According a new report by Business Insider (via VentureBeat), Apple has quietly been meeting with developers behind the scenes to attempt to push them into moving their apps over to a subscription model rather than one-off purchases. According to the report, the change is intended to keep users paying for apps “on a regular basis, putting money into developer coffers on a regular schedule,” and of course also provide a continued revenue stream for Apple, which gets a 15 to 30 percent cut of subscription revenue, depending on how long app users maintain their subscriptions. While Apple is telling developers that the move is to “create sustainable business models, instead of selling high-quality software for a few dollars or monetizing through advertising,” which is a valid concern, a move to subscriptions would also help to bolster Apple’s bottom line, particularly with the company placing a strong emphasis on its “Services” business in the past few years.
Apple announced two years ago that it would be increasing its emphasis on selling subscriptions, encouraging developers to move toward this business model at the time by staying that it would be reducing its cut of in-app subscriptions to 15 percent for subscriptions that were maintained for longer than a year. As the VentureBeat report notes, traditional paid app revenue has been on the decline compared to in-app purchases for add-on content and in-game consumables, with the “freemium” model having caught on over the years to the point where many apps are now available for free on the front end and rely on an in-game revenue stream in order to make money. While this approach works well for many game developers, it’s something that can’t really be leveraged by developers of other kinds of apps, and hence the move toward a recurring subscription model — an approach that promises to offer a steady revenue stream to encourage ongoing app development, but one that many customers have long balked at. Apple held a meeting with developers in April 2017 where the company provided suggestions on how they could turn their existing “free” users into “high-value customers” by providing some examples of subscription options and ways to increase prices while still retaining most of their customers, sharing research suggesting that modest price hikes only resulted in a loss of around 20 percent of customers.