On Wednesday, Apple announced a new program for App Store developers that earn up to $1 million a year: the App Store Small Business Program, which cuts Apple’s App Store commission from 30% to 15%.
The program will begin on Jan. 1, and “benefit the vast majority of developers who sell digital goods and services on the store,” Apple said in a news release. The 15% cut applies to both paid app downloads and in-app purchases. To qualify, the developer must have earned “up to $1 million in proceeds during the previous calendar year.” Around 98% of developers will be eligible for the program, according to analytics firm Sensor Tower numbers cited by The Verge.
Further details on the program will be released in December, Apple said — but for now, this is the criteria:
– 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 program 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.
– If a developer’s business falls below the $1 million threshold in a future calendar year, they can requalify for the 15 percent commission the year after.
Any developer that makes more than $1 million per year will remain at the 30% commission level, which is standard for the company.
The App Store commission cut comes at an interesting time for the company, which is currently facing criticisms and lawsuits regarding its digital storefront. In one of its more high-profile cases, Apple is engaged in a lawsuit with Fortnite developer Epic Games over the App Store’s “anti-competitive practices.” Specifically, Epic Games called out the 30% cut taken by Apple on all purchases made within the App Store after the game developer had implemented a new way to purchase V-Bucks, Fortnite’s currency, which allowed users to bypass Apple’s commission. In the lawsuit, Epic Games’ lawyers called the 30% tax “oppressive.”
Further, Epic Games CEO Tim Sweeney insists Epic Games is not looking for special treatment from Apple; instead, Epic Games wants the App Store to be more equitable for all developers, according to earlier comments. And so it’s impossible to see Apple’s Small Business Program without the context of its App Store controversies. Either way, it appears to be a good thing for a large majority of App Store developers — including intendent game studios.
Following Epic Games’ initial lawsuit filing, indie developers spoke out on social media about the boon it’d be to smaller studios if Apple and other storefronts took smaller cuts. Speaking directly about Valve in particular, Kitsune Games founder Emma Maassen tweeted at that time that if Valve halved its revenue share cut — it takes 30% for Steam games, like Apple — the extra money would have funded the studio’s next game without crowdsourced funding.
In September, Epic Games — alongside other companies — created the Coalition for App Fairness in an effort to take on what it calls a lack of consumer freedom, anti-competitive practices, and the 30% app tax. Companies both large and small, including Spotify, Tile, and Grove Street Games, have signed onto the Coalition.
“Developers note that a 15-30% fee in the Apple App Store represents an enormous portion of their revenue, in many cases an untenably large one,” the Coalition wrote on its website. “They argue that when they’re competing with one of Apple’s apps — like Music, Mail or Books — the situation becomes even harder.”
The lost revenue on Apple’s end, however, won’t actually be a huge loss for the company; according to Sensor Tower data cited by The New York Times, the 98% of developers that may qualify for the program “accounted for less than 5 percent of App Store revenues last year.”
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