Apple launches in-app subscriptions; Publishers wary of Apple’s 30% take

Tue, Feb 15, 2011


Apple today announced that in-app subscriptions, which first premiered with the launch of The Daily a few weeks ago, will now be available to all publishers to take advantage of.

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.

Addressing the issue of how Apple plans to handle subscriptions that originate within an app but take users to an outside link on the web, Apple CEO Steve Jobs explained that publishers, in that scenario, will owe Apple a 30% cut of subscription revenue.
“Our philosophy is simple,” said Steve Jobs in a press release.  “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.” In other words, a publisher would reap all of the subscription profits if they manage to sell a digital subscription via their website as opposed to from within an iOS app. The caveat to that, though, is that publishers who make app subscription offers available outside of the iOS ecosystem are also obligated to offer the same or cheaper deal from within the app.
iOS subscriptions for news publications have been viewed with skepticism, if not downright disdain, by publishing veterans who argue that knowledge of a customer (age, location etc.) is vital information that better helps them sell advertising space. Because of that, Apple’s new app subscription service will give publishers the option of asking users their name, email, address, and zip code when they subscribe.

The use of such information will be governed by the publisher’s privacy policy rather than Apple’s. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher’s privacy policy rather than Apple’s.

But the main story to extract from Apple’s announcement is that any company that doesn’t comply with Apple’s new subscription rules vis’a’vis offering the same or better subscription deals from within an app will have their app summarily removed from iTunes on June 30, 2011. This message was conveyed to publishers from the good folks at Apple earlier in the year.
The memo in question reads, in part: “To ensure your app remains on the App Store, please submit an update that uses the In App Purchase API for purchasing content, by June 30, 2011.” This new rule, or recently enforced rule, affects popular apps like Netflix, Hulu+ and the Amazon Kindle app.

We’ll see how this one plays out.



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