Cupertino giant Apple has announced a reduction in its App Store commission rate. As part of a new program for small business, developers earning less than $1 million in sales per year will be qualified for a reduced App Store commission of 15 per cent. Until now, Apple was charging a 30 per cent commission on the revenue generated through paid apps and in-app purchases. The App Store Small Business Programme will get launched on January 1, 2021.
According to Apple, this new developer programme will accelerate innovation and help small businesses and independent developers propel their businesses forward by publishing apps on the App Store. This will help vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases.
"Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We're launching this programme to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love," said Tim Cook, Apple's CEO. "The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea. Our new programme carries that progress forward -- helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people's lives."
Apple will release comprehensive details in early December. However, the essentials of the programme's participation criteria have been streamlined. Existing developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, can qualify for the programme and the reduced commission. If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year. Also, if a developer's business falls below the $1 million threshold in a future calendar year, they can requalify for the 15 per cent commission the year after.
However, the App Store's standard commission rate of 30 per cent remains in place for apps selling digital goods and services and making more than $1 million in proceeds, defined as a developer's post-commission earnings.
Streamlining the app ecosystem with the launch of the iPhone over a decade ago, apps have been a key revenue generator for Apple. However, there isn't any information on the number of app developers who will be eligible for the new program or how much this new program will impact Apple's app store revenue.
Of late, Apple has been under fire for giving a special treatment to Amazon by agreeing to charge 15 per cent fee for Prime Video instead of 30 per cent.