How Apple makes money: in-app purchases in games, app sales, app subscriptions. And Spotify has filed another antitrust complaint over Apple’s 30 percent cut with the European Union, complaining that it gives Apple an unfair advantage when promoting its own streaming service, Apple Music. That said, Apple has recently come under fire for the App Store model in the past few months: the Supreme Count is hearing an iOS App Store antitrust lawsuit that alleges Apple has an unfair monopoly on iPhone apps. If you work off of Apple’s 70 / 30 revenue split (which is usually, but not always, the cut it takes from purchases), you get total sales of roughly $142 billion, with $42 billion of that going to Apple in the decade it’s been running the App Store.
Those “free” apps have resulted in some pretty big sales: as of June 2018, Apple had paid out $100 billion to developers from the App Store. And Apple takes a cut of each of those in-app purchases and subscriptions.
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Even the most popular paid apps like Minecraft or Facetune just don’t make the same kind of money as free apps that rely on in-app purchases, even with in-app purchases to help bolster their numbers. According to App Annie’s latest estimates, every single one of the 50 top grossing apps on the platform is either a major service that relies on subscription fees or a free-to-play game. Most of those aren’t straight-up paid purchases - a massive percentage of the App Store’s revenue comes from in-app purchases in free-to-play games like Fortnite and Candy Crush and subscription apps like Netflix, Tinder, and YouTube. Probably one of the biggest contributors to Apple’s revenue is the massively popular App Store, which was estimated as of May 2018 to have seen upward of 170 billion downloads in its 10-year history. The App Store paid out $100 billion over a decade but every top grossing app on the platform is a subscription or a free-to-play game How Apple makes money: Subscription fees, carrier partnerships. The company offers free trials, and its service also comes bundled with some Verizon wireless plans.Īssuming all customers are paying $10 per month (with family plans, annual discounts, bundles, and student deals, they’re not, but this is ballpark numbers here), that puts Apple Music at a high-ball estimate of $6.7 billion per year brought in.Ĭost: $10 per month ($5 per month for student plans, $15 per month for family plans)
It’s unclear how many of Apple Music’s customers are actively paying. For comparison, Spotify had 96 million paid customers as of February 2019. The music subscription service had 56 million customers as of December 2018, according to the Financial Times. Photo by Amelia Holowaty Krales / The Verge Apple MusicĪpple Music is arguably the highest-profile entry in Apple’s new services business, due to it being one of the most modern (it launched in 2015, after Apple bought and rebranded Beats Music) and one of the most interesting (sorry, extended warranty programs). Last quarter saw a 19 percent increase year over year. Cook also said that Apple is on track to double its services business from 2016 to 2020.
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That new direction is going to be thrust into the spotlight next week at Apple’s “It’s Show Time” event, where the company is expected to unveil two big new subscription services: a TV service for original shows and movies, and an Apple News service that will bundle together premium news sources and magazines.Īpple’s services business brought in over $10.9 billion during the most recent quarter, setting records in “every geographic segment” in the process, according to Apple CEO Tim Cook. More than ever, Apple wants to sell people constant, ongoing subscriptions for things they can do on their phones. In recent years, iPhone sales have begun to plateau, and now Apple’s services business - which encompasses everything from the App Store to licensing deals - is being positioned as its next big frontier for revenue growth.
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