Apple announces subscription model, search ads for App Store

Some big news is coming out of Apple this week regarding the App Store, and it's not even WWDC day yet. In an interview with The Verge and The Loop, Phil Schiller, Senior Vice President, Worldwide Marketing at Apple, laid down some major changes that are coming to the App Store. ("App Store" henceforth in this article will refer to the one on iOS, OS X, and tvOS.)

One of the big changes coming is Apple's greater adoption of the subscription based payment model. Right now, only a certain type of apps can use subscription based payment, apps that usually fall under the category of news, cloud services, dating apps, or content streaming apps. With this change, any app can henceforth use the subscription model, including games.

This is an important milestone for developers. For most developers, especially indie developers, the current business model of paying once and offering free updates and support for life to customers is not at all a viable business model. It's difficult to justify working on major updates when you won't be making back the investment on these updates. Some developers have had to fall back on methods such as releasing major updates as a separate app, which not only is a lot more work, but is often met with criticism from customers, who, let's face it, would rather just get everything for free.

With the subscription model in place, developers can charge customers a small amount every few months. This should help developers sustain themselves over a long period of time, and also encourage further development, not to mention entice new indie developers to join the platform. Apple will be offering over 200 price tiers across regions and currencies, so developers can price their rates appropriate to the region.

Apple has also, for the first time, revised their revenue split. The current 70/30 split will remain for the first year of subscription (where developer takes 70% and Apple gets 30% of the revenue) but starting with the second year, it will change to 85/15, with Apple taking a smaller cut going forward. This will again encourage developers to work harder on keeping their customers for longer periods of time.

That's the pricing model. The other big change is search ads. Following Google and Facebook's lead, Apple will now be showing search ads within the App Store.

By "ads" we mean one ad, which will appear in your search result at the top, clearly marked as an ad and relevant to your search query. Apple claims there is no user tracking or data sharing when you click on the ads and those under 13 years of age won't be seeing the ads. Also, it seems for now this will be limited to the US App Store.

This is another move in developer interest, as ads are known to drive a ton of revenue, both to the developer and the company hosting them (Apple, in this case). Apple has been against ads in search results until this point but it seems the company has changed its stance.

The last but not the least of the changes is to the app review times. Apple has considerably improved the app review times in the past few weeks, that is, the time between the developer submitting the app and Apple approving (or rejecting) the app. Apple claims 50% of the apps are now reviewed with 24 hours and 90% within 48 hours.

We should get a proper rundown of these changes during the WWDC keynote. If you are an App Store developer, or have been planning to be one, it might seem that Christmas came early this year.

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