Takeaways From Apple’s New App Store Study, Apple's Ongoing Fight Against App Store Fraud, App Durability
Hello everyone. Instead of sending this update late last night, I decided to hold on to it until Friday morning.
Ahead of this year’s WWDC, Apple released a new study regarding App Store billings and sales. Earlier in the week, new data points regarding Apple’s efforts to protect developers and customers from fraud in the App Store were also released. We will talk about both topics in today’s update.
A quick update on where things stand with my new podcast, AVALON.
The first episode goes live on Tuesday. Instead of chasing sponsorships and ads, AVALON will be 100% supported by its listeners. A standalone subscription, not connected to Above Avalon membership, will be just $10 per month (or $100 per year). If you know someone who would be interested in the podcast, especially if they are new to Above Avalon, word of mouth is greatly appreciated. AVALON price discounts are available for Above Avalon members. If you have the Podcasts add-on, AVALON will be free. If you don’t have the Podcasts add-on, AVALON will be just $6 per month (or $60 per year) - you can use this form to sign up.
All members with the Podcasts add-on attached to their membership prior to Wednesday were sent a welcome email from “Neil Cybart (via Transistor)” on Thursday. To listen to AVALON, open that welcome email and select your preferred podcast player. One way of knowing that everything is up and running is you will see a short sneak peek episode appear in your podcast player. For members who recently filled out forms to either attach the Podcasts add-on to their membership (form available here) or subscribe to AVALON (form available here), those requests will continue to be fulfilled today (Friday) and tomorrow (Saturday). Thank you for your patience during this initial rush period.
With that, let’s jump into today’s update.
Takeaways From Apple’s New App Store Study
Yesterday, Apple released a new App Store study. Similar reports have been published over the years. Like the prior reports, this latest report was funded by Apple.
Two points that Apple wanted to draw attention to:
Most billings and sales facilitated by the App Store involve no commission being paid to Apple. Instead of this being a new disclosure or development, it’s a fact that continues to fly under the radar. Likely due to the news flow revolving around high-profile App Store courtroom battles, consensus likely assumes most developers pay Apple via in-app purchases (IAP) to have their apps available in the App Store. The courts and regulators have focused primarily on IAP (App Store “billings”) as large companies try their best to wrestle power away from Apple to earn more money – it’s always been about the money with these companies despite PR campaigns that say otherwise. The numbers suggest less than 10% of U.S. billings and sales facilitated by the App Store involve a commission being paid to Apple. The report defines billings as payments tied to app monetization (paid downloads, IAP etc.) while sales, a much larger total, refers to payments spent on buying goods and services.
U.S. developers saw earnings double over the last five years.
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Eddy Cue Hints at Big 2023 for Apple, App Store Revenue Growth Slows (Daily Update)
Hello everyone. We kick things off with my thoughts on Eddy Cue, Apple’s SVP of Services, looking back at Apple’s Services business in 2022. Cue made an interesting comment about Apple in 2023. We then look at a key financial metric Apple disclosed regarding the App Store. With this data point in hand, we derive estimates for the amount of overall App Store revenue in 2022 and the amount of revenue Apple reports in its quarterly financial statements.
Let’s jump right in.
Eddy Cue Hints at Big 2023 for Apple
Going back to the mid-2010s, Apple has used the new year to publish a recap of how the App Store performed the prior year. As Apple released additional services over the years, the recap has grown into something of an Apple Services year in review.
This year's release contained plenty of statistics, although very few of them could be used for financial modeling purposes. Typically, the releases included a few select quotes from Eddy Cue and Phil Schiller.
Apple did something different this year. Cue, Apple's SVP of Services and part of Tim Cook's inner circle, penned the opening section of the press release.
“2022 was a groundbreaking year for entertainment. At some point over the past year, you probably discovered a new app, a new song, a new TV show or movie, or game. An experience that made you laugh, taught you something new, or helped you see the world in a new way — and moved you to share it with others.
At Apple, we have the privilege of partnering with creators of all kinds, while building products and services that enable even more creativity. Our mission has always been to enrich people’s lives and to leave the world better than we found it, and we know that takes more than technical skill. It requires leading with our values in everything we do. We believe that our products and services should be made for everyone. We believe that privacy is a fundamental human right, and that our highest obligation to our customers is security. We believe that a culture where everybody belongs can drive innovation, and that we must stand up for the change we want to see in the world.”
Cue made the case that Apple Services aren’t just revenue-generating side hustles that Apple is doing to please Wall Street analysts.
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