Earlier this week Apple made some surprise announcements about changes occurring to its App Stores. It is not surprising that the changes are being made, but instead their timing is the interesting aspect. With Apple’s World Wide Developer Conference (WWDC) beginning next week, one would think that this information would be announced at the conference. According to Phil Schiller, Apple’s Vice President of Marketing:
We’re doing something a little different this year. We’ve got a bunch of App Store/developer-related announcements for WWDC next week, but frankly, we’ve got a busy enough keynote that we decided we’re not going to cover those in the keynote. And rather, just cover them in the afternoon and throughout the week. We’re talking to people today for news tomorrow about those things, in advance of WWDC, and then developers can come and be ready for sessions about these things, with knowledge about them before the conference. We haven’t done this before, but we figured, what the heck, let’s give it a try.
The three area where changes have occurred are:
Let us look at each of these three areas.
App Store Approvals
Since the first availability of third-party applications on the App Store, the approval process has taken about a week. Recently this has changed. The time for approvals has been drastically reduced. According to Vice President of Marketing Phil Schiller, 50 percent of submitted apps are now approved within 24 hours and 90 percent in 48 hours. This is a significant improvement.
According to John Gruber’s reporting, the reasons are:
- Tool improvements internal to Apple.
- Staffing changes.
- Policy changes.
This is a double-edged sword. For application developers, they are able to anticipate a shorter release schedule. However, for those reviewing applications they may have potentially less time to work on a review. This will become a balancing act for both developers and reviewers.
I do not normally report on rumors, so I did not post anything about this before. However, the idea of “Search Ads” was floated a few weeks ago. It appears that they are a reality. Search Ads are a new feature within the app store. Here is the basic flow for how Search Ads will work.
- A developer will bid on a keyword search term. If they are the second highest bidder, they will win.
- A user searches the store with that keyword.
- An add will appear showing off the developer’s application.
That is the basic flow of what will occur. Developers will pay when a user taps, or clicks, on the ad. They do not need to purchase anything, just tap or click on it. Here is an example of what an ad in search may look like.
One of Apple’s core tenets is user privacy. That will still be the case with Search Ads. Search Ads is covered by Apple’s overall user privacy, which means developers will never know who is the individual who installed the application.
Developers will still be able to get information about the click through rate, as well as similar information. As mentioned before no personally identifiable user information will be available to the developer.
Search Ads will be in beta over the Summer and will be released in the Fall, presumably with iOS 10.
When subscription pricing was introduced in 2011, developers were both eager and excited to use subscriptions to their own benefit to generate even more income. However, this was limited to only certain types of applications. These included dating applications, magazines, and media (movie, TV, music, etc) subscription services. This limitations has now been lifted.
Eligible Application Types
In the Fall, Apple will allow all application types to be eligible for subscriptions. There will be two categories for auto-renewable subscriptions, Content and Services.
The content category for auto-renewable subscriptions includes items that deliver updated content on a regular basis. This could be items like newspapers, educational courses, or audio or video libraries. This could also be services like Netflix or Amazon Instant Video.
Besides applications that deliver content, applications that provide a service can also use auto-renewing subscriptions. These could include cloud-storage services, or games that provide back-end servers, like massively multiplayer online games. Apple states “the experience must provide ongoing value worth the recurring payment for an auto-renewable subscription to make sense”.
This means that Apple will be able to determine if an application provides enough to warrant the use of auto-renewing subscriptions.
With all in-app purchases and subscriptions, Apple takes thirty percent of all of these purchases. When in-app purchases were initially unveiled one of the limitation was that Applications could not charge more on their own website than they were charging in the app. This policy changed so that content owners could charge more for the content purchased inside an app, than outside. This became quite useful for subscription media services so they could cover the extra thirty percent Apple was charging.
Even with the ability to create more income, the split remained the same, seventy percent for the developer and thirty percent for Apple. This rate has changed, with some caveats.
One of the biggest complaints by application developers has been the on-going revenue In order to address some of the concerns Apple has made some changes to the percentages. This is a good thing, but this change comes with caveats. The change is that after the first year, developers will get 85% and Apple will get 15%. Again, this only after the first year. If a customer continues to pay after one year, the percentage will change.
The reasoning behind this is that if a developer can retain a user for more than a year, they must be doing something correctly. Additionally, the developer is doing the hardest part of the job and creating an application that is interesting.
With the one year increase in revenue for the developer there is a sixty day grace period, in case a subscription lapses. If a user re-subscribes within sixty days, the days counting past the one year will continue as if nothing changed and you will get 85% of the revenue. However, if a user re-subscribes on day sixty-one, or any time past then, you will only get seventy percent, and the clock will start over.
There are some other features for the change in pricing. Apple states,
Starting this fall, apps with auto-renewable subscriptions will be able to offer territory-specific prices and will have access to 200 price points across all currencies. You will be able to set the prices you think are suitable for subscribers in different markets, and you will have the flexibility to price your subscriptions at parity if they’re available elsewhere.
This is a significant improvement. This means that developers will be able to set the price of their subscriptions with more granularity.
If a developer does opt to increase pricing, a user will not be surprised when this occurs. They will receive an email indicating that the price is going to increase and the user will have the option of cancelling the subscription.
Developers have been asking for free trials. Instead of implementing free-trials themselves, they do offer them in one manner. A developer can choose to provide access to an in-app purchase for seven days, for a one-month recurring subscription. This time frame goes up to one-month for a year-long subscription.
One of the more difficult things, as a developer, to determine is how to price an app. As of this writing, there are 88 total tiers. These range from free to $999.99. The first 51 are in $1 increments. Tiers 52 through 61 are in $5 increments. Tiers 62 and 63 are $10 increments. Tier 64 is $5 more ($124.99). Tiers 65 through 69 are again $10 increments. Tier 70 is another $5 increment ($174.99). Tiers 71 through 78 are in $10 increments. Tiers 79 through 83 are in $50 increments. Tiers 84 through 88 are in $100 increments. These range of options are good, but Apple has decided to add more.
Ultimately there will be 200 different tiers for developers to choose from. The exact amounts that will be available is not fully known. It is likely that the tiers will be filled in the existing tiers. It could be smaller increments, say $0.50, for some tiers, or it could be more on the higher end.
Along with this, developers can opt to charge different territories. A developer may choose to do this because of different exchange rates in different locations; or if you follow Apple’s earnings calls, what they would call “economic headwinds”.
We will see what Apple decides to unveil.
There is some other information that may be useful not just to developers, but everybody in general. An application can have multiple subscriptions, but they cannot be overlapping. This means that there may be different subscriptions for different features or services.
Apple’s announcements of changes to the App Stores. Many of the changes will be beneficial for both users and developers. The addition of Search Ads will help developers put their application in front of more people. The new subscription options will allow for a free-trial like experience for users. Subscriptions will, hopefully, allow for more opportunities for both developers and users.
Apple announcing this before WWDC will leave plenty of time for whatever they end up announcing on Monday. You can check out my predictions as well as my iOS or OS X wish list.
There will be more from Apple’s WWDC, including a recap of the keynote, next week.