Google to halve Play Store commission on subscriptions to 15 pc from January 2022

Google says it has worked with its partners in dating, fitness, education, and other sectors to understand the nuances of their businesses, and is decreasing the service fee for all subscriptions on Google Play from 30 percent to 15 percent, from January 1.
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Google on Thursday said it will reduce the commission on subscriptions on Google Play from 30 percent to 15 percent starting January 1, 2022.

In the past, Apple and Google have drawn severe criticism from developers over the steep 30 percent app store commissions.

"To help support the specific needs of developers offering subscriptions, starting on January 1, 2022, we're decreasing the service fee for all subscriptions on Google Play from 30 percent to 15 percent, starting from day one," Google said in a blogpost.

It noted that digital subscriptions have become one of the fastest growing models for developers but subscription businesses also face specific challenges in customer acquisition and retention.

Google explained that a vast majority of developers could distribute their apps on Google Play for free (currently 97 percent do so at no charge).

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For developers who offered a paid app or sold in-app digital goods, the flat service fee was 30 per cent.

"This model helped apps to become one of the fastest-growing software segments. And instead of charging licensing fees for our OS, our service fee allowed us to continually invest in Android and Play while making them available for free to device makers all over the world," it added.

The tech major said it has made important changes along the way, including moving beyond a "one size fits all" service fee model to ensure all types of businesses can be successful.

"Instead of a single service fee, we now have multiple programmes designed to support and encourage our diverse app ecosystem," it added.

Google said it has worked with its partners in dating, fitness, education, and other sectors to understand the nuances of their businesses.

"Our current service fee drops from 30 percent to 15 percent 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," it added.

In March this year, Google had announced that it will slash the service fee that Google Play receives to 15 percent for the first $1 million of revenue earned by a developer each year.

Bumble Inc founder and CEO Whitney Wolfe Herd said the pricing change announced will allow it to better invest in its products and further empower users to confidently connect online.

"We're excited to see Google continuing to collaborate with the ecosystem to find models that work for both the developer and platform. This reduction in subscription fees will help Duolingo accelerate our mission of universally available language learning," Luis von Ahn, Co-founder and CEO of Duolingo, said.

Google has also made changes to the service fee in the Media Experience programme to "better accommodate differences in these categories".

"Ebooks and on-demand music streaming services, where content costs account for the majority of sales, will now be eligible for a service fee as low as 10 per cent. The new rates recognise 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 blog said.

Google also said it will continue to engage with developers to understand their challenges and opportunities -- and how it can best support them in building sustainable businesses.

Edited by Teja Lele Desai

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