Apple Reverses Course On In-App Subscriptions

[MacRumors]

Apple has quietly changed its guidelines on the pricing of In-App Subscriptions on the App Store. There are no longer any requirements that a subscription be the "same price or less than it is offered outside the app". There are no longer any guidelines about price at all. Apple also removed the requirement that external subscriptions must be also offered as an in-app purchase.

Content providers may offer In-App subscriptions at whatever price they wish and they are not required to offer an in-app subscription simply because they sell a subscription outside the App Store as well.

This past February, Apple introduced App Store Subscriptions. This opened the door to a wide range of in-app subscription services such as magazines and newspapers. Just last month, Conde Nast rolled out iPad magazine subscriptions for a number of its periodicals.

When Apple rolled out the new subscription plan, however, it placed several requirements on app developers -- via the App Store Review Guidelines -- with regard to pricing of subscriptions. Enforcement of the new policies were to go into effect on June 30 of this year. By far the most controversial was section 11.13:

11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions. [Emphasis added]

Apple also emphasized these points in its press release announcing the In-App Subscription service. For publishers who choose to "sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app."

However, this left publishers with the requirement that App Store users be given the lowest possible pricing on all subscriptions. Just this week, the business newspaper the Financial Times dropped its iOS App in favor of a web app to give it more control over subscription pricing. The guidelines were also somewhat vague on whether companies like Netflix, Hulu or Rhapsody were required to implement an in-app purchasing mechanism and meet the pricing guidelines Apple put forth.

With the enforcement deadline looming, this week Apple introduced updated App Store Review Guidelines, of which MacRumors has obtained a copy. The corresponding 11.13 (now 11.14) section is significantly different:

11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app

The new section 11.14 states that apps can play content "subscribed to or purchased outside of the app" as long as the app doesn't include a way for users to go directly from the app to the outside purchasing mechanism. That is, these apps can't have a "buy" button that takes users to an external subscription page.

According to these new guidelines, existing subscription services such as Netflix may continue to function without offering in-app purchases. Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a premium to cover Apple's 30% cut for In-App Subscription payments.

This is a significant reversal from Apple's position in February, and it will have a major impact on the strategy of content providers regarding the App Store.

Thanks to Armin for the tip, and to Heise Online's Mac & i blog

Article Link: Apple Reverses Course On In-App Subscriptions

 

[Andy-V]

That seems about fair. It means Spotify etc can now just continue doing what they're doing and all they need to do is display a message rather than a link (they can even say go to spotify.com to buy, and it wouldn't infringe on those terms if it wasn't clickable).

 

[yetanotherdave]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3 like Mac OS X; en-us) AppleWebKit/534.32 (KHTML, like Gecko) Version/5.0.2 Mobile/8F190 Safari/6533.18.5)

Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.

 

[teme]

This is really good news. Content providers make iOS more attractive to customers, and that brings lot of value for Apple, even though they don't get their share of all possible subscriptions.

 

[iRobby]

I hope that now this brings MacLife and Macworld magazines to the iPad and iPhone Newsstand app.

 

[adrian.oconnor]

Smart move, not least of all because it's the Right Thing to do. I also wonder if they were breaking the law a little bit -- as far as I know, you can only dictate the 'minimum advertised price' -- forcing a retailer to sell at a particular price is illegal, and Apple were kind of coercing the publishers in to doing that.

 

[0dev]

Good, I don't see why they did this in the first place, but then, nothing Apple does with App Store guidelines make much sense anyway.

 

[marksman]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8G4 Safari/6533.18.5)

Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

 

[NightFox]

Glad Apple did the sensible thing now rather than stubbornly keep pushing this until they had done irreparable damage. There's a time to stick to your guns, and a time to realise you've got it wrong; it's the successful companies who get this judgement right. I wonder if the FT move was what finally pushed them to backtrack?

 

[cal6n]

Let's hope that they maintain their position regarding user-data, though.

 

[NightFox]

I hope that now this brings MacLife and Macworld magazines to the iPad and iPhone Newsstand app.

Yes, I'd love to get anything on my Newsstand app if only to avoid having that empty shelf icon just sitting there that I can't delete or even hide in a folder!

 

[pdurrant]

Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a 30% premium to cover Apple's usual cut for In-App Subscription payments.

43% premium, not 30%. Apple take 30% of the in-app price. So if an item is selling outside the app for $1, it would need to sell at $1.43 inside the app to return the same $1 to the developer. (30% of $1.43 = $0.43)

 

[pagansoul]

All I can say is WOW. I'm glad Apple was able to do a quick turn around. Some companies take years to reverse their rules even if they know something has to change. The company I used to work for took 2 years to amend a rule after they realized it was doing more harm than good.

 

[Kitman]

Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a 30% premium to cover Apple's usual cut for In-App Subscription payments.

The premium would need to be more like 43% to cover fully the 30% cut taken by Apple.

Just sayin'

Another mathematician - pdurrant - beat me to it!

 

[amorya]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8G4 Safari/6533.18.5)

Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

I'm fine for the market to decide this one. I didn't like Apple trying to enforce it, because there's some situations where people are reselling content and don't get to set the price.

 

[BLACKFRIDAY]

Looks like Apple takes care of everyone...

Still people bitch.

But good thing, Apple has realised this sooner than later.

 

[Northgrove]

Sounds good! In the country I live in, subscriptions haven't taken off at all, and I hope this will help nudge hesitant publishers in the right direction. It's a pretty major change of terms. I'd love to have a good choice of magazines to read on my iPad 2 that's still on its way to me (can't wait for the forthcoming week!).

 

[NightFox]

Can someone tell me - with in-app purchases, is Apple obliged under its own T&Cs to host the downloadable content as well as the app (at no additional charge to the developer)?

In other words, if Amazon did decide to meet Apple's original T&Cs to allow purchases through the iOS Kindle apps, would Apple have been obliged to host a copy of the entire Kindle library if Amazon had wanted them to?

 

[gnasher729]

The premium would need to be more like 43% to cover fully the 30% cut taken by Apple.

Just sayin'

Another mathematician - pdurrant - beat me to it!

On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again. More likely to give your app a minus five star rating (or the lowest rating possible) on the store before uninstalling it.

Smart move, not least of all because it's the Right Thing to do. I also wonder if they were breaking the law a little bit -- as far as I know, you can only dictate the 'minimum advertised price' -- forcing a retailer to sell at a particular price is illegal, and Apple were kind of coercing the publishers in to doing that.

Forcing a retailer to sell _your product_ at a particular price.

 

[ChristianVirtual]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)

Great news; i was worry about Kindle might move out.

 

[KnightWRX]

Great news if not for the new 1.14 section. Drop that and let the market decide if Apple's "30% credit card processing fee" is good or not. Still seems to me they are trying to cling to some shred of restrictions in-order to make their service viable. Try to let it stand on its own merit.

 

[Stella]

Congratulations Apple for doing the right thing. This will benefit the user. There's going to be a great deal more media content coming very soon!

If users want a cheaper price, subscribe outside the app - no big deal!

Can someone tell me - with in-app purchases, is Apple obliged under its own T&Cs to host the downloadable content as well as the app (at no additional charge to the developer)?

In other words, if Amazon did decide to meet Apple's original T&Cs to allow purchases through the iOS Kindle apps, would Apple have been obliged to host a copy of the entire Kindle library if Amazon had wanted them to?

Subscription content never touched apple's servers, so I would guess "No". Only the application was hosted by Apple.

 

[foidulus]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3 like Mac OS X; en-us) AppleWebKit/534.32 (KHTML, like Gecko) Version/5.0.2 Mobile/8F190 Safari/6533.18.5)

Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.

My guess is that even if Apple forces them too, they can just add a button that says "My Kindle Account" or something like that which will take them to an account page, and from there amazon may offer helpful suggestions on which books to buy.

 

[The Phazer]

Not being able to link to the other store is still amazingly clunky and wrong (why does Apple of all people want to insist on **** UX just to be anti-competitive? It doesn't just work.), but otherwise this is good news - the terms as was were clearly a breach of anti-trust in Europe and morally indefensible.

Phazer

 

[Optimus Frag]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)

Common sense has prevailed.

It does happen from time to time.