Last year, Microsoft had announced about its new revenue split figures at the Build 2018. The new policy was expected to be rolled out by the end of 2018. However, it was actually two days ago that the team at Microsoft Store updated its App Developer Agreement (ADA) which is the revenue sharing agreement. The consumer app developers will now benefit by earning up to 95 percent cut of the revenue on app sales excluding games, and an 85 percent cut on the low end.
This 95 percent share can be earned only when a customer uses a deep link (tracked by CID (Connection ID)) to purchase the app. In case the customers are directed by Microsoft to their app through a collection or “any other owned Microsoft properties (tracked by an OCID),” then developers will get an 85 percent share. This policy for the fee structure is effective for purchases on Windows Mixed Reality, Windows phone, Windows 10 PCs, and Surface Hub. The policy excludes purchases made on Xbox consoles.
If there is no CID or OCID attributed to purchase, then in the case of a web search, customers will get 95 percent revenue.
Few Hacker news users have appreciated this new revenue split policy as according to them the company has made a fair move. One user commented on HackerNews, “It seems like a reasonable shifting of costs. If you rely mostly on Microsoft for acquiring new customers, then Microsoft should get a little bit more of a cut, and if you rely mostly on your own marketing methods, then it should get less.” Another comment reads, “It’s an insanely good deal. MSFT has to be losing money on that.”
According to a few others, there is also a benefit of organic search here. As app stores don’t usually have much of organic search going on. This move might result in the company getting a better idea on the organic search being done on their store. Also, the 5%-15% cut is an add on.
According to a few users, it is equally beneficial for Microsoft as the company earns a cut as well. A comment reads, “Like all digital goods, the marginal cost of MSFT doing this is zero. I don’t think they are losing money on this, in terms of pure margins, it’s probably quite lucrative (though in absolute revenue, maybe not so much).” Another comment reads, “I actually think this is a brilliant insight on the side of Microsoft, by inverting this model they get a non-zero slice of a pie they previously did not have.”
This may have an effect on how other tech companies and developers function. Other companies may possibly get pressurized by Microsoft’s move considering the company has significantly gained the confidence of developers.
To know more about this news, check out Microsoft’s blog post.