Evolving our business model to address developer needs
When we started Android and Google Play more than a decade ago, we made a bet that a free and open mobile ecosystem could compete with the proprietary walled gardens that dominated the industry. It wasn’t yet clear what kinds of businesses would move to mobile or what apps would be successful. To keep things simple, we went with an easy-to-understand business model: The vast majority of developers could distribute their apps on Google Play for free (currently 97% do so at no charge). For the developers who offered a paid app or sold in-app digital goods (currently just 3% of developers), the flat service fee was 30%. 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.
The creativity and innovation from developers around the world spurred amazing new app experiences we could have never imagined when we first introduced Android. As the ecosystem evolved, a wider range of business models emerged to support these different types of apps. We've 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 programs designed to support and encourage our diverse app ecosystem.
The result is that 99% of developers qualify for a service fee of 15% or less. And after learning from and listening to developers across many industries and regions, including developers like Anghami, AWA, Bumble, Calm, Duolingo, KADOKAWA, KKBOX, PicsArt, and Smule, we're announcing additional changes to further support our ecosystem of partners and help them build sustainable businesses, and ensure Play continues to lead in the mobile app ecosystem.
Decreasing service fees on subscriptions to 15%
Digital subscriptions have become one of the fastest growing models for developers but we know that subscription businesses face specific challenges in customer acquisition and retention. We’ve worked with our partners in dating, fitness, education and other sectors to understand the nuances of their businesses. Our current service fee drops from 30% to 15% 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.
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% to 15%, starting from day one.
For developers offering subscriptions, this means that first-year subscription fees will be cut in half. We’ve already gotten positive feedback from our developer partners on this change:
"Our partnership with Google has been a powerful one for our business, helping us to scale and ultimately playing a key role in advancing our mission to empower women globally. The pricing change they’ve announced will allow us to better invest in our products and further empower users to confidently connect online." - Whitney Wolfe Herd, Founder and CEO, Bumble Inc.
"Just as every person learns in different ways, every developer is different as well. 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.
Going further with cross platform experiences
While apps remain incredibly important for mobile phones, great services must now also span TVs, cars, watches, tablets and more. And we recognize that developers need to invest in building for those platforms now more than ever.
Earlier this year we launched the Play Media Experience program to encourage video, audio and book developers alike to help grow the Android platform by building amazing cross-device experiences. This helped developers invest in these multi-screen experiences with a service fee as low as 15%.
Today, we’re also making changes to the service fee in the Media Experience program, 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%. 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. You can go here for more information.
We will continue to engage with developers to understand their challenges and opportunities — and how we can best support them in building sustainable businesses. It’s a theme that will be front and center at the Android Developer Summit on October 27-28, where you’ll hear more about our latest tools, application programming interfaces (APIs) and technologies designed to help developers be more productive and create better apps.
If you’re looking for more information about Google Play and its service fees, we've answered some common questions here.
