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Apple formally unveils App Store subscriptions

updated 09:50 am EST, Tue February 15, 2011

Newspapers, music, video, other media supported

Apple today officially announced the introduction of App Store subscriptions for apps beyond News Corp.'s The Daily. Rather than being limited to just magazines and newspapers, essentially any form of content can be delivered via subscription, including music and video. The scheme is being handled through the normal App Store billing system, but with some key differences.

Publishers set the price and duration of subscriptions, which can run weekly, monthly, bi-monthly, quarterly, bi-annually or annually. Customers in turn have the ability to keep track of subscriptions on their account pages, where they can cancel automatic renewals as necessary. The revenue split between Apple and publishers is somewhat different.

"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," reads a prepared statement from Apple CEO Steve Jobs. "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."

The division reflects a policy more tolerant than expected for outside subscriptions. In addition to allowing publishers a 100 percent take on revenue from web portals, Apple is once again permitting free in-app subscriptions for people with existing paper ones. The company recently cracked down on European newspapers offering the workaround before any form of in-app subscription support was available. Some catches still exist, as Apple is banning in-app links to outside portals, strictly enforcing the mirrored options rule.

To meet publisher demands for more customer data, used to attract advertisers, Apple is allowing companies to request names, e-mail addresses and ZIP codes during the subscription process. In these circumstances a publisher's privacy policy applies, not Apple's. Even more data collection is allowed, but only if a "clear choice" is given.






by MacNN Staff

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Comments

  1. testudo

    Joined: Dec 1969

    -3

    more lame

    So, if you sign up within the app, the producer of the content only gets 70% of the funds (so, exactly how is Apple earning that other 30% - are they writing some of the content?).

    But for getting less money, the publisher also gets less (to no) information on the subscribee.

    One would think that, since they aren't getting the information they need to know their audience, they should charge more for that. Give a discount to those signing up from the outside.

  1. russellb

    Joined: Dec 1969

    +4

    Dont think thats correct

    The article says If a NEW subscriber Apple gets 30% so if you have the App and you choose to start a subscription I would assume Apple gets 30%

    BUT if you are renewing or continuing the subscription then thats an existing customer and so then the newspaper etc gets 100%

    So I would read that to mean yes first time around Apple get their 30% but thereafter if you are continuing or renewing the subscription Apple get nothing.

    Great move by Apple to drive publications to use the Apple ecsystem

  1. ilovestevejobs

    Joined: Dec 1969

    -5

    Steve is writing from the grave...

    ...Oh wait. I just got a bit ahead of myself there >:)

  1. testudo

    Joined: Dec 1969

    -2

    Re: Dont think thats correct

    The article says If a NEW subscriber Apple gets 30% so if you have the App and you choose to start a subscription I would assume Apple gets 30%

    Nope. Any signing up through the App gives Apple 30%. A subscription is for a period of time. If you renew, that's more money to Apple (since you'll renew through the app).

    BUT if you are renewing or continuing the subscription then thats an existing customer and so then the newspaper etc gets 100%

    Again, wrong. Only going through the web site will give the newspaper the 100%.

    Great move by Apple to drive publications to use the Apple ecsystem

    Are you kidding me? Since when does FORCING someone into something help drive them into the ecosystem? The way to drive them would be to let them do what they were doing. Have the service, let companies use it, but if they wanted to use their own, OK.

    What Apple basically has done is let companies do this for a year or two, become a huge slice of the market, then use that power to say "How dare you use our platform to sell your product and not give us a slice of the money. Well, we'll force you to let us get in on your revenue. What are you going to do, not offer anything on the iOS? You can't do that. It's the most popular product out there."

  1. Gametes

    Joined: Dec 1969

    -2

    Same price or less?!

    It all sounds, well, maybe not reasonable but certainly arguably a tenable position. That is, I can imagine Apple proposing this plan to partners, which I guess is validated by the fact that they did.

    What I can't understand is the "the same (or better) offer be made inside the app" nonsense. This has 2 major issues:
    1) It is Apple dictating price, which they've never done and legally shouldn't be allowed to do. This is a major no-no. None of your business what I charge for anything.
    2) It is Apple forcing the company to accept lower revenues for the same product. For a $10 subscription. the provider should be able to sell on the App Store for $13, and tell the customer "hey, the price is $10, and the +30% is for Apple". Much like how restaurants do taxes.

    This would be the equivalent of California putting a 30% sales tax on everything, then forcing anyone wanting to sell goods in the state to offer the exact same price as in Pennsylvania, so that selling in California was 70% as profitable as anywhere else.

    When a company has a cost structure, and that cost structure varies, they often price for revenue. That is, if it's cheap to sell in your home land, you sell cheap. If it costs a fortune due to import tariffs and fuel costs to export to Bermuda, you sell expensive or not at all. Either way, you make $2/widget regardless of country. But a law which sets massive import tariffs and then price controls basically squeezes out all participants.

    This "law" will have 2 effects:
    - Fewer adoptions by apps which have comparable outside subscriptions than would be if they allowed variable pricing.
    - Decrease in intertial growth for the ecosystem. Mind you, it's growing now at 100%, so that will slow to 90% - meaning don't think I'm predicting it won't grow, just that that will cool.

    What's so reprehensible is how clearly they've made this rule preemptively precisely to eliminate price pressure being put on *them*, by removing all consumer controversy. Who would complain in the two alternatives I'm discussing (flat-price vs price+"tax")? In the fair case, millions of unhappy customers would rail about how WSJ is 30% more expensive on iPad! In the case Apple's chosen, a few hundred companies whine on internal blogs about how unfair it is.

    But it is.


    As a stockholder I am unhappy with this. As a customer I am unhappy. As a developer I am unhappy. As a human with a sense of fairness I am unhappy.

    Basically the worst financial decision I've seen Apple make in many years, and the sleaziest.

  1. mjtomlin

    Joined: Dec 1969

    +3

    Amazon

    Amazon used to take +70% cut of content sold through the Kindle store. It wasn't until Apple's iBooks began using the standard iOS 70/30 share that Amazon dropped their cut to match Apple's. However, they still take a +70% cut for some content offered on the Kindle. Furthermore, both publishers and users are forced to go through their store on the Kindle - there are no other options.

    So all this whining about Apple is just stupid and unfounded. They are only getting this attention now, because they recently debuted a change that included subscriptions along with regular content. And since the debuted of IAP, the rules have been in place.dvantage of Apple's platform.

  1. bleee

    Joined: Dec 1969

    +1

    referral fee

    I don't disagree with the model, but I do think the fee is a bit steep. It's basically a referral, Apple is saying "If it were not for the iOS device, the subscription would have never happened at that point in time" (unless they happen to carry another device). Which I don't disagree with, every brick and mortar online store charges a listing fee or referral fee eBay does it Amazon does it Why can't Apple?

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