When an App developer splits the 30% distribution fee with their customers

Apple is a powerful and ubiquitous distribution channel. It helps App makers and content creators reach a large market that is otherwise not available to most. The scale of this market and access comes with big revenues. For that kind of access, Apple takes 30% of the revenue generated.

For an App developer with no brand recognition outside of Apple’s channel and no access to customers, this is not a bad deal. They are comparing getting $0 with $0.7.

For others who already have established customer base, have autonomously built their brand outside of a device or distribution channel and simply want to serve their existing customer base through Apple’s channel, the 30% fee is unpalatable.

One such brand is The New York Times. Its monthly subscription for smartphone plus tablet costs $35 a month. Apple likely takes $10.5 of this.

What is Times doing? It is offering to share HALF of this $10.5 with its customers. They are doing it by offering   Sunday Print + All digital access for just $30.

Customer saves $5 over the Digital only option and Times gets the rest.

If you are wondering about marginal cost of Sunday Paper – most of the cost of printing a paper is sunk and any marginal cost is covered by Ads and inserts.

Net-Net : Customers and Times win by working around a costly channel.

See also: Math on App Store pricing

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