Apple on Wednesday announced the App Store Small Business Program (to launch on January 1, 2021) which will benefit the vast majority of developers who sell digital goods and services on Apple’s App Store by cutting fees in half via reduced commissions on paid apps and in-app purchases. Developers can qualify for the program and a reduced, 15 percent commission if they earned up to $1 million in proceeds during the previous calendar year.
[The $1 million threshold excludes] two of Apple’s fiercest critics, music streaming service Spotify, and Epic, the maker of the popular Fortnite video game.
Both those companies have helped spur increasing scrutiny of Apple’s app store practices among lawmakers and regulators in the U.S. and Europe.
Apple is framing its fee reduction as a way to help most of the companies that make the roughly 1.8 million apps in its store during the tough economic times brought on by the pandemic. About 98% of the app developers generate less than $1 million in revenue annually, according to the mobile analytics firm SensorTower.
But the reduced commission probably won’t leave much of a dent in Apple’s revenue. That’s because the small developers in line to qualify for the cut only contribute about 5% of Apple’s app store revenue, based on SensorTower’s estimates.
MacDailyNews Take: Apple’s App Store cost money to maintain. It is not somehow magically free of costs because it’s Apple’s. There are servers, power, maintenance, employees, etc.
As Apple CEO Tim Cook said in a statement introducing the program: 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 program 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. 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 program 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.