Technology giant Apple has decided to allow the purchase of non-fungible tokens (NFTs) in its curated App Store. This is potentially a strong move toward a verified, trustworthy primary market for blockchain assets.
Importantly however, the company will require app makers to sell NFTs through in-app purchases, incurring a 30% commission payable to Apple for each transaction. As a result, some startups may instead limit their app functionality and prevent NFT purchases when listing on the App store (as OpenSea does), thereby avoiding Apple’s fees and choosing to opt-out of a potentially significant revenue stream.
Apple’s 30% Cut Out of Line With Crypto
Apple’s 30% commission seems unbelievable to many projects, apps and game owners — and they are not alone. The debate about App Store fees has raged since Fortnite had their leading-edge Web2 game removed from the App Store in 2020 in response to its efforts to circumvent Apple’s commission.
For reference, marketplaces like OpenSea and Magic Eden take less than 3% commission. These fees have sparked debate in the NFT space about how much collectors and creators should be asked to pay in a decentralised ecosystem.
An additional concern is that Apple does not currently accept cryptocurrency as a payment method. Startups that choose to use the App Store as a source of revenue will be forced to accept fiat payments. This could limit the potential customer base for some apps, as many people who use cryptocurrency are early adopters who may want to maintain a clear separation between their assets and their everyday spending.
A Potentially Huge Audience
At the same time, this move by Apple could legitimise NFTs and blockchain assets in the eyes of mainstream users. The App Store is a well-established platform with a large user base. Although the App Store includes leading crypto apps like Trust, Rainbow, Metamask, Coinbase and other crypto wallets or exchanges, their clarification about in-app purchases represents the company’s first tacit approval of the digital asset economy.
There are approximately 3.59 million apps and 984,000 games on Apple’s App Store and according to reports, iOS app revenue was US$69.7 billion in 2021, a 19% year-on-year increase. Even considering the 30% platform fees, these numbers are enormous. Having marketplace options on the App Store could dramatically increase the market of crypto artists and collectors. Any crypto entrepreneur who wants to release an NFT game or collectible to a sizeable new community will be able to do so through a channel that appeals to a mass audience.
For now, it’s unknown whether Apple will ever enter the token, crypto or metaverse space. While the broader crypto market is significantly down from its November high, NFTs have continued to surprise to the upside. In any event, Apple seems to be at least passively opposed to cryptocurrencies or the time being, with no interest in expanding payment options to include crypto — but time will tell.