App Store to feature paid ads, subscription incentives

Read time 2min 40sec

Apple is planning a significant revamp of its App Store, which will include new subscription and commissions models, as well as paid ads.

With "so much" to announce at Apple's Worldwide Developer Conference in San Francisco next week, the company decided to tell developers about the changes ahead of the time, Phil Schiller, Apple's senior VP of marketing, told The Telegraph.

Subscription incentives

A few of the major changes, which commenters have said could majorly influence the way consumers experience apps, centre around subscription models.

Firstly, any app will soon be able to charge users a regular subscription fee, whereas in the past only apps in certain categories - namely media and entertainment - were allowed to do this.

Apple is also offering a financial incentive to apps that can maintain subscribers for a year or more, in the form of a reduced commission.

Apple currently takes 30% of all regular subscription fees, leaving 70% for the app-maker. With the upcoming changes, this commission model will tilt in the app-maker's favour, allowing the app-maker to keep 85% of the subscription fees for each user who has been subscribed for a year or more.

This percentage adjustment could mean millions of extra dollars per month for apps with large and regular user bases, such as Spotify.

While some critics have warned that incentivising subscription fees in this way could create a regular subscription fee-heavy app landscape that is unappealing to consumers, many have also noted that the same incentives could push companies to make apps that are more frequently beneficial and satisfying in the long term.

Paid ads

The App Store will also be introducing paid ads for apps in App Store search results, following a very similar model to Google's AdWords, which display in Google Search results.

Ads in the App Store will be differentiated by colour from search results, and will only be allowed for advertising other apps in the App Store. As with Google's AdWords, a search term will go to the app-maker offering the highest price per click for it, which they will only have to pay when a user actually clicks on the ad. Yet Apple will also use an algorithm to ensure that ads remain relevant to the user's search.

Critics have said the feature will disproportionately benefit established app-makers and moneyed start-ups, allowing funding over quality to impact the success of an app.

Schiller defended that the feature will grant app-makers more "efficient" marketing by allowing them to advertise on the platform where users search for and download apps.

The App Store has also been working to accelerate app review times, allowing 90% of apps submitted to the platform to be reviewed within 48 hours.

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