Google Apps Marketplace Sales Commissions on the Horizon
Google in the coming months will begin taking a cut from sales on its Apps Marketplace, where external developers currently pocket all revenue from sales of their applications.
Fri, September 17, 2010
IDG News Service — Google (GOOG) in the coming months will begin taking a cut from sales on its Apps Marketplace, where external developers currently pocket all revenue from sales of their applications.
Google, which launched the Apps Marketplace about six months ago, has said all along that it intends to charge developers a 20 percent commission. However, the billing API (application programming interface) required isn't yet ready.
Google plans to release the API, which is based on the Google Checkout e-payment system, to U.S. developers in the last quarter of this year, and afterwards start to roll it out abroad, the company said Thursday, in its latest update about this topic.
Developers will have to start paying commissions three months after Google releases the API in the country where they are based, the company said.
The Checkout API will have to accommodate the various ways in which software-as-a-service (SaaS) vendors sell their cloud-based applications, said Chuck Dietrich, CEO of SlideRocket, a Marketplace vendor that sells an application for making presentations.
"Billing integration is especially difficult because of the permutations of how companies like SlideRocket and many others can vary in how we package, price and bill for our services," Dietrich said. For instance, vendors may charge based on one-time sales, monthly or annual subscriptions, and usage-based and user-based models.
Google has stated previously that its 20 percent commission applies to the total revenue that a Marketplace vendor obtains from their customers over the duration of their relationship. So for example, if a customer signs up for a free trial and later upgrades to a fee-based plan, the vendor would at that moment pay Google a commission, and any time after that when the customer makes other payments.
"My desire and hope, and I’m sure it’s also Google’s ambition, is that Google makes a billing system that can handle the permutations because if not, vendors would have to conform how they package, price and sell their products based on the limitations of the billing system," Dietrich said.
Regarding the 20 percent size of the commission, Dietrich said SlideRocket finds it a good deal, considering the visibility its application gets in the Marketplace and the ease with which the millions of Google Apps customers can install Marketplace applications.
"Looking at the economics of our cost of sales, that’s a great opportunity for vendors like SlideRocket and others in the Marketplace," he said.
In addition to being an e-store, the Marketplace is a technology platform designed to let developers integrate their applications in various ways with the Google Apps suite.
For example, Marketplace applications can be integrated with Google Apps to share a single sign-on and common user interface navigation, as well as to exchange and synchronize data.
In that way, the Marketplace has been conceived as a store that contains complementary, cloud-hosted applications and tools that have been pre-integrated with Google Apps.
The roughly 200 applications currently available in the Marketplace include CRM (customer relationship management), accounting and project management software.