The future of Apple’s App Store is subscriptions

By Aarthi Rayapura June 8, 2016

Apple’s annual conference for developers, which kicks off next Monday, is normally when the company previews its newest software for iOS and Mac OS X. But this year’s WWDC isn’t just about new operating systems: starting next week and continuing throughout the fall, Apple will begin rolling out new incentives for developers in its App Store, including a new revenue-share model and the introduction of search ads in its iOS App Store.

In a rare pre-WWDC sit-down interview with the The Verge, Phil Schiller, Apple’s senior vice president of worldwide marketing, said that Apple would soon alter its revenue-sharing model for apps. While the well-known 70 / 30 split will remain, developers who are able to maintain a subscription with a customer longer than a year will see Apple’s cut drop down to 15 percent. The option to sell subscriptions will also be available to all developers instead of just a few kinds of apps. “Now we’re going to open up to all categories,” Schiller says, “and that includes games, which is a huge category.”

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.

Read the full article at: www.theverge.com

Zuora had been one of the first to recognize Apple’s entry into the subscription economy in 2011. Read more here.