Commentary
Google's Lower App-Store Fees Are Good For Publishers
- by October 26, 2021
Google last week said it would cut fees in its Play Store, the biggest repository of apps for Android devices. The move is positive for publishers that make money from subscriptions, and follows
similar moves by Apple.
Starting in January, Google will halve its commission rate on first-year subscriptions from 30% to 15%, Sameer Samat, vice president of product management, said in a blog post. The company currently charges the higher rate during the first year of a subscription, and lowers it to 15% in subsequent years.
“We’ve heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate,” Samat
said. “We’re simplifying things to ensure they can.”
Google and Apple in the past year have faced intense criticism for the fee structure of their app
stores. Epic Games, maker of the popular videogame “Fortnite,” is engaged in a legal battle with both companies over their fee structures and payment requirements.
Amid heightened antitrust scrutiny of their dominance in app distribution, Google and Apple have taken steps to give app developers and publishers more leeway in payment methods. Apple last week
said it would allow developers to show consumers other ways to pay — such as a website that handles orders for paid
subscriptions.
The lower fee structure is positive for publishers, though Google claims few charge a download fee. Some 97% of apps on its Google Play store are available for free,
according to the company. Those developers likely have other monetization methods, such as advertising or in-app purchases.
Still, publishers that depend on subscription
revenue will benefit when they don’t have to turn over almost one-third of their first-year revenue to Google. For smaller or newer publishers seeking to bootstrap a subscription business, the
lower fees can make a big difference in their cash flows.
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