Competition between the world's two most ubiquitous tech companies is turning out to be a boon for the app developers they rely on to populate their respective app stores.
On Wednesday, Apple (AAPL) announced it was changing the revenue split for its app developers, according to The Verge. Under the company's new model, developers will get an 85/15 split on revenue generated by subscribers after a year. Apple previously had a 70/30 split model with no bonus for sustained subscriptions. So for the first year, developers will keep 70% of the revenue their apps generate, and get a 15% bump after that.
That news comes ahead of Apple's annual Worldwide Developers Conference (WWDC), set to kick off on Monday.
Apple is also offering all developers the chance to sell subscriptions to the apps, instead of just a few kinds of apps, as was the company's previous policy. "Now we're going to open up to all categories, and that includes games, which is a huge category," Phil Schiller, Apple's senior vice president of worldwide marketing, told The Verge.
The change is effective immediately and applies to all existing apps with users that are more than a year old. The Apple App Store currently offers about 1.9 million apps for download, second only to the Google Play Store. During a recent conference call, CEO Tim Cook said App Store revenues were up 35% over last year.
Not to be outdone, fellow Action Alerts PLUS holding Alphabet (GOOGL) followed suit and offered the same 85/15 split that Apple did. However, unlike Apple, Alphabet will allow developers to take advantage of the revenue split immediately, as opposed to having to wait for a year like Apple app developers.
Despite Alphabet's lead in app-store apps, a new report released by market data solution firm App Annie shows the App Store generated almost double the revenue of the Google Play Store in the first quarter. In the U.S., U.K. and Japan, social media apps like Facebook (FB) and Facebook Messenger, Instagram and Snapchat dominated downloads in April.
App Annie's checks showed that not only did users download social media and messaging apps more than any other category, they also spent more time using those apps than any other.
"Messaging apps have catapulted into the stratosphere of the app economy in terms of adoption and usage, with over 90% penetration in several key markets," Fabien Pierre-Nicolas, VP of MarCom at App Annie, told Venture Beat in an interview today. "Apps, in general, are still blowing up, with total time spent in apps growing by more than 60% on Android phones from 2014 to 2015. During 2015, global downloads across all stores hit 111 billion."
The new splits could have an immediate impact on a number of high-profile app developers that sell subscriptions through the app stores like Spotify. Spotify normally charges $9.99 per month for a premium subscription, but that price increases to $12.99 per month for subscriptions purchased through the App Store -- a way to account for the former 70/30 split.
More details about Apple's plans for its App Store are sure to be made public during next week's conference. But as the company's iPhone sales growth continues to wane, investors are sure to be looking for ways the company can make its ancillary products more profitable.