Today, Google announced a major shift in the revenue sharing structure of Google Play apps – which can significantly change the fortunes of independent developers or small businesses that rely on the Android platform app store for revenue.
As of July 1, Google will have a 15 percent cut from the first $ 1 million in annual Google Play revenue from Google Play that a developer earns. This is 30% less than before. The 30% figure will still apply to all revenues in excess of $ 1 million each year.
Google says that 99 percent of developers with apps and content on Google Play will experience reductions in fees paid to Google by up to 50 percent.
Superficially, it looks like a deal very similar to what Apple announced last year, when it stated that developers who earn less than $ 1 million will soon start paying only 15% for the platform, instead of the historical 30%. But it is actually different in a way that can have consequences for many developers; it is arguably a little more generous.
That’s because Apple applies its lowest rate of 15% to a developer until it exceeds $ 1 million in revenue in a given year, at which point the highest number of 30% is applied to all of that developer’s earnings. Google still charges 15% of that first million, even if the developer earns $ 5 million. Therefore, in the Google model, a developer who earns $ 1.2 million on an application pays 15% on $ 1 million, then 30% on $ 200,000. At Apple, a developer who earns $ 800,000 forks over 15% of that amount, but if he earns $ 1.2 million, he pays 30% of all $ 1.2 million, not just $ 200,000.
To that end, the author of the Google developer blog post (Product Management VP Sameer Samat) claims that developers who are earning $ 2 million, $ 5 million and “up to $ 10 million” each year told Google that this change will make a difference in making your business more sustainable, although it will earn significantly more than $ 1 million After all, 15% to more than $ 1 million is equivalent to $ 150,000, which is not a small amount of money for anyone, but for the largest and most successful companies.
This change was probably not born entirely of altruism, however. First, Google is almost directly matching – slightly outperforming, in fact – Apple’s offer to developers, as the App Store and Google Play compete directly. In addition, Apple and Google are subject to antitrust lawsuits and investigations into the control of their respective application markets. Like Apple with the App Store, Google requires app developers to use their own payment system for apps on Play, making it difficult to get around these fees.
While fees themselves are generally not the main subject of investigations and prosecutions, this change improves the optics and sentiment of the two tech giants while they are under siege, and this without costing them a lot of money. The significant majority of the revenue that Apple and Google receive from their application markets comes from applications with revenues well in excess of $ 1 million per year.