Apple made waves today with a big change to the App Store: If an iPhone developer can keep a customer as a paid subscriber to their app for a year, Apple will take a 15% cut of revenue, instead of its usual 30%.
This is a big deal. It means that Apple’s loyal legions of app producers have an incentive to switch their business model from a one-time app purchase to an ongoing subscription.
Google isn’t taking this lying down, and is working on a similar change, reports Recode. But Google’s plan reportedly has one big plus over Apple’s — the search giant will take a flat 15% of subscription revenue immediately, with no one-year waiting period required.
The switch to subscription revenue is strategic for Google, Apple, and app makers alike. It gives app producers a way to recoup the considerable costs of development without having to ratchet up the sticker price.
And given that customers will ideally be paying every month for a long time, Google and Apple stand to make a lot more money by collecting those transaction fees on an ongoing basis, versus a one-time cut of an app sale.
Meanwhile, it’s a well-known fact that Apple iPhone users spend more money on apps in the first place. That means the burden is on Google to demonstrate why app developers should prioritise their efforts on Android.
Removing the one-year contingency for Android apps before they collect a lowered commission is a good sales pitch: Move to a subscription model, Google is implicitly saying, and you’ll make a lot more money much faster.
The Recode report does not indicate when this shift would go into effect. Google did not immediately respond to a request for comment.
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