Some great additional insight on the changes to Apple policy in the EU from the Revenue Cat webinar that just happened. Big thanks to the panellists David Barnard, Gabriel Savit, Jacob Eiting, Jens-Fabian Goetzmann and Nico Wittenborn. If you missed my post about it earlier, check out the link in comments for more context. In terms of the size of the affected market, RC shared that the EU makes up 10-20% of the revenue in the App Store. The biggest point of risk for moving to the new business terms is the Core Technology Fee, which levies a charge of €0.50 for each ‘first annual install’ per year above a 1 million threshold. Some of the key points here: - This applies installs from all stores, not just those from the Apple App Store. - ’First install’ also includes ’first app update’ in a year for users who already have the app installed (yikes, this seems terrifying 😬). - This means low-intent users are a big risk - i.e. you’ll still be charged for users who download the app, but don’t convert to paying customers. If you have a lot of these, your costs shoot up. - There’s also a risk from the cost of updates from users who download your app, don’t use it, but never delete it. - There’s nothing in the terms yet, but general consensus was that there would be some level of protection from the last two points, maybe an upper limit on charges, because it wouldn’t be in Apple’s benefit to bankrupt developers if they go viral for installs. - In any case, this will be a massive cost for big apps with large install / user volumes. Who should adopt it? The status quo (i.e. current business terms) is the best choice for most apps, but even with the Core Technology Fee, there are already a couple of specific use cases where it would make sense: - AAA games, which could charge a high, up-front fee before download. - B2B apps with a relatively high LTV (lifetime value, i.e. the income from the ‘user’ across the lifetime of the app), which would offset the Core Technology Fee, and which don’t fit the current App Store model well because it’s hard to charge for additional seats. Regarding accepting the business terms: - Currently the terms state that it’s a one-way street, i.e. if you move onto the new terms, you can’t move back to the old ones. - It’s not clear if the terms are per app or per developer. Since the agreement is currently at the developer level, it seems most likely it will be at the developer level. There will still be limitations on the apps that can be released: - Only one version of the same app can be released, even if you’re in multiple stores. - The apps have to be notarized by Apple. This will be a ‘lighter’ process than current review, but there will still be checks in place. And of course apps still on the Apple App Store will still need to go through full review. === 👋 Hi, I’m Gabrielle, and I’m a mobile expert. ✉️ Message me to find out how I can help your org build mobile apps in a way that drives business value.
And here's a interesting illustration from Nico Wittenborn of the kind of conversion rates you'd need to make it worthwhile: https://twitter.com/ncsh/status/1750687222628585509?s=20
Mark Wilcox
3mo
Apple is being very clever with the core technology fee making it a battle between big apps and themselves. I expect more legal challenges though as this is effectively bad faith negotiation. There is a giveaway here for small developers but it’s relatively tiny. It’s also a poison pill for small developers that hope to grow. For the vast majority of consumer apps their ARPU using the first install method of counting users is going to be well below the core technology fee. So growing to more than a million users (in Europe) will rapidly erode their revenue. Real numbers from our app (primary revenue source is not subscriptions, so slightly unfair): Using last years numbers we would be just over $300/month better off under the new EU terms. However if we 4x both users and iOS subscription revenue from where we are, we’d be nearly $40k/month worse off!
Thanks for sharing Gabrielle Earnshaw some great useful insight.
Jeff Grang
3mo
If you want to simulate the fees you would pay with the new deal compared to the old one before choosing it you can use that simulator : https://grid.is/@purchasely/app-store-eu-regulation-scenario-computation-7rwQ0MHfQuKPK66_06RfNA
Here's my earlier post for more context https://www.linkedin.com/posts/gabrielle-earnshaw-29284120_huge-news-from-apple-last-night-on-changes-activity-7156603222395162624-m1Qv