UPDATE: Apple clarified that the recent reduction in commission fees applies only to iOS in-app purchases, which now earn a 2.5% commission, with the payout remaining at 7% for all other content types.
Dive Brief:
- Apple plans to cut the amount of sales shared with affiliates who point buyers to its App Store next month, according to TechCrunch. The commission rate will drop from 7% to 2.5% and be applied to sales of applications and in-app purchases.
- Music, movies, books and TV programming will be maintained at the 7% payout rate. "We will also continue to pay affiliate commissions on Apple Music memberships so there are many ways to earn commissions with the program," Apple said in an email to TechCrunch.
- Apple doesn't disclose how much money it earns from the iTunes Affiliate Program, which is grouped on its income statement with other services such as Apple Pay and Apple Music. Services revenue grew 22% to $24.3 billion last year, according to Apple's earnings report.
Dive Insight:
Publishers and app developers that earn money by referring people to the Apple App Store may lose an important revenue source from the two-thirds cut in the commission rate. "For a $1 app, this affiliate commission is just a few cents," noted TechCrunch's Romain Dillet. "But it can add up if you’ve built a serious audience."
Affiliate commissions vary by tech firms and product categories, with companies like Microsoft paying a 7% commission on apps and in-app purchases and Amazon shelling out as much as 10% for digital video games. Google doesn't have an affiliate program for Google Play.
The cut in commissions isn't likely to dissuade too many app developers from favoring one platform over the other, given Apple's massive user base among iPhone and iPad users. Most of their money is earned from downloads and in-app purchases, regardless.
Smaller publishers will take a hit, however, according to John Voorhees of MacStories.
"With ad revenue in decline, affiliate commissions are one way that many websites that write about apps generate revenue," he wrote. "This change will put additional financial pressure on both groups, which is why it's especially unfortunate that the changes are being made on just one week's notice."
