We tend to give much thought to the app stores run by Apple and Google for their mobile platforms, but we overlook one aspect of their "tax" collections: Such an arrangement provides incentive for ad-supported apps. I'm concerned about that incentive.
Let's consider the two scenarios:
In both scenarios, I build an app, and release it on the Apple app store and the Google app store. (Or perhaps only one store. It doesn't matter for this discussion.)
In the first scenario, there are no ads in the app. I expect to get revenue from sales of the app, possible subscriptions.
Of course, I will have to pay the Apple and Google taxes for hosting my apps in their stores. If I sell an annual subscription for US$20, Apple and Google will take, say, 15% of that, or $3.
Now let's look at the second possibility: A free app, supported by advertisements.
I build my app and submit it to Apple's store and Google's store, and they host it. Since it is a free app, anyone can download it, and I pay no tax to either Apple or Google.
There are ads, and I get revenue from the advertisements. But none of that revenue is taxed by Apple or Google. I keep all of that revenue.
As I see it, that is a powerful incentive for me to create an ad-driven app. This is something that I have not seen discussed anywhere.
Is that a good thing? It may be. Or it may be a bad thing.
Ad revenue is not as predictable as subscription revenue, which means that my finances are less predictable.
Ad revenue changes the customer of an app. The customer of a paid-for app is the user, the person who downloads and installs the app. With an ad-supported app, the customer is not the user, but the entity paying for advertisements. That's a big difference.
Do advertisers have say in the design of apps? Do they influence the look and feel? Do they request specific features? Or the removal of certain features?
I don't know the answers to these questions, which disturbs me.
I don't see anyone talking about this issue either, and that disturbs me more.
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