Apple Reverses Course On In-App Subscriptions

Reasonable but what else is in the agreement?

This is a good compromise. Vendors cannot use any in-app purchase features (Apple's or a vendor specific mechanism) without giving Apple their cut.

The issue for vendors is then is the premium charged by Apple.

BTW, to all mathematicians, the premium really IS about 30% and not 43%. Why? Because out of the $1 you're charging today, about 5% plus some per transaction fee is going to Visa/Mastercard and the secure payment vendor you are already using. That is, part of Apple's 30% take includes what you are already paying out for this similar financial service. So it is 30% - 5% that Apple gets.

So $1 / .75 = $1.33.

If the per transaction fee raises your current charges to 7%, we get $1 / .77 = $1.299. In any case, the premium is really significantly less then 43%.

We're seeing again and again that Android is keeping Apple honest, so to speak.

Remember Vic Gundotra's "draconian future" remark at Google I/O? Although overly dramatic, situations like this is what he was talking about.

Apple is a great number 2 and a pretty horrible number 1.

waldobushman said:

This is a good compromise. Vendors cannot use any in-app purchase features (Apple's or a vendor specific mechanism) without giving Apple their cut.

The issue for vendors is then is the premium charged by Apple.

BTW, to all mathematicians, the premium really IS about 30% and not 43%. Why? Because out of the $1 you're charging today, about 5% plus some per transaction fee is going to Visa/Mastercard and the secure payment vendor you are already using. That is, part of Apple's 30% take includes what you are already paying out for this similar financial service. So it is 30% - 5% that Apple gets.

So $1 / .75 = $1.33.

If the per transaction fee raises your current charges to 7%, we get $1 / .77 = $1.299. In any case, the premium is really significantly less then 43%.

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Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

I wonder if these changes will help BeamItDown Software stay in business with iFlow Reader. I have never used the product, but as a fellow small business owner, I hate seeing other small businesses close their doors.

The Phazer said:

IMO the threat of regulatory action is unquestionably why Apple have rowed back.

Phazer

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That could be, but there has yet to be any formal investigations launched, and there was a threat of investigation over Apple's flash exclusion policies, but they didn't budge on that one. I think if Apple was still convinced that this was a viable model, they would have waited for an investigation to materialize and addressed it then.

Glad to see some flexibility on this. It would suck to see the app store start to show some cracks and have developers walk away.

guess i don't have to look for a cheap android tablet now just in case i needed a way to read kindle books

samcraig said:

Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

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I think that it is misdirected to imply that Apple's 30% cut is simply a credit card transaction fee, they are charging developers for providing them with easy access to millions of impulsive customers.

LOL! I love all the comments from people that have NO CLUE as to how publishing works and have no value for the power of the channel.

First... this is great that Apple modified it's agreement. They needed to.

Second. The 30% is again a none issue. It's reasonable given they offer the largest single installed base of customers - especially when it comes to tablets.

Third... people keep acting like this all defined and Apple is just being chuckle heads. But keep in mind, this is not all business as usual. It's all new. A new market and new distribution opportunity that has no rules - no proven business model - and no, free with no advertising is not a business model that works. Publishers are trying things, Amazon is trying things and Apple is trying things all with the goal of finding the final common ground. But as we can see from the history of music, it's going to take a few years to pan out.

This is all good news and will open the door for more publishers to buy in. Good move on Apple to adapt and change.

Apple should see little change in sales commissions since many users will be more than happy to pay an extra 30% to be able to install the software on all their computers from the App Store.

Popeye206 said:

Second. The 30% is again a none issue. It's reasonable given they offer the largest single installed base of customers - especially when it comes to tablets.

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The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

MacObsessed said:

I think that it is misdirected to imply that Apple's 30% cut is simply a credit card transaction fee, they are charging developers for providing them with easy access to millions of impulsive customers.

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I never suggested it was. I think the CC fee Apple is charged is 'relevant' in the accounting aspect. But in terms of their 30% take - has very little impact. There's a difference between the cost of doing business and the infrastructure built. the CC fees are a given to Apple. The 30% is to pay for the infrastructure, human resources and profit.

0dev said:

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.

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Ha ha. They WANTED THE MONEY. But the economics of publishing simply won't support their former approach.

yetanotherdave said:

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.

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Or remove the entire store experience if their app currently has that, or perhaps just remove the "buy" buttons. This could be more involved than it sounds, as it would probably require a little more design than just pulling out a button / list.

What about buttons for obtaining previews of books though, is that allowed? Additionally, how do you inform a user they cannot purchase in-app any longer (if you don't yet have support of IAP; eg; large catalog of items, different price points, etc...), are you allowed to display a message indicating a user needs to go to your website to purchase content? I thought previously this was frowned upon and has had the odd app rejected for doing so.

samcraig said:

The 30% is to pay for the infrastructure, human resources and profit.

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In a 1%, 1% and 98% distribution ? Because 30% is quite a hefty fee for simply processing a payment.

Quiet out = Quiet in!

Apple should say it clearly and loudly that they will not bring this rule back anymore.

As long as they do not do that and perform a kind of "hush hush" move - I would not trust them, they might bring the thing back just as well in a year or two when content providers and users are hooked.

marksman said:

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.

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Why?
Aren't Apple users in general willing to pay more for the better user experience?
Doesn't an iOS app deliver a better user experience?

The Phazer said:

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

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This.

A good change in the right direction.

Good to see common sense has prevailed eventually, although a (very) cynical view would be to say Apple have done this to get rid of external "buy" buttons without causing complaints:
If they'd just announced they were banning "buy" buttons that took you to external websites, there would have been an outcry from everyone similar to what there was with the original announcement. However, by doing what they've done they got the initial outcry but have seemingly now backed down, leaving people are happy with the new, apparently relaxed, requirements that include the removal of the buy buttons...

KnightWRX said:

The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

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Sorry... wrong. They are WAY more than payment processing. iTunes and the new Newstand is a channel. It's easy access to millions of potential customers and that is worth the 30%.

newagemac said:

Yay! Now they get to charge us higher prices on our mobile devices! Big win for consumers!

/sarcasm

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Because they were going to absorb the 30% AppleTax and not charge us more to cover it?

I wonder if this has anything to do with the Lodsys issue. Seems interesting to me that they changed the rules so soon after the lawsuits started.

KnightWRX said:

In a 1%, 1% and 98% distribution ? Because 30% is quite a hefty fee for simply processing a payment.

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LOL! Again... you do realize Apple is not a Bank? They too have the pay credit card processing fee's when a transaction is done. Visa, Mastercard, AMEX all get their cut along with the actual processor that Apple uses.

Again... It's called Channel. That is what the 30% is for. It's just like the margin the book stores take when they sell a magazine or book.

If you don't understand how things are sold, you should educate yourself before going on about things you don't know.

Glad Apple finally decided to do the right thing on this one, but I'm still going to be annoyed when they force Amazon to remove the link to the Kindle Store from the Kindle App. I guess I'll just have to bookmark it in Mobile Safari. Maybe I'll make a homescreen icon to the Kindle Store and put it in my books folder right next to the Kindle App.