Apple and Google boasted that they paid over $17 billion to app developers over the last year. What they left out is that they also made a tidy $7.3 billion off those sales, thanks to the 30/70 split pioneered by Steve Jobs with the launch of iTunes in 2003.
That split could coming to an end soon, though, according to a new report claiming Apple plans to make a departure from its old pricing formula in an effort to make Cupertino’s devices more appealing to media companies.
The Financial Times reports that after more than a decade of insisting on a 30/70 split, the iPhone maker is discussing new commercial terms with media companies to redefine the so-called “Apple tax.”
The terms of the new split on subscriptions sold through the App Store haven’t been revealed, but Apple has already been testing a more generous split with premium content providers. Apple’s lower percentage won’t apply just to music services, but video and Newsstand content as well. Apple already has deals with HBO and the MLB to take only 15 percent of new subscriptions made through Apple TV. It’s likely that those terms will be made available to more companies in the near future.
Changing the terms of its deal will cost Apple hundreds of millions of dollars in revenues from in-app payments, but it could also calm regulators, who fear Apple is using its power to pressure content companies to play by its rules. Details on Apple’s new percentage haven’t been shared yet, but some media execs are hoping it’s much lower — like 95/5 — so the burden of paying Apple is lessened.
Source: Financial Times
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
4 responses to “Apple plans to kill its 70/30 split for in-app subscriptions”
Even at 30/70 it’s still very fair, Apple provides the infrastructure for delivery of these games/apps and in app purchases. This can equate to lots of storage and bandwidth across the globe. Yes it would be nice if it were lower, but Apple clearly is here to make money, not cut even.
And the 70/30 revenue split applies to free apps as well with Apple covering the cost for review, infrastructure for delivery and bandwidth.
It would be nice if Apple could make the developer license for life. Pay 100 bucks once and continue with the 30/70 policy. Paying every year for the license doesn’t make sense any more.