Apple's App Store to Get Changes Aimed at Improving Developer Revenue

With more than 1 billion apps available in the App Store, developers say it's harder to make money nowadays. Apple is trying to help them.

App Store, Apple, Play Store, Google, apps developers, revenue, App Annie, app search, search

Apple is making changes to its App Store to help increase the earnings potential of the developers who create apps for Apple's 1 billion users so they stick around to create additional innovative and profitable products for the company's customers.

The changes include ads for their apps appearing in the listings when users perform searches in the App Store, as well as new capabilities for developers to offer renewable annual subscriptions for their apps in all categories so they can get recurring revenue for their work.

Ads have not been used in App Store search in the past, but are being brought on to help customers "discover or re-engage with [an] app at the very moment they are searching for apps like yours," according to Apple.

The search ads will appear in search for U.S. customers starting this summer with a beta version of the feature, with a final version expected to be rolled out by the fall. The search ads are designed to let developers show off their apps to prospective customers as they search for apps, while also respecting user privacy by conforming to the company's existing privacy standards, according to Apple. More than 65 percent of the downloads from the App Store come from user searches in the store.

The search function is also receiving improvements that will "enable deeper discovery of apps, including lesser known or niche apps" by customers, while users won't see ads for apps they have already installed. In addition, only ads that are relevant to a user's search query will be displayed, preventing users from being barraged by non-related apps.

Developers using the ad service will pay for their ads only when they are tapped by a user, according to Apple. Developers can choose how much to spend on the ads and can start or stop them at any time. The ads displayed in the search function will be clearly marked as ads. Ads will not be displayed to users whose Apple ID is registered to anyone under 13 years of age to protect minors.

The upcoming subscription options in the App Store will also arrive in the fall, allowing developers to offer automatically renewable subscriptions to their apps in all product categories for the first time. The renewals will allow customers to get continuous code and feature updates for the apps they bought previously while also ensuring recurring revenue for the creators of the products.

Developers will also receive more revenue when customers renew their subscriptions under new pricing established by Apple. Developers will continue to get 70 percent of the app revenue for the first year as they do today, with Apple receiving the other 30 percent, but in the second and subsequent renewal years, the developer will get 85 percent of the revenue, with Apple receiving 15 percent.

More details about the App Store changes will likely be revealed at Apple's Worldwide Developers Conference (WWDC 2016), which will be held June 13 through 17 in San Francisco.

Apple's App Store continues to bring in higher revenue than Google's Play store, according to first-quarter 2016 figures from research firm App Annie, with the App Store bringing in 90 percent more in revenue than the Play store. Google leads actual downloads, however, by providing more than double the downloads of the App Store, according to the data.

Apple's App Store was hit by a glitch in May that returned improper search results to user queries, according to an earlier eWEEK story. The app searches on the site were not always displaying the proper apps in response to search terms, giving users inadequate app choices based on their queries.

Glitches and outages obviously can't be prevented 100 percent of the time, but for popular sites such as the App Store, any issues or service interruptions tend to get plenty of user and media response due to their heavy use.