Schiller: Apple moving toward App Store subscription model

In an interview with The Verge, Apple worldwide marketing chief Phil Schiller revealed that the company is planning on announcing a major shift to its revenue-sharing model for app developers at next week’s Worldwide Developer’s Conference, which will put a greater emphasis on selling apps as subscriptions rather than one-time purchases. Schiller explained that Apple would retain the standard 70/30 revenue split for normal app purchases and initial subscriptions, but that developers who can maintain subscriptions with customers longer than a year will see a shift in the revenue-sharing model to an 85/15 split.

Schiller: Apple moving toward App Store subscription model

As part of this change, the option for selling subscriptions will be opened up to all developers across all categories of apps — and Schiller says “that includes games, which is a huge category.”

This shift in the revenue-sharing model will obviously favor developers who sell their apps with subscription pricing, which raises the possibility of incentivizing more developers to sell their apps for a recurring monthly or annual fee, rather than a one-time purchase. On the flip side, however, developers will also need to ensure that their apps continue to be appealing after the first year so that users have an incentive to continue subscribing, which should translate into a motivation for developers to provide more effective and regular content updates to their apps.

Financially, this would present a significant opportunity not only for developers, but also a way for Apple to reap more ongoing services revenue from its existing user base.

Schiller added that Apple plans to start showing search ads for apps in its iOS App Store results, and that the company has given careful consideration on how to do this in a “way that, first and foremost, customers will be happy with.” Schiller said Apple also plans to setup an ad auction system that will be “fair to developers, and fair for indie developers, too.”