Monday, February 16, 2009

Google Expects A Piece Of The Paid App Pie

Late last week Google announced the opening of the Android Market to paid applications. Starting some time this week we should see developers offering their paid apps for sale for consumers here in the states. However Google isn't offering up there services for free, no Google will take a hefty 30 percent cut on the sales.

Google has said Google Checkout will serve as the only payment and billing mechanism for Android Market. But while Google Checkout typically charges sellers just 2 percent of the sales price they have bumped their fees to a 30 percent transaction fee for the Android Market. While it wasn't clear why they chose 30% the fee is inline with that which Apple charges for inclusion of Apps into the iPhone App store.

According to statements made to Google says the company "does not make money" from its application store. "Developers will get 70 percent of the revenue from each purchase and the remaining amount goes to carriers and billing settlement fees," a Google spokesperson said in a statement to "We believe this revenue model creates a fair and positive experience for users, developers and carriers."

It would seem as there is some disparity in the statements. As it stands Apple makes a ton of money from their 30% cut from iPhone apps, so it would be safe to assume so would Google. At least once the Android Market takes off and starts selling. Apple of course has reached the 20,000 apps milestone with more than 500 million downloads so they have a bit of a head start.

Google has always been fairly transparent on the fees they were charging. So the 70/30 split really doesn't come as a surprise. The one question was really why they choose 30%. Apple holds a monopoly on the App Store therefore they also hold developers hostage to any fees they want. Google doesn't need to do so, and really shouldn't. If the fees actually go straight to carriers and other things that's great, if not then you are charging 30% for what?

As Desmond, a respondent at Wired wrote:

Unlike Apple, it would be really nice if Google were to EARN their 30% by doing what Apple clearly doesn't, making sure apps aren't buggy pieces of S**T. I don't mind paying the 30% premium, I DO mind paying a premium for absolutely no added value. To Google and Palm; Earn your percentage, Put Apple to shame, check apps for bugs before letting them into your market..

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