Apple just sent an email to members of the App Store affiliate program saying that App Store commissions will be reduced from 7 percent to 2.5 percent on May 1st — that’s a 64 percent cut. While this change will have no effect on App Store users, it has some implications on the App Store ecosystem.
Many websites from the Apple community link to App Store downloads with a unique referral ID in the link. When customers buy apps or in-app purchases using this link, Apple gives back a small cut to its affiliate partner. Developers still get 70 percent of the sale while partners get incentivized.
For a $1 app, this affiliate commission is just a few cents. But it can add up if you’ve built a serious audience. And I know this because I’ve experienced this myself.
Back in 2009, when the App Store was just a few months old, I started a website called iAppstore.eu with a friend of mine (I know, it’s a terrible name). It was a sort of a directory with recommendations about the best app for something in particular. It wasn’t particularly original, but we thought people would save time and money by looking at our recommendations as most of the interesting apps were paid downloads.
The iPhone was slow and heavy, the App Store was a brand new thing. But it was fascinating. Apple had created a brand new playing field overnight. There was no Instagram, Snapchat, WhatsApp or Uber. Independent developers were still experimenting, half of the apps were broken in some way or another and the App Store was a tiny place.
Our little website got something like 15,000 readers per month. And we made hundreds of euros in the first few months with App Store commissions and a Google ad near the bottom of the page. It wasn’t anything groundbreaking, but it was a fun little way to make some money as a kid who didn’t want to work during summer break. This is probably how I learned that you could make money on the internet and ended up applying for TechCrunch years later.
Very quickly, bigger websites started to get serious about App Store reviews, app prices dropped massively and our website faded away. I don’t think App Store commissions are a good business model and I’m glad I didn’t stay in this business for too long, but there are still a ton of small and big websites that rely on these commissions.
If Apple drastically cuts this revenue stream, the company could end up alienating people writing for those sites. But it could also indicate that some bigger App Store changes are coming soon.