I got an email from the iTunes Affiliate program at Apple today. It announced a great new website for ease of creating affiliate links. It closed out with the unapologetic statement that, by the way, the standard 7% earnings on app sales will be 2.5% starting May 1st.
First off, if you’re not familiar with affiliate linking, it’s when you add a code to a link to a product that gives you a commission on the sale. It cost nothing for the user who clicks it, and it serves as a way to encourage people to send others to buy the product. In most cases (and in the case of iTunes), the user doesn’t have to purchase the product they clicked into; anything they purchase from the company within a set timeframe will earn you a commission.
I use affiliate links on everything. I’ve built many tools, including SearchLink to make this easy, and it generates a small portion of my monthly income. Not a lot, but it’s enough to notice. On an average month, I’ll make about $200. With this cut, that same amount of traffic will bring me about $75 dollars. A popular post written for MacStories can earn me $200 in affiliate sales on its own. Again, that’s now $75. And the average post, even with MacStories traffic, earns $20 to $30… which is now $10 or less. It’s a drastic cut to mention in passing just one week before it takes effect.
Most people don’t make significant income off affiliate linking, but it doesn’t cost the writer anything and it earns something. But there are many sites whose business model is built on affiliate linking, in part or in whole. And it works. Well, it used to.
Talking with John Voorhees, an active MacStories contributor and creator of Blink, an iOS app specifically for creating iTunes affiliate links, we pondered possible reasons for this cut and its potential fallout. My best guess is this: Apple hosts a lot of free apps. They don’t make much of a cut on things that don’t cost money. But, if someone clicks in for a free app from an affiliate link, they still have to pay a commission on everything else that user buys before the link’s timeframe runs out. The link still brought them sales, though, and they’re only paying out on things they make money on. It’s a bit mysterious to me.
I can only assume that the investment isn’t paying off enough to continue at the 7% level. Plus, people using affiliate links aren’t spending anything to do so, so even a huge cut like this probably won’t cause any of us to stop doing it. Apple really doesn’t stand to lose traffic on this, only save money. I don’t love the idea, but it’s a winning proposition for Apple.
I doubt there’s a real lack of traffic to the App Stores in general, or that affiliate links count for a significant portion of traffic that otherwise wouldn’t be going to the App Store. What’s curious to me is that the cut applies only to apps, not to Music or Books, or anything else you can purchase through iTunes. It’s possible that this announcement is indicative of a further shift in the App Store business model, but I’m not going to speculate further without more information.
I’m guessing some sites you read are going to be showing you a few more ads. Some may shut down completely. I won’t be one of them, but I’ll be going out to eat less often until I replace the revenue.