Google Play is lowering its developer fees for app subscriptions
Android is the most popular operating system in the world (even counting desktop platforms), and as a result, Google Play is one of the most important software distribution channels ever. However, Google has been under pressure in recent years to reduce the fees it charges developers for transactions, especially during the recent legal battles with Epic Games. Google is now reducing the cut it takes from subscription sales, and select developers can keep as much as 90% of their revenue.
“Digital subscriptions have become one of the fastest growing models for developers,” Google wrote in a blog post, “but we know that subscription businesses face specific challenges in customer acquisition and retention. […] Our current service fee drops from 30% to 15% after 12 months of a recurring subscription. But we’ve heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate. So, we’re simplifying things to ensure they can.”
Google Play is now reducing the service fee for all subscriptions to 15%, starting on January 1st, 2022, instead of charging 30% for the first year and 15% after that. This change should provide app developers with even more income, especially with services and apps with a lower retention rate (e.g. people unsubscribe before the first year is over).
Google is also rolling out changes to the Play Media Experience Program, which lowers fees for eligible developers creating video, audio, or book applications. Before now, developers in the program could have service fees as low as 15%, and now that is being reduced further to 10%. “The new rates recognize industry economics of media content verticals and make Google Play work better for developers and the communities of artists, musicians and authors they represent,” the company said.
These changes might help Google push off criticism that it takes too much money from app revenue, which has been consistent over the past few years. Epic Games has argued in court that the high cut for purchases is anti-competitive. The lawsuit with Epic also revealed that Netflix, Spotify, and Tinder reached secret agreements with Google to reduce service fees, which gave them an advantage over smaller developers without millions of active customers.