Google is reducing the fees charged to developers of Play Store apps for digital subscriptions from 30% in the first 12 months to 15% at any time.
Previously, Android developers selling digital subscriptions in their apps supported the 30% rate in the first year, after which the fee percentage was cut in half.
The revised pricing structure, which takes effect in January 2022, puts more pressure on Apple to further reduce its iOS fee schedule, already shaken by legal and regulatory pressure. Apple is currently following Google’s old model of 30% for auto-renewing subscriptions, dropping to 15% after one year.
Over the past year, lawsuits in the US and UK and regulatory action in countries like Japan and South Korea have eroded fees by 30% which for more than a decade , were standard in both the iOS App Store and the Google Play Store.
This rate still exists, but only for Android and iOS developers earning $ 1 million or more in revenue.
The commission war begins
Earlier this year, Apple launched its App Store Small Business Program, which allows developers with revenues of less than $ 1 million per year to claim a 15% discount on app sales and in-app purchases. . In June of this year, Google followed suit and adopted a 15% commission for developers below the annual income threshold of $ 1 million.
Soon after, Amazon embarked on a more complicated fee cut, reducing its hold to 20% in its Amazon Appstore for Android, with the promise of AWS service credits equivalent to an additional 10% discount.
Sameer Samat, vice president of product management, announced the latest change in a blog post on Thursday.
“Our current service charges drop from 30% to 15% after 12 months of recurring subscription,” Samat explained. “But we’ve heard that customer attrition makes it difficult for subscription companies to take advantage of this discounted rate. So we’re keeping it simple to make sure they can.”
Google’s pricing structure is not that simple. There’s also now a potential rate of 10 percent for people enrolled in the company’s Play Media Experience program, which typically charges 15 percent.
“E-books and on-demand music streaming services, where content costs make up the majority of sales, will now be eligible for service charges as low as 10%,” Samat said. “The new tariffs recognize the economics of the industry’s media content verticals and improve how Google Play works for developers and the communities of artists, musicians and authors they represent.”
Google, however, did not specify what the eligibility criteria might be. The company’s FAQs for its seemingly straightforward pricing structure suggest that lower streaming charges will be offered “based on high content costs.”
There may be trouble ahead
App Store fees could drop further if South Korea’s requirement that Apple and Google support third-party payment systems in apps distributed through their respective stores remains in place. Google says it has no intention of fighting the law; Apple has reportedly told authorities in South Korea that it is already in compliance with the law and does not need to make any changes, creating a potential challenge for the government of that country.
The Dutch Consumers and Markets Authority recently told Apple it needs to adapt to third-party payment systems – something the judge in Epic Games’ lawsuit against Apple also called for in its recent ruling – it seems likely Apple and Google will have to make further concessions in their store’s rules and fees. For comparison, biz Stripe payment processing charges 2.9% plus $ 0.30 per transaction.
For the most part, however, these changes will not be relevant to the vast majority of Android developers.
According to Google, only 3% of Android developers pay Google store fees, whether it’s in-app digital product purchases, in-app subscriptions, or app sales commissions.
The remaining 97% of Android developers distribute their apps for free and pay nothing to Google, at least not directly. However, Google can be paid through advertisements. If Android developers include ads in their apps, as 38% of US developers do, Google should see between a quarter and a third of the money they make. ®