ads in the Play Store. Facebook also has an incredibly healthy app ad business, and it’s been widely speculated, since reports started emerging in April, that Apple would soon be on the bandwagon as well.
All of these news bits come as WWDC is getting ready to kick off next week, and Apple is working hard to pitch to developers that the App Store remains the premier location to promote and monetize their apps.
Of course, long term, app usage remains a challenge. After one gets through a list of perennially popular apps, most slip into oblivion rather fast, 23 percent are used once before never being used again. Only 38 percent of apps are launched 11 or more times.
In 2015, around $20 billion was spent in the App Store, meaning Apple collected net revenue of more than $6 billion via its 30 percent cut.
The changes to the revenue model will take effect June 13, the day Apple’s Worldwide Developer Conference starts in San Francisco.