iPhone App Store Revenue Split

Last week Apple released a BETA version of the iPhone Software Development Kit. They also announced the iPhone Apps Store. Users will be able to download applications through iTunes on their Mac or PC. Applications can also be downloaded directly from the iPhone or iPod Touch too.

This essentially makes Apple the gatekeeper. There are pros and cons to this but what I really want to talk about is the revenue split for developers.

Apple will test and approve applications before they appear in the Apps Store. They will also host these applications. For this service and for being the platform holder, Apple is taking a 70/30 split. 70% of revenue goes to the developer and 30% of the revenue goes to Apple.

For Apple this means bucket loads of cash in their coffers every single quarter. They have a vested interest in having as many apps sold on their platform as possible.

What does this mean for the developer though? Currently games sell for $5.99 on iTunes. This means $4.20 goes straight to the developer.

Guy Kawasaki interviewed Steve Ballmer the day of the announcement at MIX08.  Ballmer claimed that the 70/30 revenue split was too high.  That’s a fairly hypocritical thing to say.  Recently, Kotaku broke the story that Microsoft halved royalties for games on XBox Live Arcade.  The revenue split they mention is 35/65.  Everyone that I spoke with at GDC actually said that number was more like 30/70.

Let me restate that to be clear:  Microsoft is taking 65-70% of revenue for each item sold on XBLA.

Pot, kettle, black Mr Ballmer.  Pot, kettle, black.