Apple cuts App Store affiliate commission from 7% to 2.5%

From TechCrunch:

Apple just sent an email to members of the App Store affiliate program saying that App Store commissions will be reduced from 7 percent to 2.5 percent on May 1st — that’s a 64 percent cut. While this change will have no effect on App Store users, it has some implications on the App Store ecosystem.

Many websites from the Apple community link to App Store downloads with a unique referral ID in the link. When customers buy apps or in-app purchases using this link, Apple gives back a small cut to its affiliate partner. Developers still get 70 percent of the sale while partners get incentivized.

. . . .

For a $1 app, this affiliate commission is just a few cents. But it can add up if you’ve built a serious audience. And I know this because I’ve experienced this myself.

. . . .

Our little website got something like 15,000 readers per month. And we made hundreds of euros in the first few months with App Store commissions and a Google ad near the bottom of the page. It wasn’t anything groundbreaking, but it was a fun little way to make some money as a kid who didn’t want to work during summer break.

. . . .

If Apple drastically cuts this revenue stream, the company could end up alienating people writing for those sites. But it could also indicate that some bigger App Store changes are coming soon.

Link to the rest at TechCrunch and thanks to Elaine for the tip.

9 thoughts on “Apple cuts App Store affiliate commission from 7% to 2.5%”

  1. Any cut, particularly any steep cut, is harsh. But it’s not like Apple is cutting revenue to anyone who is producing anything.

    I suspect the last line is correct. Something more significant is coming.

    • Unless the affiliates are not doing anything to boost app sales, Apple is effectively cutting revenue to independent app developers.

      • Really, really, really hard to prove. The effectiveness of any advertising is notoriously difficult to measure. If I don’t have an affiliate link on my blog, Joe Blow won’t buy your app? Prove it. That also assumes I will eliminate all my affiliate links because it’s not worth the same effectively zero effort to earn the lesser amount.

        Only Apple, with their view of the whole store, can measure what effect this will have. And they can only measure it by trying it. They will be able to compare total sales per app and the portion of sales per app from affiliate links from before and after the change.

        Any reduction in sales will also reduce the value of Apple’s 30%. If the reduction in sales is greater than the retained revenue from the affiliate reduction, Apple’s revenues will decline. Apple will not be planning to cut their own revenue. They must have some confidence that this will not have a significant effect on overall app sales.

        • As a general proposition, I agree that the effectiveness of advertising is difficult to measure.

          However, affliate links are a bit different than other forms of advertising.

          First, creation and placement of the “advertising” in the form of a link is outsourced at no direct cost to Apple.

          Second, Apple doesn’t pay anything for the advertising unless a sale takes place and Apple makes money.

          Third, Apple knows which affiliate generated each sale, so it pays less to low-producing affiliates and nothing to affiliates that don’t generate sales through direct clicks. It pays nothing for referred visitors who just look and decide not to buy or buy later by searching on the Apple store.

          Fourth, Apple pays nothing for the exposure of its brand on large numbers of websites which collectively communicate the idea that buying Apple hardware is a great idea because there are lots of cool apps that add value to the hardware.

          I don’t think anyone is likely to remove existing affiliate links, but, with respect to future links, some sort of cost-benefit analysis will take place, particularly if the affiliate needs to create a review of a new app, do some artwork, etc.

          The effort by each website (or newsletter, etc.) proprietor to promote products sold on the Apple store that might have been justified by a higher affiliate percentage may not be worth the time it takes to create the affiliate copy and link promoting the Apple product at the lower percentage.

          If I’m an entrepreneurial online marketer, maybe I wind down my Apple-oriented products or put them on autopilot and spend my creative time on something that I think can generate more money for me.

          For me, Apple isn’t as sophisticated as an organization like Amazon when it comes to wringing information out of data. It seems more gut-driven. Steve Jobs was blessed with a golden gut. Current Apple management, not so much.

          That said, I could be wrong. But I would love to have access to data on Apple’s affiliate-driven sales over the next several months.

  2. Cut enough and many of the app makers may decide that there’s no money to be made making them and they will then seek greener pastures.

    • It’s already in that territory: a popular app can be reverse-engineered in China – and improved a bit – for a fraction of the cost it takes to create it in the first place.

      I’ve read a bunch of stories about app developers who generated venture capital money – and went broke by this process.

      Anecdotal – but still makes you stop and think.

  3. “Developers still get 70 percent of the sale while partners get incentivized.”

    Getting incentivized … must be like Wally experiencing “brand awareness” in Dilbert.

  4. iwish I understood this better. An app developer puts his app on Apple and gets 70% of purchase price minus no doubt some kind of electronic download bs fee attached.

    An affiliate other than apple, also sells the same app on apple site and through their portal gets 7%? I dont understand why the app developer needs ‘affiliates’ other than A. Although I ve noticed increasingly some app developers are taking their works off A’s site for reasons not clear to me

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