Apple has sent an e-mail to the members of its affiiate program informing them that App Store commissions will be reduced from 7 percent to 2.5 percent on May 1st. This huge cut has the potential to turn the App Store economy on its head as the company’s affiliate partner, which induce people like you and me to downlaod Apps from the app store, will suddenly find their profits slashed by more than half.
The app store works in pretty mysterious ways. There are a lot of developers creating all sorts of applications and, there are a lot of ways of getting peope to downoad these apps. Some of them more popuar ways you may already be aware of however, there are a bunch of other ways as well. For instance, suppose you have a website an an audience. You can get that audience to start downoading applicatons through your portal.
So basically, Apple gives you a unique referal ID that can be leveraged to send users towards the App Store. For every user that actually downloads the app ( we are mostly interested in paid apps here) the devloper gets most of the money, Apple keeps some and of course, the website doing the hard work of refering gets some as well. You do understand that none of this is rocket science here. This is basically how adverising works as well except that there, its more of a per click or a per view arrangement.
So, under the new order of things, the developers will still get the lion’s share of the profits (they have done most of the work after all) however, the affiliates will earn a lot less. So they someone was earning $7 on per $100 worth of sales they redirected to Apple, they will earn merely $2.5. The reasons for making this change remain shrouded in mystery but it could be that affiliates were not giving the company the kind of downloads it was hoping to get from its App Store.
Sure, the change may induce some affiliates to look elsewhere for profits but Apple does not seem overly concerned by the possibility. Its affiliate program is still one o the better ones out there and it is probably counting on that to keep affiliates sticking around. That or of course, it may be hiding some major changes up its sleeve. We will know for sure in due course of time.
