Apple Debuts App Store Subscriptions

[MacRumors]

Apple today announced the debut of subscriptions for the App Store, opening the door for developers offering a wide range of content, including magazines, newspapers, music, and video, to use the same recurring billing mechanism introduced earlier this month with The Daily.

Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.

Answering questions about whether content may also be offered outside of the in-app purchasing mechanism, Apple CEO notes that publishers are free to offer content outside of the application but that the same or better offer must also be available within the application.

"Our philosophy is simple - when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Steve Jobs, Apple's CEO. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."

Apple of course expects that many customers will want to utilize the in-app mechanism for ease of activation and simple direct billing to their iTunes Store accounts. Content providers will of course prefer that customers use external subscriptions so as to not have to send 30% of their revenue to Apple.

The announcement offers no word on the release of iOS 4.3, which developers have indicated contains the API hooks required for in-app subscriptions.

Article Link: Apple Debuts App Store Subscriptions

 

[NebulaClash]

"All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app."

Left unsaid but implied is that a one-click button is so much easier than going to a web site, most people will just click the button. Publishers know this and that is why they are resisting. Equal placement will not result in equal results.

 

[Andronicus]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

Seems fair. Or fair enough.

 

[BornAgainMac]

So 4.3 is going to be available sometime today?

 

[thetexan]

Of course by Apple keeping 30% for this model when all they did was billing, it will drive publishers away from the iOS platform. Lets take the Amazon Kindle app for example. If you buy a book on there now, Amazon "owns" the rights to sell you the book, Amazon owns the servers that send you the book, Amazon owns the infrastructure that syncs your book with other Kindle devices, and so forth. Apple has no part in the process, so 30% is not cheap by any means.

If all Apple is doing is the billing, then that 30% should be a lot lower.

We will never know what might have come to the iOS platform but I guarantee you a bean counter somewhere will be saying no to this obscene pricing.

 

[TheSlush]

Another piece of the puzzle in place for the iPad to have an impact on the future of publishing. (I had originally expected Apple would have launched the iPad with this mechanism, but it apparently took some time to figure out.)

 

[JonHimself]

So I always thought the supposed complaints from publishers saying that Apple would force them to charge existing subscribers (physical copy) additional charges for the digitial version was just a PR move. I think they assumed Apple would only allow for the 70/30 split on subs and that would allow them to appear to be fighting for the customer who (likely) complain about having to pay MORE money ontop of their physical subscription fees.
Now that Apple has said to providers that they can provide the digital versions for free OR charge them outside of the App Store (as long as they provide the same price in-app) it will be interesting to see how many providers follow through with providing free access to existing subscribers. They can't blame Apple anymore. Maybe I'm too jaded but it just seemed like the content providers assumed they could push the blame of double-charging on Apple.

 

[ghostface147]

So 4.3 is going to be available sometime today?

So yeah, that's what I am thinking.

 

[talkingfuture]

This makes a lot of the magazines I have looked at more viable as paper replacements, as long as the developers decide to offer a subscription anyway.

 

[Eddyisgreat]

Do'h I though "App Store Subscriptions" meant unlimited Applications for one low monthly fee

 

[NoExpectations]

Does that mean iOS 4.3 arrives today? It's a Tuesday.....makes sense to me.

 

[Farplaner]

Well, there goes the theory (from previous threads) that the app publishers can simply raise the price of the in-app subscription to offset the 30% apple tax...

 

[newagemac]

Of course by Apple keeping 30% for this model when all they did was billing, it will drive publishers away from the iOS platform. Lets take the Amazon Kindle app for example. If you buy a book on there now, Amazon "owns" the rights to sell you the book, Amazon owns the servers that send you the book, Amazon owns the infrastructure that syncs your book with other Kindle devices, and so forth. Apple has no part in the process, so 30% is not cheap by any means.

If all Apple is doing is the billing, then that 30% should be a lot lower.

We will never know what might have come to the iOS platform but I guarantee you a bean counter somewhere will be saying no to this obscene pricing.

I don't see current app developers complaining about the 30%. The reality is the App Store is much more than just "billing". It's a retail store similar to Walmart and the profit you are giving up is similar. And it's most important function is the marketing (and sales) it provides. Calling Apple's App Store just a billing solution for software developers and magazine publishers is like calling Walmart or Barnes and Nobles just a "billing" solution for software developers and magazine publishers.

 

[Richard1028]

Do'h I though "App Store Subscriptions" meant unlimited Applications for one low monthly fee

Read the article. It's up to the publisher to decide your subscription frequency. Why would you expect it to be monthly?

Edit: Never mind. I think you're making a funny.

 

[The Toddfather]

Of course by Apple keeping 30% for this model when all they did was billing, it will drive publishers away from the iOS platform. Lets take the Amazon Kindle app for example. If you buy a book on there now, Amazon "owns" the rights to sell you the book, Amazon owns the servers that send you the book, Amazon owns the infrastructure that syncs your book with other Kindle devices, and so forth. Apple has no part in the process, so 30% is not cheap by any means.

If all Apple is doing is the billing, then that 30% should be a lot lower.

We will never know what might have come to the iOS platform but I guarantee you a bean counter somewhere will be saying no to this obscene pricing.

Isn't their entire business model based on 30%? iTunes is only the most successful music/app retailer ever, but I'm sure you are correct and they are going to fail.

 

[ovrlrd]

Left unsaid but implied is that a one-click button is so much easier than going to a web site, most people will just click the button. Publishers know this and that is why they are resisting. Equal placement will not result in equal results.

Yes but it isn't exactly fair to the customer that the publisher fight this kind of thing. All the customer wants to do is easily subscribe. If they are already subscribed through the publisher using some method outside the app, then the publisher can give those people subscriptions inside of the app as well. Basically no matter what way you look at it, the publisher is made out to be the evil one by not supporting in-app subscriptions.

 

[kenypowa]

I don't see current app developers complaining about the 30%. The reality is the App Store is much more than just "billing". It's a retail store similar to Walmart and the profit you are giving up is similar. And it's most important function is the marketing (and sales) it provides. Calling Apple's App Store just a billing solution for software developers and magazine publishers is like calling Walmart or Barnes and Nobles just a "billing" solution for software developers and magazine publishers.

Can you imagine VISA or Mastercard charge 30% processing fees to its merchants?

 

[The Phazer]

Well, there goes the theory (from previous threads) that the app publishers can simply raise the price of the in-app subscription to offset the 30% apple tax...

Yup. One important thing to remember is that e-bookstores generally have a 30% margin - the rest goes to the publisher, and that % is set down in stone. If Apple take 30%, then after admin costs a e-bookstore will lose money on every single transaction via in-app purchases.

Does this now mean Netflix will have to offer this? Because they will unquestionably withdraw from the platform in that case (as will Sky in the UK)?

This is the biggest disaster ever to hit iOS. It's a greedy, stupid move, and it's inevitably going to lead to huge regulatory trouble which will cost Apple billions of dollars. Whichever idiot approved it needs to be out of the door, even if it's Jobs.

Phazer

 

[DrFreeman]

Of course by Apple keeping 30% for this model when all they did was billing, it will drive publishers away from the iOS platform. Lets take the Amazon Kindle app for example. If you buy a book on there now, Amazon "owns" the rights to sell you the book, Amazon owns the servers that send you the book, Amazon owns the infrastructure that syncs your book with other Kindle devices, and so forth. Apple has no part in the process, so 30% is not cheap by any means.

If all Apple is doing is the billing, then that 30% should be a lot lower.

We will never know what might have come to the iOS platform but I guarantee you a bean counter somewhere will be saying no to this obscene pricing.

I think Apple plays a part in the process by actually designing the device to which the product is delivered!

Also if the person buys it direct from the publisher, then the 30% goes to the publisher not Apple.

However 30% seems a bit high. I think something along the line of 15% seems more fair.

 

[JonHimself]

Well, there goes the theory (from previous threads) that the app publishers can simply raise the price of the in-app subscription to offset the 30% apple tax...

It sounds like they will be able to avoid the "apple tax" by providing the subscription on their own website and take 100%. All they have to do is allow people the option of subscribing from within the app.
From my perspective, the ability to manage all of my subscriptions from within itunes/my itunes account will likely drive me to choose the in-app subscription instead of doing it outside of the Apple store and I assume that most people will choose in-app because it probably will be easier (one button vs signing up/creating an account on another website) which is unfortunate for the content providers.
Having said that, if I'm a content publisher I have to wonder how many people would not subscribe AT ALL if they had to sign up for each magazine separately, give out their credit card information to a handful of companies and deal with managing all of that. Without knowing anything (just speculating), I would think that getting 70% for more people (again, just assuming it would be more) would be better than getting 100% from less.

 

[manu chao]

Now that Apple has said to providers that they can provide the digital versions for free OR charge them outside of the App Store (as long as they provide the same price in-app) it will be interesting to see how many providers follow through with providing free access to existing subscribers. They can't blame Apple anymore.

If online access (which includes access via iOS apps) is free with a print subscription, how can publishers provide it for the SAME price in iOS apps?

 

[swarmster]

Alright, Conde Nast, I'm willing to pay as much as twice what a paper subscription to Wired costs; so $20/year. Your move.

 

[ovrlrd]

Isn't their entire business model based on 30%? iTunes is only the most successful music/app retailer ever, but I'm sure you are correct and they are going to fail.

The funny thing is 30% has always been the number used to keep the iTunes store alive. It is not Apple's intention to make a big profit off selling this stuff, it is their intention to use it as a value added service for their hardware.

Every time there is a financial earnings they say that the iTunes store is making just slightly above profit, just enough to pay it's operations and help pay for any future development relating to the store (like in-app subscriptions).

With this new 30% cut for subscriptions though, it does seem a bit odd because I am still not sure what that 30% is needed for, but it's not like anyone knows the intricacies of what Apple is offering here.

 

[The Phazer]

It sounds like they will be able to avoid the "apple tax" by providing the subscription on their own website and take 100%. All they have to do is allow people the option of subscribing from within the app.

What business would take on the potential that they either make a profit or a massive loss depending on which button the customer ticks? There are lots of content businesses for which 30% renders them unviable. Inevitably, some customers will use the Apple box, because they don't realise that it hurts that business.

I ask again, given these terms make it impossible for these companies to continue, does this mean we'll see the withdrawl of the Kindle, Netflix, Sky and Hulu+ apps this afternoon (or as soon as Apple attempts enforcement)?

Phazer

 

[CDutch]

Purely speculation on my part but I wouldn't be surprised to see Apple schedule a media event for sometime next week to debut the iPad 2 and launch iOS 4.3 (which the iPad will also run).

Also, the Feb 28 extension of the free preview of The Daily app kind of puts a deadline as to when the update can be launched.