U.S. and European Regulators 'Looking At' Apple's App Store Subscriptions Program

[BaldiMac]

I "buy" or get the Amazon app from the app store. That's ONE transaction. Apple is entitled to a commission on THAT transaction since they brokered the transaction. They have a cost involved in processing the request and delivery.

If I buy a book on the amazon website - Apple isn't doing anything in terms of cc# processing or delivery. Amazon is handling that transaction and cost.

Why is it OK for Apple to get cuts on transactions they aren't involved with?

In the situation that you described, Apple does not get a cut.

The real solution here - although not very customer friendly - but what Apple is going to force developers to do - is simply not have a button to go to the company website to make purchases. Instead, people will have to just open up safari or whatever on their phones/computers and make the purchases and then send them/copy them to the phone to consume.

According to Apple's rules, they would still have to offer IAP.

But again - slippery slope - because where does this new "rule" end. What about a lot of apps like Fandango, Ebay, Best Buy, etc that offer ways to make purchases via their website (via their app). Where does Apple draw the line. And will they on their demand for 30%?

They drew the line at content that can be viewed or played within the app. Who knows if that will change.

Exactly. But when subsequently every month my money goes to Netflix, and their movies through ISP onto my device, what has Apple got to do with it?

They process your subscription renewal.

 

[samcraig]

In the situation that you described, Apple does not get a cut.

Apple offers thousands of free apps they don't make a penny on. This isn't about trying to get their transaction cost back. This is about profit and increasing revenues when competing "stores" are gaining a sale from a customer instead of ibooks, itunes, etc.

It's unfortunate that Apple doesn't get a cut from an app from Amazon. Perhaps they should have changed or initiated their app store with a policy that an app cannot be free if they plan on charging of external content. That makes more sense for then and even now then this 30% nonsense.

 

[logandzwon]

I really think iOS should offer a official way to jailbreak. You enable that mode, signature signing disables, you can side-load anything you want.
Then provide an optional facility for official apps will not run on a JB phone, (like ibooks does now.) Network providers could choose to not allow JBed phones on their network.

This BS about not loading un-signed code on iPods and disconnected iPhones is retarded though.

 

[BaldiMac]

Apple offers thousands of free apps they don't make a penny on. This isn't about trying to get their transaction cost back. This is about profit and increasing revenues when competing "stores" are gaining a sale from a customer instead of ibooks, itunes, etc.

I didn't say it was about getting their costs back. Although that's how the App Store has operated to date.

It's unfortunate that Apple doesn't get a cut from an app from Amazon. Perhaps they should have changed or initiated their app store with a policy that an app cannot be free if they plan on charging of external content. That makes more sense for then and even now then this 30% nonsense.

Apple doesn't charge for content purchased outside of the app

Apple has so far operated the App Store a bit over break even. The cut they get from paid apps finances the billions for free apps and updates that they process.

I'll wait for real numbers to see if this is the start of a push to turn the iTunes Store into a major source of profits for Apple. Maybe your right. I doubt it based on the numbers to date.

 

[logandzwon]

According to Apple's rules, they would still have to offer IAP.

The actual rules do not explicitly say that. Job's comment implies that...

That would not make sense.

 

[tatonka]

It's silly, because Apple is "entitled" to whatever amount they negotiate with the companies that they do business with. If someone agrees to pay me to sit and stare out the window for 6 hours a day, I am "entitled" to that money. Apple doesn't need to justify the amount with backend costs or anything else.

And just to be clear, I'm pessimistic that this strategy will work out well for Apple or consumers. I think the amount they are charging is too much for certain types of products/services. In other words, I think they are making a bad business decision. They don't agree with me. They have a better track record than me, so who knows.

The problem is they didn't negotiate any deals on that .. they try to use their market position to force it onto everyone wanting to stay in that market.
I was arguing entitlement from a moral point of view .. not legally. Legally I think the case is borderline, but since iOS is hard to seperated into tablet and phone (also this move clearly aims at the tablet market) I think they could get away with it. Doesn't make it right and doesn't mean it will fly .

I agree that it is a bad business decision .. but I tend to disagree with quite a few of Apple decissions lately. Of course Apple is filthy rich, they must be doing a lot of things right .. which is why I buy their stuff after all.

 

[Stella]

Apple offers thousands of free apps they don't make a penny on. This isn't about trying to get their transaction cost back. This is about profit and increasing revenues when competing "stores" are gaining a sale from a customer instead of ibooks, itunes, etc.

Apple get paid to list an application on the AppStore. Why should Apple get paid for any purchases made via said application, aside from any payment processing charges?

I buy say, RapidWeaver, create customer websites and get paid. RealMac aren't entitled to a penny of my revenue through the use of RapidWeaver. Why is this different from iOS apps?

( I give RapidWeaver as an example because its pretty good application for creating static websites ).

 

[tatonka]

The actual rules do not explicitly say that. Job's comment implies that...

That would not make sense.

The press statement is very clear about that.

However, Apple does require that if a publisher chooses 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

http://www.apple.com/pr/library/2011/02/15appstore.html

 

[deadkennedy]

So MS could charge for 30% of every plane booking done on Windows machine and every car sold on ebay. I'm sure they like this idea.

 

[Oletros]

The actual rules do not explicitly say that. Job's comment implies that...

That would not make sense.

The actual rule say that

 

[mdatwood]

Be fair though, in your example MS would also have handle all the customer info, billing, customer service, and hosting the content. (iTunes profits for Apple are much less then 70% of sales.)

Even though your comparison is wrong (Apple doesn't host Kindle books, NF movies, Pandora streams, etc...), MS has all the infrastructure in place to easily do just that by leveraging xbox live. Given how large the app store and itunes music sales are MS needs to change their TOS on Windows and start demanding a 30% cut from Apple for every sale that occurs while the user is using iTunes on Windows. I mean it's only fair since MS provided all of the infrastructure for that user to even have the ability to use ITMS. Heck, why not demand a cut of ipod sales while they are at it.

 

[logandzwon]

The press statement is very clear about that.

http://www.apple.com/pr/library/2011/02/15appstore.html

First off, let me say, I may be totally wrong about it, and if I am, then I completely disagree with it all.

However, if you look at the context, the PR is quoting Jobs talking about publishers selling subscriptions to content. That is not the same thing as Netflix or these music companies are doing.

 

[deadkennedy]

However, if you look at the context, the PR is quoting Jobs talking about publishers selling subscriptions to content. That is not the same thing as Netflix or these music companies are doing.

 

[Oletros]

First off, let me say, I may be totally wrong about it, and if I am, then I completely disagree with it all.

However, if you look at the context, the PR is quoting Jobs talking about publishers selling subscriptions to content. That is not the same thing as Netflix or these music companies are doing.

The PR could say that, the App Store guidelines say thhis:

11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected

11.12 Apps offering subscriptions must do so using IAP, Apple will share the same 70/30 revenue split with developers for these purchases, as set forth in the Developer Program License Agreement.

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.

11.14 Apps that link to external mechanisms for purchasing content to be used in the app, such as a “buy" button that goes to a web site to purchase a digital book, will be rejected

 

[logandzwon]

Even though your comparison is wrong (Apple doesn't host Kindle books, NF movies, Pandora streams, etc...), MS has all the infrastructure in place to easily do just that by leveraging xbox live. Given how large the app store and itunes music sales are MS needs to change their TOS on Windows and start demanding a 30% cut from Apple for every sale that occurs while the user is using iTunes on Windows. I mean it's only fair since MS provided all of the infrastructure for that user to even have the ability to use ITMS. Heck, why not demand a cut of ipod sales while they are at it.

Like they do on xboxlive?

 

[BaldiMac]

The actual rules do not explicitly say that. Job's comment implies that...

That would not make sense.

Yes, the actual rules explicitly say that.

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.

The problem is they didn't negotiate any deals on that .. they try to use their market position to force it onto everyone wanting to stay in that market.

How are they forced if they can choose to take their business to the other 75% of the market?

 

[tatonka]

First off, let me say, I may be totally wrong about it, and if I am, then I completely disagree with it all.

However, if you look at the context, the PR is quoting Jobs talking about publishers selling subscriptions to content. That is not the same thing as Netflix or these music companies are doing.

Apple® today announced a new subscription service available to all publishers of content-based apps on the App Store℠, including magazines, newspapers, video, music, etc.

Again quoted from the same press release .. they do include services like video and music. Nobody really knows how this will be enforced, but it sure sounds like it would include Netflix as well.

T.

 

[charlituna]

Good! This new subscription program by Apple is completely illegal.

Oh really. Based on what? To call antitrust the market has to be iOS devices. But those are just a subset of smart phones etc. The courts are more likely to confirm that the market is smart phones, tablet computers, mobile Internet devices or such. And while Apple has the major sales position that in and of itself is not illegal.

 

[Oletros]

Oh really. Based on what? To call antitrust the market has to be iOS devices. But those are just a subset of smart phones etc. The courts are more likely to confirm that the market is smart phones, tablet computers, mobile Internet devices or such. And while Apple has the major sales position that in and of itself is not illegal.

Is being a monopoly the only way a rule is ilegal?

 

[logandzwon]

The PR could say that, the App Store guidelines say thhis:

11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected

11.12 Apps offering subscriptions must do so using IAP, Apple will share the same 70/30 revenue split with developers for these purchases, as set forth in the Developer Program License Agreement.

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.

11.14 Apps that link to external mechanisms for purchasing content to be used in the app, such as a “buy" button that goes to a web site to purchase a digital book, will be rejected

Thanks! Perfect, the actual rules.
So, lets say that Netflix/Rhapsody remove the link of the front app that says "Not a member click here to sign up."

11.2 There is no system to purchase anything in the app
11.12 app does offer subscription, or any purchase.
11.13 Maybe... this one might get us. see below
11.14 again we are not linking to anything.

In the context of Netflix;
11.13 Apps can play approved content, (movies,) that is sold outside of the app provided that the same content is also offered in the app using IAP. This applies to both purchased content and subscriptions.

I do not pay Netflix for a subscription for content. I pay for a subscription to a service. There is a very fine difference. If I pay for a subscription to the "The New York Times" I am entitled to every issue of "The New York Times," they publish during my subscription period. With my subscription to Netflix I am entitled to whatever 3rd publishers want to let netflix show it's viewers, for as long as they see fit.


Again... if I'm wrong here and services like NetFlix are banned, then I completely agree this is wrong.

 

[tatonka]

How are they forced if they can choose to take their business to the other 75% of the market?

That's why the second part of the sentence read "if they want to stay in that market" ... thats why the move is anti competitive, either pay or leave the field to Apples own services. And that is not necessarily anti competitive in the legal sense, meaning illegal, but it is certainly aiming at hitting competitors.

But seriously. Please explain to me why you feel that Apple has a right to charge a fee (not necessarily that high, but any sort of fee) for a digital subscription and not for any purchase made via the Ebay or Amazon apps that are also distributed freely over the app store? And processing fees for the billing do not count, since they are artificially enforced. Netflix or Amazons Kindle do have working billing systems and would not require Apple to handle that.

T.

 

[OllyW]

Oh really. Based on what? To call antitrust the market has to be iOS devices. But those are just a subset of smart phones etc. The courts are more likely to confirm that the market is smart phones, tablet computers, mobile Internet devices or such. And while Apple has the major sales position that in and of itself is not illegal.

They might get into trouble from Apple insisting that they can't offer their content at a lower price anywhere else, which could be deemed as anti-competetive.

 

[Oletros]

Thanks! Perfect, the actual rules.
So, lets say that Netflix/Rhapsody remove the link of the front app that says "Not a member click here to sign up."

11.2 There is no system to purchase anything in the app
11.12 app does offer subscription, or any purchase.
11.13 Maybe... this one might get us. see below
11.14 again we are not linking to anything.

In the context of Netflix;
11.13 Apps can play approved content, (movies,) that is sold outside of the app provided that the same content is also offered in the app using IAP. This applies to both purchased content and subscriptions.

I do not pay Netflix for a subscription for content. I pay for a subscription to a service. There is a very fine difference. If I pay for a subscription to the "The New York Times" I am entitled to every issue of "The New York Times," they publish during my subscription period. With my subscription to Netflix I am entitled to whatever 3rd publishers want to let netflix show it's viewers, for as long as they see fit.

The rule apply to Netflix

 

[Popeye206]

Also. But it seems more like some of the diehard fanbois are finally opening their eyes. At least that minority that doesn't use mom's credit card.

Huh??? What am I opening my eyes too?

You insinuate that unless I "freak out" over every move Apple makes - or every humor that pops up - that I'm an idiot because I'm a fanboy?

You, know... there are fanboys on here that actually think about all sides before overreacting and crying foul on anything that's not free.

 

[logandzwon]

To put it another way;

Buying content, means you have a right to consume it.
(Subscribing to content is a limited time version of buying it.)

With Netflix I have no right to any content, but as a member I can watch whatever is on at the moment.

It's the difference between say buying a DVD and receiving it over cable.

I have a right to lead my DVD to my friends. I do not have a right to record a movie off the TV and take it to my friends house and play it there.