On March 17, the tech giant Google announced a major change to the revenue-sharing structure of Google Play apps. Analysts say that could significantly change the fortunes of independent developers or small firms who rely on the Android platform’s app store for revenue.
From July 1, Google will take a 15% cut of the first $1 million in annual Google Play revenue from Google Play that a developer earns. That’s down from 30% previously. The 30% figure will still apply to all revenue more than $1 million each year.
Google claims that 99% of developers with apps and content on Google Play will see reductions in fees paid to Google of up to 50%.
However, it’s essential to note that Apple’s fee reduction only applies to app makers that earn under $1 million per year. Yet, if a developer goes over the $1 million threshold at any point in the year, they’ll be booted from Apple’s program and subject to the regular 30% rate.
This looks like a very similar deal to what Apple announced in 2020
Notably, this looks like a very similar deal to what Apple announced in late 2020. The company said that developers earning under $1 million would soon begin paying 15% to the platform rather than the regular 30%. However, it’s different in a way that could be significant for many developers; it’s arguably a little more generous.
Another important thing to mention is that Apple applies its lower 15% rate to a developer until that developer surpasses $1 million in revenue in a given year. At this point, the higher 30% number is applied to all of that developer’s earnings. Google still charges 15% on that first million even if the developer earns $5 million. Meanwhile, in Google’s model, a developer who makes $1.2 million on an app pays 15% on $1 million, then 30% on $200,000. In Apple’s, a developer earning $800,000 forks over 15% on that amount, but if they make $1.2 million, they pay 30% on all $1.2 million, not just $200,000.
Untoubdeatly, for developers who are pulling in $2 million, $5 million, and even $10 million each year, this change will make a difference in making their businesses more sustainable, even though they make significantly more than $1 million. After all, an additional 15% of $1 million is $150,000, which is not a small amount of money to any but the largest and most successful businesses.