Apple Just Changed the Rules, And (Almost) Everyone's Getting a Bonus
Apple just made more than 98% of its developers 50% happier. Hot off of its fight with Fortnite maker Epic, Apple has announced a new program aimed at lowering the App Store fee for what Apple calls "Small Businesses."
The App Store Small Business Program cuts the App Store fee from 30% to 15% for all developers who earned less than $1,000,000 in 2019 (after the store's fee).
We dove into our App intelligence to see how big of an impact this move will have on the community, and it's pretty staggering.
Almost Everyone Is a "Small Business"
To understand the impact, we first have to look at how many developers can make money on the App Store. Using Explorer, we can see that of the 2 million apps available in the App Store right now, 376K are either a paid download, have in-app purchases, or monetize with subscriptions.
Those apps belong to 124.5K developers.
Of those developers, only a little under 2% earned more than $1,000,000 in 2019. Surprised?
That means that roughly 98% of all developers that can make money in the App Store as of right now will qualify for the program, which opens in 2021 and keep more revenue in their pocket instantly.
Note: Apple specifically said that the requirement is to have under $1,000,000 in proceeds, which translates to revenue after Apple takes its fee.
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Let's Talk About the $1M+ Club
Google, Tinder, Bumble, Disney, Dropbox, and LinkedIn are some of the companies who got coal in their sock this year. What about games, you ask? That's pretty much everyone else who isn't qualifying for the new program.
Lead by no other than the Candy Crush King, more than half of all $1M+ club members happen to be games. Next on the list, and with a large gap, are Health & Fitness, Social Networking, and Entertainment, followed by Photo & Video.
Keep in mind, these numbers are for 2019. 2020 threw the store for a loop, increasing revenue for these categories by significant margins.
How Much Are They Making?
Let's take a closer look at how those developers who don't qualify because they make more than $1M are distributed.
The bulk of those who don't qualify are making just a bit more than the minimum. Developers making just under 1.5M account for roughly 39% of all developers that don't qualify. You may think these guys might want to scale back a bit, right?
When you do the math, though, scaling back would cost them hundreds of thousands of dollars. Not something that's easy to give up.
Revenue, however, is a whole other ball game. The smallest group—developers making more than $150M (just 1.5% of the $1M+ club)—is responsible for more 29% of the group's revenue.
The next group over—those making between $50M and $150M—is responsible for another 24%. Even in the $1M+ club, only a handful of developers earn Apple (and themselves) the most revenue.
It's clear now that Apple didn't just pick $1,000,000 because it has a nice ring to it.
This move is truly a win-win for Apple. In a single swing, Apple managed to make almost every developer in the ecosystem happy, potentially fend off a set of anti-trust lawsuits, and give developers more incentive to stay with Apple.
All with minimal impact to their bottom line. Is Google Next?
Developers, don't forget to apply! If you're a developer and qualify don't forget that you have to request the lower fee. If you're tracking with us we'll give you a heads up in the new year.
About the Data
The insights in this report come from our proprietary, high-quality, and affordable, app intelligence. App makers, marketers, investors, and journalists all over the world rely on our data every day. Learn more →