Fees applied by distribution platforms to transactions by developers and content providers

The rise of digital platforms has changed the way we consume and distribute products and services in a great number of industries. In particular, since the introduction of mobile apps and app stores in the late 2000s and the spread of connected devices, platforms help distribute products, apps and digital content on a wide range of devices. This report presents a benchmark of fees applied by selected app and content distribution platforms to developers and content providers. It recalls the importance of considering the role of the two-sided nature of these platforms, the services they provide and the different criteria they use to set their fees when doing a comparative analysis.

Our benchmark study does not purport to be exhaustive. However, we believe it provides a rigorous overview of fees and services of selected platforms from public sources. It comprises a sample of well- known app stores, consoles and digital content platforms. It is the result of our best efforts to study the existing public information of relevance to our report.

Our research presents different types and levels of distribution fees applicable to transactions of developers and content providers and highlights the following aspects:

• Economic literature analyzes platforms under the concept of “two-sided markets”¹ and refers to them as “two- sided platforms”, where network effects play a significant role: the utility of users on one side of the platform depends, in part, on the number of participants on the other side of the platform.
• The success and sustainability of two- sided platforms depend on their ability to attract users and generate benefits for both sides of the platform. Appropriate pricing mechanisms are necessary to incentivize investment and sustain these benefits.
• Platforms use different pricing strategies, usually applying two types of fees: registration and service fees (hereafter together referred to as “distribution fees”).
• The analysis of distribution fees should take into consideration that, on top of distribution services, platforms can invest to provide different types and levels of services to users on both sides of the platform, such as security, development/ Samsung Galaxy Store Sony PlayStation Soundcloud Spotify Steam performance/marketing tools, technical support, and billing/payment systems². Some platforms may also use these fees to help support the broader ecosystems in which they operate.

The main benchmark results can be summarized as follows:

Registration fees

Our research identified registration fee information for 9 out of 19 platforms. Among them, the majority apply a registration fee (including Apple App Store, Google Play Store, Microsoft Store, Microsoft Xbox, Soundcloud and Steam).

• One-off payment: Google Play Store applies a one-off registration fee of $25 per developer, while Microsoft Store and Xbox both apply a $19 one-off fee for individuals and a $99 one-off fee for companies. Steam applies $100 each time the developer wishes to distribute a new app (recoupable after the product makes at least $1,000.00 Adjusted Gross Revenue for Steam Store or in-app purchases).
• Recurring payments: Apple App Store charges $99 per year per developer, Soundcloud offers free registration, or charges between €2.5 and €5.5 per month depending on the program (i.e. €30 and €66 per year, respectively).

Service fees

Services fees vary from 5% to 80% of developer and/ or content provider revenues. Platforms generally charge different levels of service fees, depending mainly on the content type, developer’s revenues, exclusivity of content, the use of developer’s own or third-party billing/ payment systems and the developer’s monetization strategy. A single platform can apply between one and five distinct service fees.

Out of the 19 platforms studied, 68% apply a 30% service fee.3 Four apply a single 30% rate to all content providers (Deezer, Nintendo Switch, Samsung Galaxy Store and Sony PlayStation), while the others additionally apply lower or higher rates depending on the different criteria mentioned above (e.g., the developer’s revenues, monetization strategy, or billing/ payment system).

At the lower end of the spectrum, some platforms have service fee offerings below or equal to 15% (Apple App Store, Epic Games Store, Google Play Store, Microsoft Store and Xbox and ONE Store). ONE Store and Google Play can apply service fees as low as 5% to 10%.

At the higher end of the spectrum, a few platforms charge service fees greater than or equal to 50% (Amazon Prime Video Direct, Audible, Kindle Direct Publishing, Kobo and ONE Store). Audible and Kobo charge the highest service fees, between 75% and 80%, depending on the specificities of the content/apps. 
 

¹ Economists generally consider a two-sided market to be “one in which at least two distinct sets of agents (or sides) interact through an intermediary – the platform– and in which the behavior of each set of agents directly impacts the utility, or the profit, of the other set of agents”. See Jullien et al. (2021).

² The term “billing/payment systems” used throughout this study captures the fact that platforms use different terminology when referring to services to help facilitate transactions. For example, some platforms may refer to an integrated billing system that supports various forms of payment and offers billing-related services (e.g., centralized tracking of transaction history, a process for issuing refunds, etc.). Other platforms may refer to payment management while providing users with a list of acceptable forms of payment.