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Apple is Making it Easier to Make Money From Apps

June 10, 2016

Apple could be making the app marketplace fairer for all developers, with soon-to-come changes allowing businesses to collect ongoing revenue from their apps. It’s the first shake-up of the App Store’s economy and will provide a way for developers to collect revenue over an extended period of time.

The change is set to be announced at the annual Worldwide Developers Conference this weekend, and will roll out over the Australian autumn. Usually, the WWDC focuses on Apple’s new operating systems and developments, but this year the company is expected to be taking a different tack.

What’s wrong with the current model?

While developers have collected a large overall revenue since the App Store opened in 2008 –  amassing more than $40 billion in the past 8 years – there are signs this growth is stagnating. Developers have begun to see signs that they’re not being rewarded for their hard work, and have turned to Apple for a solution.

The problem is complex, and lies in the way the app creator is able to collect payment for their app, beyond the initial dollar amount at the point of sale. It’s this ongoing payment that will make businesses sustainable, as they will have a sure source of income well into the future.

Most developers, though, are not able to collect revenue in this way, and have to settle for the one-off payment at the start. Users aren’t required to pay more to download an updated version of the app, even if a developer has worked hard on it.

Who will be able to benefit?

For a while, Apple has presented a subscription-based solution to only some apps, allowing them to operate on an on-going subscription model. Certain categories in the store – news, music streaming, dating apps and cloud storage solutions – are allowed to collect a periodic payment from their users, meant to compensate the creators for the new content they’re releasing.

This subscription feature was not available to all, though, and many developers were releasing updates without receiving further compensation.

Now Apple has announced that the subscription feature will be available to apps in all categories, not just the original few. This opens up the potential for every app developer to collect money from their users on an ongoing basis.

How much are developers due to make?

To incentivise developers to adopt this model, Apple is going to reduce the share it collects, providing the creator with a greater slice of the pie. Currently, Apple receives 30% of the app’s value if the purchase is made. Now, however, if the developer commits to this subscription model for more than 12 months, this number would reduce to just 15%, leaving more in the pockets of the developer (and much less to Apple itself).

What else has Apple announced?

Apple has also announced reduced turnaround times for apps, with 90% of apps expected to be reviewed within 48 hours of submission. This greatly reduces time to market and makes it even easier to launch a new product sooner.

We’ll have to stay tuned during the WWDC to see what else Apple has in store – it seems they have some big things up their sleeves.