Recently, Apple’s App Store came under the line of fire and faced some trouble over the commission it charges to app developers. Apple’s CEO Tim Cook is going to appear in front of Congress soon, but before that, he ordered the Analysis Group to collect some data and conduct a study to see and compare Apple’s commission charges with all other digital marketplaces.
This study is not going to affect Tim Cook’s testimony, nor is it going to affect this case, but it has given some insights about the whole issue.
The results of this study revealed that most platforms that host various apps generally charge a commission of 30%, which is what the App Store also charges from in-app digital subscriptions. After the first year, however, App Store’s charges drop to 15%.
These charges are very much in line with what other digital stores charge too. There is nothing extraordinary with what Apple charges as such when compared with other prominent app stores like Amazon’s, Google’s, and Microsoft’s. However, as far as the share of revenue between parties in physical sales is concerned, there is a different story.
The study analyzed almost 38 digital marketplaces including the stores for ebooks and video games. Only Epic Games was found to have an exception of charging 12% of commission, but almost all other marketplaces charge 30% as a standardized commission.
Amongst the app stores that were analyzed in this study, Microsoft Store, Samsung Galaxy Store, Xbox, PlayStation, Nintendo, and Steam were also studied. While all other marketplaces showed to be rather consistent with their commission charges, Steam’s commission was found to be on a sliding scale. But a game on Steam needs to earn more than $10 million before its rate fluctuates from 30% to 25%.
If we look at other e-commerce marketplaces like Amazon and e-Bay, we will see that the commission charge rates are slightly lower, and they vary a lot too. For selling something physical on Amazon has a commission rate between 8% to 17%. For e-Bay, the rates fluctuate between 10% to 12%. But if we look at the ticket resale sites like Stubhub and Ticketmaster, the commission charges go from 31% to 37%. That’s how much variation there is when different marketplaces are compared and analyzed.
On the other hand, if a developer wants to sell his game in a physical store, the developer will only receive less than 45% of the commission, while the retailer will get more than half of the retail price. This makes sense because the rules and dynamics of a physical store are completely different from a digital app store.
This study also pointed out another important fact that the commission is not payable on any services sold outside the App Store. This makes sense because why would App Store charge commission when it is not being used to sell something?
On many marketplaces, sellers often try to redirect buyers to external site links to avoid paying commission to the digital marketplace. This is quite indecent and comes under ‘free riding.’ So, it is imperative for digital marketplaces to keep creating rules to prevent such things from happening.
So, through this report, it is quite evident that Apple is not doing anything abnormal by charging a certain percentage as a commission. All other digital marketplaces are doing the same, and it is not so wrong as such.
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This study is not going to affect Tim Cook’s testimony, nor is it going to affect this case, but it has given some insights about the whole issue.
The results of this study revealed that most platforms that host various apps generally charge a commission of 30%, which is what the App Store also charges from in-app digital subscriptions. After the first year, however, App Store’s charges drop to 15%.
These charges are very much in line with what other digital stores charge too. There is nothing extraordinary with what Apple charges as such when compared with other prominent app stores like Amazon’s, Google’s, and Microsoft’s. However, as far as the share of revenue between parties in physical sales is concerned, there is a different story.
The study analyzed almost 38 digital marketplaces including the stores for ebooks and video games. Only Epic Games was found to have an exception of charging 12% of commission, but almost all other marketplaces charge 30% as a standardized commission.
Amongst the app stores that were analyzed in this study, Microsoft Store, Samsung Galaxy Store, Xbox, PlayStation, Nintendo, and Steam were also studied. While all other marketplaces showed to be rather consistent with their commission charges, Steam’s commission was found to be on a sliding scale. But a game on Steam needs to earn more than $10 million before its rate fluctuates from 30% to 25%.
If we look at other e-commerce marketplaces like Amazon and e-Bay, we will see that the commission charge rates are slightly lower, and they vary a lot too. For selling something physical on Amazon has a commission rate between 8% to 17%. For e-Bay, the rates fluctuate between 10% to 12%. But if we look at the ticket resale sites like Stubhub and Ticketmaster, the commission charges go from 31% to 37%. That’s how much variation there is when different marketplaces are compared and analyzed.
On the other hand, if a developer wants to sell his game in a physical store, the developer will only receive less than 45% of the commission, while the retailer will get more than half of the retail price. This makes sense because the rules and dynamics of a physical store are completely different from a digital app store.
This study also pointed out another important fact that the commission is not payable on any services sold outside the App Store. This makes sense because why would App Store charge commission when it is not being used to sell something?
On many marketplaces, sellers often try to redirect buyers to external site links to avoid paying commission to the digital marketplace. This is quite indecent and comes under ‘free riding.’ So, it is imperative for digital marketplaces to keep creating rules to prevent such things from happening.
So, through this report, it is quite evident that Apple is not doing anything abnormal by charging a certain percentage as a commission. All other digital marketplaces are doing the same, and it is not so wrong as such.
Read next: Study reveals more than half of the people on Earth now use social media
