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Apple’s unprecedented App Store overhaul is going to cost you

Updated 4 years ago
Published Jun 8th, 2016 2:12PM EDT
App Store Changes

Ever since its inception, the rules governing the App Store have more or less stayed the same. Sure, Apple has implemented various tweaks and enhancements over the years, but the underlying fundamentals have largely remained unchanged.

Well, it’s time to buckle up folks, because Apple is planning to completely revamp the way we think about and purchase software. In a wide-ranging interview with The Verge, Apple executive Phil Schiller detailed all of the changes Apple plans to roll out to the App Store experience in the near future.

First and foremost, Apple will soon allow developers to sell subscription-based apps across any category. As it stands today, only a few type of apps (news, dating, audio streaming) have the ability to offer users subscription pricing.

“Now we’re going to open up to all categories,” Schiller explained, “and that includes games, which is a huge category.”

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Indeed, subscription pricing has the potential to be a huge game-changer. Imagine EA offering a sports bundle where users can pay a monthly subscription for unfettered access to the entirety of EA’s sports game catalog.

Additionally, Schiller explained that Apple will for the first time give developers the ability to offer “tiered pricing options for app subscriptions.” Such a change will provide developers with even greater flexibility when trying to sign up users across varying markets.

Another impending change to the App Store is a subtle yet important change to Apple’s traditional 70/30 revenue split with developers. According to Schiller, developers who are able to keep a subscriber for more than a year will see their share of subscription revenue increase from 70 to 85%. While that may seem rather small at first glance, it’s undoubtedly cause for celebration amongst developers who have long expressed dismay about Apple taking a recurring cut from their monthly revenue.

If the new subscription model becomes widely adopted, it will represent a fundamental shift in the economics of the App Store. Developers will be incentivized to sell their apps for a recurring fee instead of a one-time cost. It could change the way consumers pay for certain apps, but it also presents a massive opportunity for developers, many of whom feel the app economy has been become moribund in recent years. And as iPhone sales growth slows, a move to app subscriptions is another way for Apple wring more profits from its existing user base.

Apple’s App Store has become a legitimate money-making machine in its own right, and with the upcoming changes to the App Store, it may become even more profitable for developers in the months ahead. Of course, as apps become more profitable for developers, it may end up costing users in the long run.

Another change Apple is planning to add to the App Store are search-based ads, which corroborates a rumor that first sprung up about two months ago. While Schiller didn’t go into too much detail on this topic, a previous report from Bloomberg relayed that Apple’s implementation will be similar to the sponsored search results one currently sees on Google.

Basically, Apple figured search ads are something that consumers are already used to from internet searches and social media, and the company wants in on the marketing dollars from mobile app developers. According to IAB, paid search on both desktop and mobile for the US market totaled more than $29 billion last year, with mobile alone comprising about $9 billion.

But in contrast to Google, Schiller made a point of emphasizing that Apple has no plans to create profiles of users to enable targeted searches. In other words, developers will only be able to target search queries not specific demographics of users.

From a UI perspective, Schiller added that sponsored adds will be discernible via a light blue background, similar to what you see below via The Loop.

A broader takeaway from Schiller’s enlightening interview is that WWDC is going to be chock-full of interesting announcements. If Apple is willing to divulge this level of detail about impending App Store changes ahead of WWDC, one can only imagine what type of surprises they’re saving for the actual keynote.

Yoni Heisler Contributor

Yoni Heisler has been writing about Apple and the tech industry at large for over 15 years. A life long Mac user and Apple expert, his writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and TUAW. When not analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions.