Apple Debuts App Store Subscriptions

[Small White Car]

Everyone keeps throwing "marketing" around. Apple doesn't launch a marketing campaign for something you drop in the App store. It markets itself as a company.

Look in the App store in your phone.

Click 'Featured.'

Being placed in front of millions of eyeballs who have the ability to instantly buy with a finger-touch is far, far better marketing than any TV ad.

The stuff that's posted in there isn't random.

Two big businesses trying to rip each other off all it does is hurts the consumers.

Pricing based on supply and demand is called capitalism, not 'ripping each other off.'

I mean, I guess you could call it that, but if you're opposed to our entire economic system I don't think iOS magazines should be your biggest concern.

But not on iOS it seems?

Well, Apple doesn't charge Skype each time someone downloads it, so I'm not sure what you're saying.

 

[Wolfpup]

I don't know why everyone is so up in arms about Apple's cut as the retailer. How much of a cut do you think Barnes & Noble makes on a book they sell in their store? Google charges developers 30% to sell their wares in the Android Market. Yet Apple seems to be the only one getting hate for participating in the longstanding tradition (and proven business) of retail markup.

Android is open-you don't have to go through the market, while you do on iOS.

And anyway, charging for something done through a program would be like Buick skimming off the top from Krogers because I put my groceries in the back seat.

 

[cmaier]

And how do you define 'non-iOS capable subscriptions'? Would a web-only subscription, which excludes any smartphone-app based access be disallowed by Apple if it costs less?
Publishers could simply de-bundle all their offers. Part one: web access, part two: iOS access, part three: Android access, part four: Kindle access.

I'm not sure what your point is, but if the web-only subscription worked on the iPhone, I'm sure Apple would have no beef.

But if, for example, MLB or Netflix start selling one tier that works on smartphones/tablets OTHER than iOS, and another, more expensive tier that works on iOS devices, Apple will drop the hammer on them.

Heck, Apple may drop the hammer on them even if MLB or Netflix creates a tier that only works on iOS devices (and not on other devices) even if that tier costs less (imagine Netflix coming up with a new iOS-only plan that features reduced bandwidth and movie selection, and no physical DVDs, for one penny less than their current streaming-only plan. Think Apple would allow that? I don't.)

 

[aristokrat]

Wow, you guys are getting crazy over this. I see this being hugely beneficial to smaller developers who don't want to spend their time setting up a payment/accounting service. Even if they think they can make it happen through paypal, they still have to keep track of who gets access
To their stuff, etc. This is a huge boon for the little guys.

For the big guys, they surely understand the value of availability. For every additional step in the buying process, more and more people turn back. Going to a web browser (or a computer even), navigating to a site, having to create a new account (probably the biggest hurdle*), getting out the credit card, inputting all the data, etc. At that point, you've been able to reconsider if this purchase is really worth it (why do you think Amazon introduced One-Click?). Having access to one of the biggest populations of impulse buyers can bring in tons of revenue. And instead of passing the costs down the line, maybe think about trying to restructure your costs, as their is very little inherent cost digital media. Or, if you think it's impossible, then just go bury your head in the sand and give up. Working hard to win is kind of how it works.

*This is why I still can't read the NYTimes despite it's being free. Every time they ask for me to create an account I reconsider whether it's really worth it for this one article.

 

[Mattie Num Nums]

If the purchaser wanted to buy the book from Apple they would have used iBooks. They bought it from Amazon in the Apple shopping centre. Do malls usually have a 30% cut of everything that is sold in them?

They don't. They get rent from the individuals stores inside the mall. Thats the way I think the App store would be great. Each company gets its own store front, has to meet the standards Apple provides for the store (packaging files, looks and feel, etc.) and they pay Apple a "rent" fee. That too me makes more sense than paying margin 2x. Now as consumers we pay more for the margin of the publisher and now the margin of Apple.

 

[diamond.g]

Exactly, HOWEVER! Sending Apple a .app file and having them host it costs a lot less tha paying a printer, paying fed ex, and paying Albertsons. The old fashioned way probably was 30% of the value. With the App store if Apple took 20% I'd say hey thats pretty damn fair. Apple is trying to get the same margins companies are paying now, but with less over head. I just don't see how anyone can really defend it. Two big businesses trying to rip each other off all it does is hurts the consumers.

I think there is confusion. I believe no one is arguing about the 30% Apple takes for App purchases (say buying the Kindle App itself) what people ate worried about is Apple taking 30% for content when they are not hosting (according to a dev on this site) it. Apple isn't hosting any of the Kindle books but they want a cut of the book sale anyways. Nor are they hosting any of the Netflix content. Skype doesn't run through Apple servers either, but if you can buy minutes online they want a cut of that as well.

 

[cmaier]

If the purchaser wanted to buy the book from Apple they would have used iBooks. They bought it from Amazon in the Apple shopping centre. Do malls usually have a 30% cut of everything that is sold in them?

No, but malls charge rent. Would you prefer if Apple charges Amazon and Netflix a fixed monthly charge for being available on iOS devices? (Right now you pay $99 a year and get to submit as many apps as you want. Perhaps Apple should just charge ten million dollars a month? )

 

[genosseinski]

I think another issue is how many issues you wanna sell xD

If you fill out a form on a website for a year's subscription, that is, given the time you will use it on your ipad, worth the effort.

If you just want to buy a single issue, then you are much more likely to tap the big green "buy" button within the app.

So my proposal: get people to buy long-term subscriptions on your website with special deals and stuff. Charge the common hopper and testing guy more to buy single issues...

Although you still have to consider that most people don't like long-term contracts/subscriptions anymore, they tend to be more flexible

 

[Mattie Num Nums]

I think there is confusion. I believe no one is arguing about the 30% Apple takes for App purchases (say buying the Kindle App itself) what people ate worried about is Apple taking 30% for content when they are not hosting (according to a dev on this site) it. Apple isn't hosting any of the Kindle books but they want a cut of the book sale anyways. Nor are they hosting any of the Netflix content. Skype doesn't run through Apple servers either, but if you can buy minutes online they want a cut of that as well.

I think they are greedy all around when it comes to content. All Apple is doing right now is driving up the cost of content. All these people going "Go Apple! I am a shareholder because I have 5 shares yey!" Have no clue what this is going to do to us... the people that buy content.

 

[fabianjj]

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.

Yes for software bought in the app store.

however the way I understand it when it comes to in-app purchases, the developer provides the server space and bandwidth and not Apple. Although I'm not quite sure.

But the point being in the case of the Amazon Kindle, amazon provides EVERYTHING for the additional book purchases (billing, bandwidth, server space, etc.) the only thing Apple really does here is still allowing the app itself to be in the app store.

That is what people are complaining about, that Apple does nothing in the context of the extra content, but wants 30% anyways for the content being on their device (Which is owned by the consumer).

 

[Mattie Num Nums]

Look in the App store in your phone.

Click 'Featured.'

Being placed in front of millions of eyeballs who have the ability to instantly buy with a finger-touch is far, far better marketing than any TV ad.

The stuff that's posted in there isn't random.

... and people pay extra to be featured? If so I don't see your point. At that point they are paying extra for the marketing.

 

[blindzero]

FAIL. Does Visa deal with infinite re-delivery (re-download) of product? Does Visa bring paying customers to your magazine shop?

Not to mention Visa does charge upwards of 30% or more for $1.00-$2.00 purchases. They do it with their minimum charge of 20-40 cents per transaction plus a % for the merchant. That may change soon tho.

 

[spotlight07]

70% is more than publishers typically get from a distributor and there are no printing or shipping costs to deal with, only the small relative cost to deliver the digital content.

The only downside here for publishers is that advertising/subscriber demographics must be opt-in.

The 100% is a loophole for publishers to transition their current print subscribers to the new digital platform. It has to be free for the people using the existing method (print) to get the new method in order for the changeover to take place. Similar to iTunes' transition to digital music began with the ability to rip & manage CDs you already owned.

Once the transition is complete, there's no need for anything but the simplicity of in-app purchase. Apple knows this is a transition period, one day we will not buy CDs/Print anymore.

 

[thetexan]

I'm not sure what your point is, but if the web-only subscription worked on the iPhone, I'm sure Apple would have no beef.

But if, for example, MLB or Netflix start selling one tier that works on smartphones/tablets OTHER than iOS, and another, more expensive tier that works on iOS devices, Apple will drop the hammer on them.

Heck, Apple may drop the hammer on them even if MLB or Netflix creates a tier that only works on iOS devices (and not on other devices) even if that tier costs less (imagine Netflix coming up with a new iOS-only plan that features reduced bandwidth and movie selection, and no physical DVDs, for one penny less than their current streaming-only plan. Think Apple would allow that? I don't.)

That's way too complicated for most companies, and in the end I assume they simply pull their platform.

As I said earlier, if Apple enforces this rule you can expect to see an end to Netflix, Pandora, MLB, Napster, Slacker Radio, Sirius XM, Hulu, and a host of other apps. If Apple selectively enforces it then you can expect to see them in court to explain why they held the Kindle app to one standard but not the Pandora app. Their only explanation is that the Kindle app competes with iBooks and that won't look too good in a court.

 

[Small White Car]

That is what people are complaining about, that Apple does nothing in the context of the extra content, but wants 30% anyways for the content being on their device (Which is owned by the consumer).

This is incorrect.

If that were true they'd be trying to charge you when you copy files over the USB cable. That's not something they're doing because "being on the device" is not what they're after.

... and people pay extra to be featured? If so I don't see your point. At that point they are paying extra for the marketing.

I don't believe they do. That's the point. Part of the benefit for the 30% is 'exposure and marketing.'

You were saying "where's the marketing?"

I was pointing out where it was.

 

[manu chao]

Pricing based on supply and demand is called capitalism, not 'ripping each other off.'

And pricing based on a dominant market position can be called under the right circumstances 'illegal activity'.

Well, Apple doesn't charge Skype each time someone downloads it, so I'm not sure what you're saying.

What is the difference between a video or music streaming subscription and a subscription that lets you make phone calls? There is nothing that would stop Apple charging for services delivered via iOS apps as well on top of the now announced 'content delivered via iOS apps'.
Except that at some point, even they will realise that they are starting to cut into their own flesh.

 

[blindzero]

No they are not .. they do nothing but process the billing .. they do not provide the content nor is the content distributed via their servers ... 30% is outrageous for that super limited service and forcing everybody to use it is borderline illegal (at least here in Europe I'd be surprised if that flies).

T.

I don't think they are forcing people to use it. They give publishers 100% if they bring the customer. Forcing people to make sure iOS devices have the lowest price may have issues though...although to get around this publishers will probably just package freebies if you purchase through their site.

 

[bobthedino]

Is this the end of the Kindle app?

From Apple's press release:

In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

The Kindle app currently switches to Safari to allow you to buy Kindle books from Amazon's web site. So with Apple's new policy, either the Kindle app disappears, or Amazon allows you to buy Kindle books via in-app purchase. Is this likely to happen?

 

[Mattie Num Nums]

This is incorrect.

If that were true they'd be trying to charge you when you copy files over the USB cable. That's not something they're doing because "being on the device" is not what they're after.



I don't believe they do. That's the point. Part of the benefit for the 30% is 'exposure and marketing.'

You were saying "where's the marketing?"

I was pointing out where it was.

I guess to me Marketing means getting people inside the App store. Once I get there I can just hit search and get whatever I want. Marketing to me is seeing commercials, ads in magazines, things that bring clients to the App Store. To be honest most of the featured and top stuff, I ignore because I don't want Fart Apps or Angry Birds.

 

[iPhoneCollector]

So 4.3 is going to be available sometime today?

You wish.

 

[DrFreeman]

Does this apply to Macs as well? Apple sure played a part in the process by actually designing the Mac I might reading an e-book on. Or if I subscribe to Bloomberg using a native Mac Bloomberg app, should Apple get 30% of what I pay to Bloomberg?

My understanding was that if a company brings an existing customer, then Apple will not get anything. So in your case, Apple should not get anything from Bloomberg.

As I mentioned in my post, 30% is really high. It should be lowered. I also think that at some point, once the number of iOS devices increases to an "acceptable" number, this cut should be lowered to less than 5%.

 

[Small White Car]

And pricing based on a dominant market position can be called under the right circumstances 'illegal activity'.

iOS is not dominant.

So...what's your point?

 

[thetexan]

From Apple's press release:



The Kindle app currently switches to Safari to allow you to buy Kindle books from Amazon's web site. So with Apple's new policy, either the Kindle app disappears, or Amazon allows you to buy Kindle books via in-app purchase. Is this likely to happen?

Apple is pretty arrogant these days. My guess is yes, unless Amazon complies which they likely will not do.

I just wonder how many pissed off iPad owners there will be out there. Kindle beats iBooks because of Whispersync and the fact it's platform agnostic.

 

[fabianjj]

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

Unless Apple says the prices has to be the same in-app and outside(don't know if they can do that though), then if the developer simply charges more to make up for the Apple tax, the developer could simply put up a link that says: "Why Pay 43% more than you need to? Go to our website to get 30% off of everything".

Although showing both those numbers might confuse people. But then again, for most customers these in-app options will be completely useless and ony a way to accidentally spend more money.

 

[tibi08]

I can't believe I just read through so many pages of utter drivel saying how unreasonable the 30% charge is.

Apple have invested millions of $'s in R&D and developed the best mobile eco-system in the world, with an enormous group of very happy (and fairly well off) users. If someone wants to tap into that user base, then a 30% commission is entirely reasonable. If a supplier doesn't like it, they can f/o and sort their own supply chain out. I'm sure there'll be plenty of other developers chomping at the bit.

Besides, it's supply & demand like everything else - if nobody accepts the 30% commission then they will just have to drop it......