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Apple Tax to come down for app-based subscription services

By | Published on Thursday 9 June 2016


Apple has announced a bunch of changes incoming to its app store, and perhaps most important is the news that the so called Apple Tax is coming down for in-app subscriptions. Indeed, that innovation stood out enough for Google to quickly announce it was doing the same, and with fewer limitations than its appy rival.

As previously reported, the Apple Tax – the 30% Apple takes on purchases made through iOS apps – has proven controversial in some quarters, and especially in the streaming music domain. As streaming music services are paying over at least 70% of subscription income to the music companies already, the cut Apple then takes if subscribers sign up via the iOS app would wipe away any profit margin.

To that end, streaming platforms generally pass the Apple cut onto the customer, so that it is £3 a month more expensive to subscribe to such services if you choose to sign up and pay via the app. Of course customers can always sign up via the service’s own website, and then use the iOS app without Apple taking any cut at all, though the tech giant – unlike Google – has rules that make it hard for a digital platform to communicate that fact to customers within the app itself.

This has all became an even bigger issue since the launch of Apple Music last year, because it doesn’t have to worry about its own in-app purchase mark up, meaning that to anyone signing up for a streaming music service within an app, the Apple set-up appears better priced than its competitors. The whole thing reportedly led to an FTC investigation in the US last summer.

The big change is that Apple and Google are dropping the cut they take for in-app subscriptions to 15%, though with Apple the figure will only drop once a subscriber has been subscribing to a service for over a year. Though as the new policy is instigated, it will apply to anyone who has had a Spotify or Deezer (or whatever) subscription for more than a year already, if they are still paying via the app.

Other app store changes at Apple include allowing app makers to pay to score more highly in searches within the store, the expansion of the subscriptions option to all kinds of apps, and a new option to vary subscription prices around the world.