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Google planning to let developers keep 85% of app subscription payments

Following Apple's decision to lower its transaction fee on subscriptions to 15%, it now seems that Google will follow suit, but with one big difference.

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Published onJune 9, 2016

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While most of Google’s revenue comes from advertising, it does make money in other areas including via the Google Play Store. There are movie sales, books sales, music sales, and app sales. App developers can make money in one of several ways including offering an app for a price, using advertising to generate income, or by offering a service to which users subscribe (monthly, yearly etc).

For paid apps sold via Google Play the transaction fee is equivalent to 30% of the app price. The developer keeps 70% and Google gets 30%. That is also true for subscription based services. Now, following Apple’s decision to lower the transaction fee on subscriptions to 15%, it now seems that Google will follow suit, but with one big difference.

Under Apple’s plans, if an app can keep a subscriber for over a year then the revenue split will be changed from 70/30 to 85/15. However, under Google’s new plan, the move from a 70/30 to 85/15 for subscriptions will apply immediately and not after a year. This means that while developers and service providers using iOS will receive the traditional 70% of the subscription price on auto-renewable subscription during the subscriber’s first year, developers and service providers on Android will see a revenue increase to 85% of the subscription price the moment a subscription is made. Like Apple’s new revenue structure, it is thought that Google’s new revenue structure will apply to all existing subscriptions as well (at the next billing cycle).

It won't have any impact on indie developers or even on some of the big game studios.

According to industry sources Google has actually already been testing this new split with some of its entertainment partners who sell content via Play Movies & TV. There is some uncertainty about when Google plans to roll out the new pricing plan, however my guess is that it will be soon because Apple’s new scheme is effective from June 13, 2016.

While the new pricing structure is good for big businesses, like the film studios etc, it won’t have any impact on indie developers or even on some of the big game studios. The transaction fee for in-app purchases and for the sale of apps remains the same at 70%/30%.