Google Play Store Fee Changes: Lower Rates for Subscriptions & Media
Google Adjusts Subscription Fees on Google Play Store
Google has announced a reduction in commissions applied to subscription-based businesses utilizing the Google Play Store. Previously mirroring Apple’s approach, the company lowered commissions to 15% on the initial $1 million in developer revenue. Now, a further adjustment is being implemented specifically for application developers generating income through recurring subscriptions.
Instead of the tiered system of 30% in the first year, decreasing to 15% thereafter, Google will now apply a consistent 15% fee from the outset.
Expanded Fee Reductions
The company states that 99% of developers will qualify for a service fee of 15% or less. This is due to additional fee reductions for applications within the Play Media Experience Program.
These adjusted fees can be as low as 10%, according to Google.
The Play Media Experience Program
The Play Media Experience Program includes applications such as e-books and on-demand streaming services for music or video. A significant portion of sales within these applications is attributed to content costs.
These businesses sometimes directly compete with Google’s own services, like YouTube Music versus Spotify.
Launched earlier this year, the program aimed to incentivize developers to create for the Android platform, initially offering service fees as low as 15%. Interested developers can submit a form to apply.
Rationale Behind the Changes
“Digital subscriptions are experiencing rapid growth among developers, but we recognize that these businesses encounter unique challenges in acquiring and retaining customers,” explained Sameer Samat, Google’s vice president of Product Management.
He continued, “We have collaborated with partners in sectors like dating, fitness, and education to understand the intricacies of their operations. Our previous fee structure reduced from 30% to 15% after a year of recurring subscriptions, but we’ve acknowledged that customer churn can hinder subscription businesses from benefiting from this reduction.
Therefore, we are streamlining the process to ensure they can.”
Implementation Timeline and Developer Input
The revised fees will take effect on January 1, 2022, as announced by Google.
Google emphasized that the new fee structure was developed in consultation with the developer community, incorporating feedback from a diverse range of developers across various industries.
Developers such as Anghami, AWA, Bumble, Calm, Duolingo, KADOKAWA, KKBOX, Picsart and Smule contributed to the process.
Considerations for Media Applications
When establishing the new fees for media applications, Google recognized the increasing complexity of app development. Developers must now address multiple platforms, including TVs, automobiles, smartwatches, and tablets.
This necessitates greater investment in their app-based businesses.
Furthermore, Google believes that lowering fees on media applications will enable businesses to share savings with artists, musicians, authors, and other creators.
Context of Regulatory Scrutiny
This adjustment occurs amidst heightened regulatory oversight of app stores and ongoing antitrust litigation, including a case with Epic Games in the U.S.
Lawmakers globally are evaluating whether tech giants are leveraging their market dominance through app stores, which serve as the primary distribution channel for mobile software.
South Korea, for example, recently enacted legislation aimed at curbing in-app payment commissions.
The situation is further complicated by the fact that these tech companies often compete with the developers whose apps they distribute.
Proactive Engagement with Developers
In a strategic move to preempt further regulation, Google has secured support from some developers regarding the new commission rates. Statements from Bumble and Duolingo praising the change were released.
Bumble’s CEO, Whitney Wolfe Herd, stated the pricing will allow for increased investment in their products, while Duolingo’s CEO, Luis von Ahn, expressed excitement about accelerating their mission.
Continued Investment in the Android Ecosystem
Despite lowering commissions, Google maintains that fees are necessary to fund ongoing investment in Android, its commerce platform, the Play Store, security measures, app distribution systems, and developer tools.
Further details regarding upcoming updates to tools, APIs, and other technologies will be shared during the Android Developer Summit on October 27-28.
