Apple slashes App Store affiliate revenue — for in-app only

From 7% to 2.5% in one week flat — Welcome to the new Apple Store affiliate rate.

May 8, 2017: Apple has clarified that only in-app purchases are subject to the reduced rare

From Apple's iTunes Affiliate Blog:

We'd like to clarify some changes being made to the Affiliate Program. Commissions for all iOS in-app purchases will be reduced from 7% to 2.5% globally, and all other content types (including music, movies, books, paid iOS apps and TV) will remain at the current 7%. For more information on commission rates, please see our Getting Started Guide.

So, phew, kinda.

Apple just announced via the iTunes Affiliate Newsletter that it's slashing App Store — app and in-app purchase — affiliate revenue from 7% to 2.5% effective May 1, 2017.

Starting on May 1st 2017, commissions for all app and in-app content will be reduced from 7% to 2.5% globally. All other content types (music, movies, books, and TV) will remain at the current 7% commission rate in all markets. We will also continue to pay affiliate commissions on Apple Music memberships so there are many ways to earn commissions with the program.

That's close to a two-thirds drop and with only one week's notice.

Once-upon-a-time App Store affiliate revenue paid for a full-time app editor on iMore. It's dwindled since then, as paid apps gave way to fremium, but this, to quote our business team, is "soul crushing". We'll have to wait and see how it shakes out, but it's possible revenue will drop low enough it wouldn't even keep a full-time editor in instant coffee for the month.

@natisho @reneritchie @MDMDeals No kidding it's going to hit me hard—gonna need to take a hard look at if it's worth it to run @MDMDeals anymore. Suspect I may not be 😕

— Mark D Miller (@MarkDMill) April 24, 2017

Both the depth of the cut and the abruptness of the timeline are startling. A lot of websites, including iMore, have been increasingly turning to affiliate revenue to help shore up declines in ad revenue — and to get away from the more egregious ads.

The same holds true for developers who have long used affiliate adds on their own apps to bolster their income.

With Apple (and Amazon, by the way), slashing that affiliate revenue, it's going to make things even tougher. (Google, the other major online market, doesn't and never has offered affiliate revenue for Google Play.)

So, yeah, this change in affilate commissions pretty much sucks. We don't rely on links alone (thankfully), but we'll be affected by it. pic.twitter.com/85V94DBPqQ

— Federico Viticci (@viticci) April 24, 2017

While Apple initially ran the App Store at slightly above break-even, and used its 30% share of paid apps to support the huge percentage of free apps, App Store revenue has grown steadily over the years and has long since become a huge business in its own right.

If the App Store were struggling, cuts would be easier to understand. But the reverse is true. That's led to the popular, if desperate, theory that Apple is doing this in advance of cutting its own revenue share from 30% down to 15% or 10% at WWDC 2017.

That would explain the change, though not the abruptness.

As much as that sounds like wishful thinking, it would at least reduce the pressure on developers. Though, if that was part of the reasoning, why not wait and announce the two together?

Not really. Affiliates never worked for iPhone/iPad apps because of low prices anyway. https://t.co/zkoylDmqve

— 👾Denys Zhadanov (@DenZhadanov) April 24, 2017

Either way, publications are also businesses and, if they can't financially justify it, they may reduce or eliminate app coverage, which would also hurt developers and customers alike. (At least for those who find app coverage valuable.)

Given how out-of-the-blue this is, a lot is up in the air right now. We'll have to wait and see how it shakes out.

If you're a developer or a pub that depends on App Store affiliate revenue, let me know how the change affects you.