Google cuts Play Store subscription fee for services by 15%

The new structure will occur from January next year and possibly boost developers to shift from one-time payment modes to subscriptions.

On Thursday, Alphabet Inc-owned Google said it is reducing the charge that subscription-based apps need to pay Play Store to 15 per cent right from day one, following objection about its fee structure from companies such as Spotify.

Currently, developers must pay a 30 per cent subscription fee in the first year and 15 per cent after that. “We’ve heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate. So, we are simplifying things to ensure they can,” said Sameer Samat, Vice President, Product Management, Google in a blog post.

The new structure will occur from January next year and possibly boost developers to shift from one-time payment modes to subscriptions. It’s worth noting that the reduction in this specific category, which Google terms as Media Experience program, is at the company’s discretion and based on high content costs, it said.

“The new rates recognize industry economics of media content verticals and make Google Play work better for developers and the communities of artists, musicians and authors they represent,” Samat said.

E-book companies and on-demand music streaming services, which use most of their sales to compensate for content costs, will now be suitable for a service fee as low as 10 per cent. Google has come under attack from big firms such as Microsoft Corp, Spotify Technology SA, startups, and smaller companies that claim the fees strip customers of options and push up app prices.

In March, Google said it would decrease the service fee it prices developers on its app store by half on the first $1 million they earn in revenue in a year, a move similar to iPhone maker Apple Inc.

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