Google Play Store cuts developer tax for subscriptions by half

The industry practice of “70/30” income splits between developers and app store owners has been under scrutiny in recent years, particularly when Epic Games made a huge deal about it. However, it did compel a few platforms to adjust their policy, mainly by lowering the so-called “developer tax” in certain cases. In general, storefront owners continue to collect 30% of profits by default, but Google is making a substantial modification to that policy to drive subscriptions to the forefront.

The 70/30 income split, like many other business practices, emerged de facto without any official agreement among industry participants. Giving store and platform owners 30% of earnings may have worked well for Steam, where each game frequently sells in the double digits, but it didn’t work well for the mobile app industry. Unfortunately, it has been the current quo for many years, which has harmed developers who sell their games for $4.99 or less on average.

It might be more worse for apps and services that make money on a monthly or annual basis. At the same time, companies such as Google and Apple are attempting to promote the subscription model as a more realistic and sustainable strategy than one-time payments for apps. In addition, Google is making it more appealing for developers to move to subscription payments by cutting the tax they must pay to incentivize this model.

Beginning in January of next year, the service fee for anything sold through the Google Play Store will be decreased from 30% to 15%, implying that developers and publishers will keep 85 percent of any cash generated. Previously, Google permitted the same reduction, but only after 12 months of a regular subscription. This shift came on the heels of another significant change in April when it reduced the revenue cut to 15% for the first $1 million of a developer’s income.

Google is also altering some of the estimates for ebook publishers and music streaming services on demand. They can get their service charge lowered by up to 10% if they participate in Google’s Play Media Experience program. According to the Android creator, this program pushes publishers to target most or all Android devices, ensuring that the same experience and content are available in automobiles, TVs, and even smartwatches.

Source: android-developers.googleblog