Apple kills app affiliate commissions, imperiling small publishers

Apple generally releases its “bad” news late in the day, and its latest such announcement is particularly unfortunate: Effective October 1, it will stop paying publishers affiliate commissions for both apps and in-app purchases from its App Stores, a move that independent app reviewers believe will kill their sites.

The company announced the decision in an email to affiliates one day after reporting that it had made a record $53.3 billion in the prior quarter, which executives said was buoyed by growing App Store sales and subscriptions. Apple’s stock spent the day within striking distance of a historic $1 trillion market capitalization, while some of the App Store’s longest-term promoters spent the night worrying about whether they would still have jobs after the change.

At stake are 2.5 to 7 percent commissions on apps and in-app purchases, which Apple pays to publishers who convince customers to buy apps from the iOS and Mac App Stores. While these are relatively small fractions of Apple’s revenue, they are critical sources of income for independent sites that cover iOS and Mac applications.

A widely circulated editorial from independent app review site Touch Arcade said that the decision was a sign that “Apple does not want us to exist anymore” and would kill the publication. Many publications have struggled in recent years with declining ad revenues, forcing cutbacks in everything from staffing to event and product coverage; for some sites, affiliate revenue has been the only guaranteed income keeping people employed.

Apple’s actual motives are unclear. Its email cited the “increased methods of app discovery” in the latest iOS and Mac App Stores as the reason for its decision, but as users know, the App Stores’ discoverability is terrible. Apple’s search feature has become polluted by ads, and its chief means of app discovery is a daily feed of internally developed puff pieces that Apple describes as “editorial.”

Developers have described Apple’s current system as resembling a giant store that stops you at the front counter rather than providing any viable way to see what’s available inside. While independent reviewers certainly haven’t been perfect, they have balanced out developers’ self-promotion, Apple’s “editorial” promotion, and frequently sketchy user reviews by casting spotlights on additional titles and calling out particularly bad ones.

At this point, it’s not known whether Apple plans to pocket those commissions to increase its take from services or refund them to developers, thereby reducing its 30 percent share of every purchased app. Epic Games recently cut its Unreal Engine Marketplace asset developer commissions to 12 percent and made the cut retroactive — a move that enabled thrilled developers to pay off student loans and pursue dream projects. If Apple makes the funds available to app developers for their own marketing efforts, independent sites might not be starved out of the market after all.