Google Android Newsstand May Lift Developer Revenue
To boost the appeal of tablets and win friends among news publishers, Google may be ready to take less revenue from the sale of Android apps.
In a bid to woo publishers to a forthcoming digital newsstand, Google is said to be ready to reduce the share of revenue it collects from the sale of Android apps.
Google recently broadened its competitive front against Apple and Amazon with the launch of Google eBooks. Apple launched its iBookstore last spring; Amazon has been selling its Kindle e-book reader since late 2007.
But Google eBooks remains a sideshow in the company's larger effort to establish Android as the dominant mobile development platform. According to data released on Monday by Nielsen, Android has become the most popular smartphone operating system in the past six months and is approaching Apple's iPhone in terms of overall consumer market share.
With Android set to power a new wave of tablets, many of which will be announced at CES later this week, Google hopes to encourage news publishers to participate in a digital news showcase for Android devices. According to a report in the Wall Street Journal, Google wants to improve news reading on Android devices and is prepared to offer better financial terms and access to data derived from app sales.
Presently, Amazon, Apple, and Google offer 70% of revenue from the sale of apps or digital news content and keep 30% for themselves. The Wall Street Journal says that Google has proposed taking a smaller percentage of revenue and providing customer data about app buyers. Lack of access to this data remains a significant gripe among large content providers and developers.
It's not clear whether Google intends to offers a greater share of revenue all developers selling apps in the Android Market or only select news publishing partners, if the deal happens at all.
Al Hilwa, program director for applications development software at IDC, says that Google could be focusing on news publishers as a way to dispel some of the ill-will that has arisen over Google News, which some publishers continue to see as doing more harm than good.
"For tablets, e-book reading and magazine reading are going to be very important," he said.
A spokesperson for Google declined to comment, citing a policy of not responding to reports the company deems to be rumor or speculation.
But if Google goes through with this reported plan and offers Android developers a better deal, Amazon and Apple would likely feel pressure to reduce the percentage of revenue they collect in their respective online stores.
"Looking at the growth trajectories of these markets," said Hilwa, "I wouldn't conclude that the Android Market needs a lot of goosing to grow."
However, says Hilwa, Google has to be concerned with competing Android stores. And, he says, there's definitely a feeling among developers that Google's 30% fee is too high. While pretty much any developer would welcome a larger portion of revenue from app sales, this feeling is particularly acute among Android developers because Google's review system is automated. Google doesn't employ an army of app reviewers like the iTunes App Store and thus has less justification for taking almost a third of app sales revenue.
Hilwa suggests that rather than taking less revenue, Google might be better off using the revenue it collects from app sales to improve app quality. "I would prefer to see Google up its level of scrutiny rather than cut the percentage," he said.
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