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Apple Launches Subscriptions on the App Store

119 points by bjonathan 16y ago

jrnkntl 16y ago
Where this would be the most important part for the content-providers: "“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...”"
- chapel 16y ago
  I am glad Apple put this in here. After the issue with the ambiguous working on purchases made outside the App Store, this is something more consumer friendly as well as publisher friendly.
  - anonymoushn 16y ago
    This is less friendly in the sense that it explicitly forbids the 43% Apple-racket-cancellation markup.
    - swombat 16y ago
      How is that a racket? Seems pretty reasonable to me, at least as a user.. I don't want to have to log in to a different website just to get the normal price. It's like if store-owner X said, "If you want us to sell your goods in our store, you need to guarantee that you won't undercut us in another store, otherwise we don't want to stock your goods or your shelves." It's standard practice in the physical product market. I'm not sure why everyone is so quick to side with Amazon in this. Amazon have squeezed their own suppliers a million ways to Sunday, driven numerous bookshops out of business, and generally fucked about with everyone they could when they could. They even sued people with their ridiculous one-click patents. I won't cry for them getting squeezed a bit by Apple.
      - anonymoushn 16y ago
        I understand what you're saying, and I'm not going to adapt the analogy to suit my view of the situation because that invariably becomes kind of silly. I think that as long as Apple allows publishers to make content viewable inside the app store purchasable outside the app store only, this policy is fair and as you've described it. If Apple requires publishers to make content viewable in the app store purchasable in the app store, the publisher is forced to choose between losing 30% of revenue on a chunk of their transactions or having a vastly inferior product for entirely artificial reasons. Apple would essentially be holding the publisher's product quality ransom. I'm also not a fan of this because I think that people who have costs forced on them for a specific subset of their transactions should be able to transparently pass on those costs to the customers who make those transactions, rather than spreading it out across all customers. I think that publishers should be able to charge 43% more for purchases and state in the app that it costs more because Apple is taking a 30% cut. I think that retailers should be able to charge 1-2% more to customers who use Visa and MasterCard than to those who use cash, and a couple percent more for Discover or AmEx. Instead, the cost is concealed and the users who don't have CCs with excellent rewards programs are paying for the rewards programs of those who do. With this policy, non-iDevice-users will pay a premium to allow iDevice users to buy the content more easily, and that doesn't strike me as particularly fair.
        yardie 16y ago
        I think that retailers should be able to charge 1-2% more to customers who use Visa and MasterCard than to those who use cash, and a couple percent more for Discover or AmEx. Retailers are free to do this, they just can't except VISA anymore. I've been in a few stores that accept AMEX,Discover, and Mastercard with a reasonable markup (and some unreasonable markup, like the DMV). VISA shoppers, once they realize the policy, just walk out the store and go to a store that has what they want and does accept Visa. Some even come back cash in hand. In that regard Apple's policy mirrors visa. You are free to put your subscriptions in marketplace, amazon, etc. But if you want to be in the App Store you have to abide by their agreement.
        16y ago
  - chapel 16y ago
    I think was was somewhat mistaken on the premise of this change. I don't like it as much as I initially did, but as long as Apple doesn't force publishers that have subscriptions outside of their app (and don't offer in app subs) to do in app subs as a result, I think the change is somewhat acceptable.
- kj12345 16y ago
  But "inside the app" means Apple In-App Purchase, right? I'm sure Amazon and Sony are capable of storing a user's credentials in an app, and then making the appropriate network requests when you click Buy or Subscribe. But from my understanding that wouldn't qualify since it doesn't go through Apple.
adolph 16y ago
Would apply to a services back-end to an application? As an example, the ubiquitous grocery list: the app is functional stand-alone but has a subscription syncing service that allows for sharing lists and update.
- carson 16y ago
  It will probably depend on what the definition of "publisher" so only time will tell. The following seems like it could cover a large swath of things depending on that definition: "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."
- jmelloy 16y ago
  This is actually what it's designed to apply to. Inside your grocery app is a button that says "Subscribe to sync!" Apple handles the credit card processing and takes 30%. You go to the website, and there's a button that says, "Subscribe to sync!" You pay for the credit card processing & recurring billing expenses, and 100% of what's left. Apple is assuming/hoping that the amount of people who buy your service through the app will offset the reduction in revenue.
smackfu 16y ago
Interesting that Steve Jobs is still giving quotes for the press releases.
- ascendant 16y ago
  They said he'd still be involved in the strategic stuff. I'm sure they need to put his name on a few press releases to make sure investors know he's still alive.
davidedicillo 16y ago
"Publishers of content-based apps" I wonder if this can be used for other non-content-driven applications.
jaaron 16y ago
And with that, Apple just gave up the content app space to Android. Do you think the Economist, the Financial Times, Amazon, Netflix, Hulu, Rdio and others are really going to hand over 30% of their subscriber revenue?
- dsuriano 16y ago
  But will the Economist, the Financial Times, Amazon, Netflix, Hulu pass up on the large amount of iOS users out there? They could easily make up losses with new users. (Higher volume of users, Easier billing system, more user friendly,etc etc)
  - runevault 16y ago
    Amazon with their current pricing structure with ebooks can NOT, because on anything priced from 2.99 to 9.99 their own cut is only 30% of the sale price.
- kayoone 16y ago
  yep, they will.
- GBKS 16y ago
  How much of subscriber revenue goes out to shipping magazines and newspapers to people's doors and stores? In comparison, 30% may not be that big of a deal, especially when you can reach a global audience.
  - zdean 16y ago
    Subscriptions are a money looser for most magazines. The end game with subscriptions (historically) has been to support ad rates that are calculated on a Cost Per Thousand readers basis. Ads are where they've made the bulk of their profit/revenue. A better place to look for a comparison is the cost structure of selling magazines on the newsstand. In that situation, it's a 33/33/33 split between the publisher, a distributer middle-man, and the retailer selling the magazine. In either situation, however, retaining 70% of the revenue is a HUGE advantage over the old way of doing it for ad-driven properties.
donohoe 16y ago
It still leaves a bad taste in my mouth. The user is paying for the device, they are paying for the bandwidth, they now pay for the content. Fine, great. The publisher is paying to build the app, they're paying even more to acquire/write/edit/host the content, they're paying a cost to make it available. Okay... whatever. Apple claims 30% just for being there. They don't add to the discovery of most content apps (we're all aware of the big name ones a Wired, NYT, USA Today, etc), discovery is what could happen in the app but not the app store itself. FYI: I work for the NYT so while I think my issues are critical and fair I want to be upfront about that.
- pclark 16y ago
  By "being there" you mean, having the data that enables one click payments from a mobile phone - that in itself, is a huge deal. I think 30% isn't ridiculous for handling payments on a mobile device. I remember asking an FT guy if he felt it was a good deal, and he said 30% was good compared to some carriers in the olden days...
  - JoeAltmaier 16y ago
    It is no longer the "olden days" Desktop manufacturers don't skim subscription content - we would all revolt if they tried. It is NOT 30% for handling payments. It is skimming 30% for the life of the subscription for fielding a single click.
  - donohoe 16y ago
    Comparing a bad deal to a worse deal doesn't make it good. I don't speak for the NYT but I've been following that chatter from news organizations for awhile. The thinking (right or wrong) goes like this: * Publishers don't want to use Apples payment system as it locks them into Apple * Publishers don't want to use iTunes for managing subscriptions * Publishers don't want to have to pay 30% of the costs to pay for a service they don't want to use There is a great and strong argument that its good for users and I agree with that. Users don't have to enter billing info etc across multiple apps. Thats a win, and a big one too. However the reality is that when people grumble about paying for news content in the first place, and newspapers turn to the internet as publishing market shrinks, and the whole business model of news is in flux, along comes Apple and says we're going to take 30% for adding a service that you (the publisher) don't want and we're going to great a barrier between you and your customer so you're dependent on us. This could be a huge debate, and I honestly can't go into one. Too tired. Too much to do today. So let me just say that you should always do what the consumer wants and in this case Apple is providing that. But by a 30% cut they're going to make it difficult for news organizations to budget and pay for in-depth news coverage as they become increasingly dependent on online revenue sources.
Kylekramer 16y ago
Ballsy move. Is it even enforceable? Prices for content can legitimately fluctuate on a day by day basis. They have enough trouble with the app review team, is there now going to be a team devoted to making sure no one undercuts them?
- wallflower 16y ago
  They don't care about policing the little guys. It's the big media players. That being said they can just handpick a few little guys for app rejection, with the hope that the little guy will bitch and tweet and blog and spread the message for Apple that they are indeed keeping an eye on compliance.
cletus 16y ago
Wow, big move by Apple. While on the one hand I'm glad for there to be this subscription service the real hand grenade they tossed out was this (emphasis added): > 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 Can you see Amazon handing over 30% of Kindle sales to Apple? I can't. Affiliate commissions are typically what? 4-10%? Unfortunately Apple doesn't have a lot of room to move here either as having a retail channel for iTunes vouchers (which is incredibly important for them) means maintaining a margin of at least 20% I would guess. All I know is that if I lose my Kindle app on my iPad that's going to be a huge problem.
- greyman 16y ago
  I am a bit confused - is kindle ebook considered a subscription?
  - evilduck 16y ago
    Books not necessarily, but the Kindle platform does offer subscription services for Magazines, Newspapers, blogs, etc. Under Apple's current wording, it appears that Amazon would be required to add an in-app option to subscribe to those offerings and would be required to fork over 30% of all subscription revenue if a user chose to use the Kindle app to subscribe instead of using a different Kindle platform option.
    - davidcann 16y ago
      Why do people care so much about Amazon? Amazon is a middleman, so why not cut them out? Magazines, Newspapers, and Blogs can go directly through Apple and keep their same 70% cut.
      - evilduck 16y ago
        You're proposing publishers cut out Amazon as a middleman and replace them with Apple, another middleman. I don't know Amazon's cut, but it may not be worth the effort to switch if there's no financial gain. If content, quality and prices are equal between the AppStore subscription and the Kindle store versions, I have no incentive to buy from the AppStore when it's less feature rich than a Kindle version which can seamlessly sync and move between PC, Android and iOS. AppStore purchases are stuck on iOS devices, and the Kindle's display is the preferable reading screen for many people. To be fair, it's not limited to Amazon either, B&N and the Nook are in the same situation.
apress 16y ago
So do we think this applies the killer 30% take to ebook competitors like Amazon and B&N? The only clause that appears to relate to them is "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." That's the only place where "content" is mentioned as opposed to "subscriptions." Because of the "same or better offer" clause, not to mention agency pricing agreements from major book publishers, it is not possible for anyone but Apple to sell ebooks on iOS if those terms are applied to the ebook reader apps.
bnycum 16y ago
I understand Apple taking 30% from the initial app sale, but not from the subscription. Apple is only acting as the credit card processor in this case. They don't host or deliver the in-app/subscription content you buy, so you are taking this hit as well after the 30%. What if Mastercard/Visa charged you 30% to process cards?
YooLi 16y ago
Why does everyone (even blogs that should know better) think that in-app purchases are the same as in-app subscription purchases?? The Kindle is brought up, but what does Amazon sell through the Kindle on subscription??
- Legion 16y ago
  Magazines.
  - pclark 16y ago
    Amazon takes a 30% cut of those.
  - nhangen 16y ago
    and blog subscriptions.
    - wallflower 16y ago
      What blogs do you think will go pay? Unless they pay-wall the content on their website, how will they get people to pay for a subscription? Now, to answer that question there are many high priced financial mailing lists
- jaaron 16y ago
  Because this press release also updates and clarifies enforcement of in-app purchases as well. The current approach taken by the Kindle app, that is, linking to the Amazon web Kindle store for purchases, will no longer be allowed by Apple. Apple will force Amazon to allow users to purchase ebooks in the app, taking a 30% cut.
russnewcomer 16y ago
Is it just my reading of it, or does this just seem to be a flat revenue grab and attempt to integrate everything into an iTunes account? The press release is definitely targeted at the word subscriptions, so from my reading of it, individual purchases like Kindle books are safe from this requirement. However, I wonder about Netflix, Hulu, et. al, and what this will mean for their apps, especially since they seem to be basically required by Apple to include a subscription model that uses an iTunes account, and they can't charge extra to make up for their profit loss due to Apple's absolutely ridiculous 30% charge for payment processing. Seriously, all they're really doing for those apps is requiring that they add iTunes as a payment processor, add a little bit of app to handle that, and then hand over 30% of their revenue? Which basically means that the publishers will make nothing on iTunes-only subscribers. How is this a good move for their platform at the 30% charge? Do any other payment processors take 30%?
deleted 16y ago
[deleted]
GHFigs 16y ago
Apple: Customers purchasing a subscription through the App Store will be given the option of providing the publisher with 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. Amazon: We will share the name, billing address, and order information associated with your newspaper or magazine purchase with the publisher, who is under obligation to keep that information confidential. We will not share your credit card information or e-mail address. -- http://www.amazon.com/gp/help/customer/display.html?nodeId=200396170 http://www.amazon.com/gp/help/customer/display.html?nodeId=2...
- deleted 16y ago
  [deleted]
saturdaysaint 16y ago
This sounds like extortion... yet it's interesting to consider that these are essentially the terms the music labels have been living under for years. In that case, they paid because Apple came up with a viable service before them. Now Apple's trying to extract the same terms from companies that have successfully built sophisticated services and vast user bases independently of Apple. It's absurd to think of Apple getting a commission for "bringing a subscriber" to Netflix just because someone starts their subscription in the app. I've supported most of Apple's major strategic decisions, but this looks like a flagrant abuse of their market position.
- dpritchett 16y ago
  It's called affiliate marketing and it's one of the best ways for an independent operator to make money in the SEO business. I guess the only question is whether Apple can claim 30% in perpetuity or just for the first X months.
  - saturdaysaint 16y ago
    I downloaded the Kindle and Netflix apps exclusively based on my experience with Amazon's and Netflix's services. These companies handle all of the backend for the services - Apple does nothing. Where is any "marketing" taking place on Apple's part - simply letting these companies' apps be searchable? I'm not opposed to Apple charging what it wishes for in-app content purchases, but making this a mandatory option for all services at a fairly steep rate might not be viable for all businesses. I don't think this will last. If iOS were to lose Netflix , Kindle and Pandora(which isn't unimaginable) the platform would instantly be less appealing than lowly WP7 and WebOS for a lot of users.
    - sambe 16y ago
      Not saying your wrong, but the marketing was to build the entire sales channel. You are free to use your Amazon Kindle for your Kindle purchases. It's all a bit of a grey area, more so than some make out if you ask me.
dstein 16y ago
Is this only for media/content subscriptions? If I have an SaaS app that I'd like to make an iPhone front-end to, can this subscription service be used?
ryancarson 16y ago
A lot of you are focusing on content subscriptions in your comments. I don't think that's the real story. I'm hugely concerned about all of us who are running SaaS apps that are complemented by an iOS app. We've worked our assess off to reach profitability and now Apple thinks they can come along an extort 30% of our revenue. The power of the App Store is in reaching the mass market. That's awesome for people who are building apps/services that service that market. They benefit hugely from this powerful distribution channel. But all of us folks who have built up a following in a niche market (web design and development, for us) don't need this and we're certainly not going to put up with Apple demanding we fork over 30% of our revenue just so our customers can have an iOS experience. IMHO, this is the push we all need to go HTML5, CSS3, jQuery for our next 'iOS' app (the way 37s recently did with the mobile version of Basecamp). I'm a huge Apple fan (probably spent $30K+ over the years for our company) but this is bullshit.
- pclark 16y ago
  I thought you sold subscriptions through your site, and they could then be viewed on the iPhone? Can you purchase your content via in app purchases presently? I don't see how it changes for you guys. Apple only takes 30% if you use their payment platform - if you offer a subscription service outside of the iOS application, you're free to use authentication and let users transfer their subscription from the web to iOS and Apple never takes a cut.
  - hallmark 16y ago
    One key point that ryancarson points out in his post (http://thinkvitamin.com/web-industry/why-you-should-fight-apples-subscription-extortion/ http://thinkvitamin.com/web-industry/why-you-should-fight-ap...) is this: ".. 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." I sort of understand why Apple has this language, in addition to the same-or-better pricing clause. Otherwise, a publisher could effectively circumvent Apple's 30% cut by offering subscriptions at a much cheaper price off the platform and link to the sign-up form from within the app. To prevent these crafty workarounds, Apple needs rules. Unfortunately, SaaS web app developers who create companion iOS apps become collateral damage in Apple's efforts to grab profit from content publishers' subscription revenues. Apple could and should keep the same-or-better pricing constraint and remove the in-app link restriction.
jhancock 16y ago
Apple's 30% is a tax on the consumer, not the app publisher. The tax is always on the person whose wallet was opened. Apple and the publisher are beneficiaries. The publisher will make money off these sales or not stay in business. Its the consumer that will ultimately lose choice and quality. Apple's business model is not Microsoft, its Wal-Mart. And like Wal-Mart, companies will respond to Apple's predatory behavior by filling the shelves with inferior product. If you haven't shopped at Target recently, go check out something as simple as Hanes undershirts at Target and then the seemingly similar Hanes product at Wal-mart. There is a marked difference in quality as this is the only way suppliers can make money off sales to Wal-mart. Of course, software follows very different rules of scale than textiles. We may expect to see product differentiation such as "MyApp for Android" having more R&D into it than "MyApp for iOS". Its hard to say how this differentiation will take place, its new territory.
kgermino 16y ago
It seems that everybody forgets about web apps. Take Netflix for example, the app is useless without an internet connection anyway, is there any reason that they can't come out with a web-app designed for the iPhone and leave Apple out of it completely? Or would they not be able to play videos properly? Separately, I personally hate it when I have to download an app that does nothing you couldn't do with a regular website. Sports score apps for example, the MLB At Bat and NHL Ice Time apps are nice and provide a lot of extra features so I understand those, but there's also countless apps that only download scores from the web and display them. I hate that, give me a iPhone formatted web page, and if I like it I'll put it on my home screen, saves me having to update it and saves space on my drive.
Bitmobrich 16y ago
Lets take Hulu for example, who currently has a subscription model of $8.00 a month. Now if a users decides to subscribe to Hulu through an iOS app the price of the subscription is the same for the user. But for Hulu instead of collecting $8.00, they are now collecting $5.60, since 30% is now going to apple, because that person used an iOS device. So it is a tax on both the app publisher and the consumer. Apple's new term of service states: "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". For the app maker, the quickest way to compensate for a 30% Apple tariff is to raise the price by at least 30%, which hurts the app maker and the consumer. Even before this announcement the app market as we know it today, is on it's way out. In favor of creating a browser based mobile web app. With this new tax, I believe the adoption rate to create browser based mobile web apps will continue forward at full throttle so app makers and consumers are not losing 30% of subscriptions and content purchases to apple.
- zacharypinter 16y ago
  Flash pros/cons aside, it's a shame Apple blocks any and all browser plugins on iOS, which could help mobile web apps innovate faster.
elai 16y ago
What I would do in response is make iOS editions with a few extra 'features', charge ticket master style connivence fees or use some other artificial marketing editioning (consumer vs "enterprise" editions with few differences). Or I'll separate out the main service and smartphone service, somewhat like instapaper, charging more saying that the iOS service tier is a different user experience that has a higher price.
- zacharypinter 16y ago
  The problem with this is that you're betting an investment in design, development, and marketing into a loophole that Apple could very well close.
qas1981 16y ago
I think as apple continues the clamp down on there products people will gain interest in the Android platform. Google can really destroy apple by providing the same services at a lower cost. I would imagine that is there game plan. So when Apple has completely offended every content producer they will jump ship.
mkramlich 16y ago
new feaures are always good but this new restriction-lightning-bolt-from-the-blue is for me "straws[final+3]" why I have decided to never make iOS apps whenever I can help it, strongly preferring web apps, where I have considerably more freedom and stability combined with more efficient tools and less bureaucracy.
Debugreality 16y ago
I can see a lot of publishers offering special deals for purchasing through their website instead of through the app store to offset the 30%. For example "Subscribe via the web and receive 3 months free subscription." At least until Apple further restricts their terms...
ericbrunstad 16y ago
Paypal should be watching this very carefully. Apple is increasingly filling Paypal's role as a micro-transaction processor.

119 points by bjonathan 16y ago

Where this would be the most important part for the content-providers: "“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...”"

chapel 16y ago
I am glad Apple put this in here. After the issue with the ambiguous working on purchases made outside the App Store, this is something more consumer friendly as well as publisher friendly.
- anonymoushn 16y ago
  This is less friendly in the sense that it explicitly forbids the 43% Apple-racket-cancellation markup.
  - swombat 16y ago
    How is that a racket? Seems pretty reasonable to me, at least as a user.. I don't want to have to log in to a different website just to get the normal price. It's like if store-owner X said, "If you want us to sell your goods in our store, you need to guarantee that you won't undercut us in another store, otherwise we don't want to stock your goods or your shelves." It's standard practice in the physical product market. I'm not sure why everyone is so quick to side with Amazon in this. Amazon have squeezed their own suppliers a million ways to Sunday, driven numerous bookshops out of business, and generally fucked about with everyone they could when they could. They even sued people with their ridiculous one-click patents. I won't cry for them getting squeezed a bit by Apple.
    - anonymoushn 16y ago
      I understand what you're saying, and I'm not going to adapt the analogy to suit my view of the situation because that invariably becomes kind of silly. I think that as long as Apple allows publishers to make content viewable inside the app store purchasable outside the app store only, this policy is fair and as you've described it. If Apple requires publishers to make content viewable in the app store purchasable in the app store, the publisher is forced to choose between losing 30% of revenue on a chunk of their transactions or having a vastly inferior product for entirely artificial reasons. Apple would essentially be holding the publisher's product quality ransom. I'm also not a fan of this because I think that people who have costs forced on them for a specific subset of their transactions should be able to transparently pass on those costs to the customers who make those transactions, rather than spreading it out across all customers. I think that publishers should be able to charge 43% more for purchases and state in the app that it costs more because Apple is taking a 30% cut. I think that retailers should be able to charge 1-2% more to customers who use Visa and MasterCard than to those who use cash, and a couple percent more for Discover or AmEx. Instead, the cost is concealed and the users who don't have CCs with excellent rewards programs are paying for the rewards programs of those who do. With this policy, non-iDevice-users will pay a premium to allow iDevice users to buy the content more easily, and that doesn't strike me as particularly fair.
      - yardie 16y ago
        I think that retailers should be able to charge 1-2% more to customers who use Visa and MasterCard than to those who use cash, and a couple percent more for Discover or AmEx. Retailers are free to do this, they just can't except VISA anymore. I've been in a few stores that accept AMEX,Discover, and Mastercard with a reasonable markup (and some unreasonable markup, like the DMV). VISA shoppers, once they realize the policy, just walk out the store and go to a store that has what they want and does accept Visa. Some even come back cash in hand. In that regard Apple's policy mirrors visa. You are free to put your subscriptions in marketplace, amazon, etc. But if you want to be in the App Store you have to abide by their agreement.
        16y ago
- chapel 16y ago
  I think was was somewhat mistaken on the premise of this change. I don't like it as much as I initially did, but as long as Apple doesn't force publishers that have subscriptions outside of their app (and don't offer in app subs) to do in app subs as a result, I think the change is somewhat acceptable.
kj12345 16y ago
But "inside the app" means Apple In-App Purchase, right? I'm sure Amazon and Sony are capable of storing a user's credentials in an app, and then making the appropriate network requests when you click Buy or Subscribe. But from my understanding that wouldn't qualify since it doesn't go through Apple.

adolph 16y ago

Would apply to a services back-end to an application? As an example, the ubiquitous grocery list: the app is functional stand-alone but has a subscription syncing service that allows for sharing lists and update.

carson 16y ago
It will probably depend on what the definition of "publisher" so only time will tell. The following seems like it could cover a large swath of things depending on that definition: "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."
jmelloy 16y ago
This is actually what it's designed to apply to. Inside your grocery app is a button that says "Subscribe to sync!" Apple handles the credit card processing and takes 30%. You go to the website, and there's a button that says, "Subscribe to sync!" You pay for the credit card processing & recurring billing expenses, and 100% of what's left. Apple is assuming/hoping that the amount of people who buy your service through the app will offset the reduction in revenue.

smackfu 16y ago

Interesting that Steve Jobs is still giving quotes for the press releases.

ascendant 16y ago
They said he'd still be involved in the strategic stuff. I'm sure they need to put his name on a few press releases to make sure investors know he's still alive.

davidedicillo 16y ago

"Publishers of content-based apps" I wonder if this can be used for other non-content-driven applications.

jaaron 16y ago

And with that, Apple just gave up the content app space to Android. Do you think the Economist, the Financial Times, Amazon, Netflix, Hulu, Rdio and others are really going to hand over 30% of their subscriber revenue?

dsuriano 16y ago
But will the Economist, the Financial Times, Amazon, Netflix, Hulu pass up on the large amount of iOS users out there? They could easily make up losses with new users. (Higher volume of users, Easier billing system, more user friendly,etc etc)
- runevault 16y ago
  Amazon with their current pricing structure with ebooks can NOT, because on anything priced from 2.99 to 9.99 their own cut is only 30% of the sale price.
kayoone 16y ago
yep, they will.
GBKS 16y ago
How much of subscriber revenue goes out to shipping magazines and newspapers to people's doors and stores? In comparison, 30% may not be that big of a deal, especially when you can reach a global audience.
- zdean 16y ago
  Subscriptions are a money looser for most magazines. The end game with subscriptions (historically) has been to support ad rates that are calculated on a Cost Per Thousand readers basis. Ads are where they've made the bulk of their profit/revenue. A better place to look for a comparison is the cost structure of selling magazines on the newsstand. In that situation, it's a 33/33/33 split between the publisher, a distributer middle-man, and the retailer selling the magazine. In either situation, however, retaining 70% of the revenue is a HUGE advantage over the old way of doing it for ad-driven properties.

donohoe 16y ago

It still leaves a bad taste in my mouth. The user is paying for the device, they are paying for the bandwidth, they now pay for the content. Fine, great. The publisher is paying to build the app, they're paying even more to acquire/write/edit/host the content, they're paying a cost to make it available. Okay... whatever. Apple claims 30% just for being there. They don't add to the discovery of most content apps (we're all aware of the big name ones a Wired, NYT, USA Today, etc), discovery is what could happen in the app but not the app store itself. FYI: I work for the NYT so while I think my issues are critical and fair I want to be upfront about that.

pclark 16y ago
By "being there" you mean, having the data that enables one click payments from a mobile phone - that in itself, is a huge deal. I think 30% isn't ridiculous for handling payments on a mobile device. I remember asking an FT guy if he felt it was a good deal, and he said 30% was good compared to some carriers in the olden days...
- JoeAltmaier 16y ago
  It is no longer the "olden days" Desktop manufacturers don't skim subscription content - we would all revolt if they tried. It is NOT 30% for handling payments. It is skimming 30% for the life of the subscription for fielding a single click.
- donohoe 16y ago
  Comparing a bad deal to a worse deal doesn't make it good. I don't speak for the NYT but I've been following that chatter from news organizations for awhile. The thinking (right or wrong) goes like this: * Publishers don't want to use Apples payment system as it locks them into Apple * Publishers don't want to use iTunes for managing subscriptions * Publishers don't want to have to pay 30% of the costs to pay for a service they don't want to use There is a great and strong argument that its good for users and I agree with that. Users don't have to enter billing info etc across multiple apps. Thats a win, and a big one too. However the reality is that when people grumble about paying for news content in the first place, and newspapers turn to the internet as publishing market shrinks, and the whole business model of news is in flux, along comes Apple and says we're going to take 30% for adding a service that you (the publisher) don't want and we're going to great a barrier between you and your customer so you're dependent on us. This could be a huge debate, and I honestly can't go into one. Too tired. Too much to do today. So let me just say that you should always do what the consumer wants and in this case Apple is providing that. But by a 30% cut they're going to make it difficult for news organizations to budget and pay for in-depth news coverage as they become increasingly dependent on online revenue sources.

Kylekramer 16y ago

Ballsy move. Is it even enforceable? Prices for content can legitimately fluctuate on a day by day basis. They have enough trouble with the app review team, is there now going to be a team devoted to making sure no one undercuts them?

wallflower 16y ago
They don't care about policing the little guys. It's the big media players. That being said they can just handpick a few little guys for app rejection, with the hope that the little guy will bitch and tweet and blog and spread the message for Apple that they are indeed keeping an eye on compliance.

cletus 16y ago

Wow, big move by Apple. While on the one hand I'm glad for there to be this subscription service the real hand grenade they tossed out was this (emphasis added): > 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 Can you see Amazon handing over 30% of Kindle sales to Apple? I can't. Affiliate commissions are typically what? 4-10%? Unfortunately Apple doesn't have a lot of room to move here either as having a retail channel for iTunes vouchers (which is incredibly important for them) means maintaining a margin of at least 20% I would guess. All I know is that if I lose my Kindle app on my iPad that's going to be a huge problem.

greyman 16y ago
I am a bit confused - is kindle ebook considered a subscription?
- evilduck 16y ago
  Books not necessarily, but the Kindle platform does offer subscription services for Magazines, Newspapers, blogs, etc. Under Apple's current wording, it appears that Amazon would be required to add an in-app option to subscribe to those offerings and would be required to fork over 30% of all subscription revenue if a user chose to use the Kindle app to subscribe instead of using a different Kindle platform option.
  - davidcann 16y ago
    Why do people care so much about Amazon? Amazon is a middleman, so why not cut them out? Magazines, Newspapers, and Blogs can go directly through Apple and keep their same 70% cut.
    - evilduck 16y ago
      You're proposing publishers cut out Amazon as a middleman and replace them with Apple, another middleman. I don't know Amazon's cut, but it may not be worth the effort to switch if there's no financial gain. If content, quality and prices are equal between the AppStore subscription and the Kindle store versions, I have no incentive to buy from the AppStore when it's less feature rich than a Kindle version which can seamlessly sync and move between PC, Android and iOS. AppStore purchases are stuck on iOS devices, and the Kindle's display is the preferable reading screen for many people. To be fair, it's not limited to Amazon either, B&N and the Nook are in the same situation.

apress 16y ago

So do we think this applies the killer 30% take to ebook competitors like Amazon and B&N? The only clause that appears to relate to them is "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." That's the only place where "content" is mentioned as opposed to "subscriptions." Because of the "same or better offer" clause, not to mention agency pricing agreements from major book publishers, it is not possible for anyone but Apple to sell ebooks on iOS if those terms are applied to the ebook reader apps.

bnycum 16y ago

I understand Apple taking 30% from the initial app sale, but not from the subscription. Apple is only acting as the credit card processor in this case. They don't host or deliver the in-app/subscription content you buy, so you are taking this hit as well after the 30%. What if Mastercard/Visa charged you 30% to process cards?

YooLi 16y ago

Why does everyone (even blogs that should know better) think that in-app purchases are the same as in-app subscription purchases?? The Kindle is brought up, but what does Amazon sell through the Kindle on subscription??

Legion 16y ago
Magazines.
- pclark 16y ago
  Amazon takes a 30% cut of those.
- nhangen 16y ago
  and blog subscriptions.
  - wallflower 16y ago
    What blogs do you think will go pay? Unless they pay-wall the content on their website, how will they get people to pay for a subscription? Now, to answer that question there are many high priced financial mailing lists
jaaron 16y ago
Because this press release also updates and clarifies enforcement of in-app purchases as well. The current approach taken by the Kindle app, that is, linking to the Amazon web Kindle store for purchases, will no longer be allowed by Apple. Apple will force Amazon to allow users to purchase ebooks in the app, taking a 30% cut.

russnewcomer 16y ago

Is it just my reading of it, or does this just seem to be a flat revenue grab and attempt to integrate everything into an iTunes account? The press release is definitely targeted at the word subscriptions, so from my reading of it, individual purchases like Kindle books are safe from this requirement. However, I wonder about Netflix, Hulu, et. al, and what this will mean for their apps, especially since they seem to be basically required by Apple to include a subscription model that uses an iTunes account, and they can't charge extra to make up for their profit loss due to Apple's absolutely ridiculous 30% charge for payment processing. Seriously, all they're really doing for those apps is requiring that they add iTunes as a payment processor, add a little bit of app to handle that, and then hand over 30% of their revenue? Which basically means that the publishers will make nothing on iTunes-only subscribers. How is this a good move for their platform at the 30% charge? Do any other payment processors take 30%?

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GHFigs 16y ago

Apple: Customers purchasing a subscription through the App Store will be given the option of providing the publisher with 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. Amazon: We will share the name, billing address, and order information associated with your newspaper or magazine purchase with the publisher, who is under obligation to keep that information confidential. We will not share your credit card information or e-mail address. -- http://www.amazon.com/gp/help/customer/display.html?nodeId=200396170 http://www.amazon.com/gp/help/customer/display.html?nodeId=2...

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saturdaysaint 16y ago

This sounds like extortion... yet it's interesting to consider that these are essentially the terms the music labels have been living under for years. In that case, they paid because Apple came up with a viable service before them. Now Apple's trying to extract the same terms from companies that have successfully built sophisticated services and vast user bases independently of Apple. It's absurd to think of Apple getting a commission for "bringing a subscriber" to Netflix just because someone starts their subscription in the app. I've supported most of Apple's major strategic decisions, but this looks like a flagrant abuse of their market position.

dpritchett 16y ago
It's called affiliate marketing and it's one of the best ways for an independent operator to make money in the SEO business. I guess the only question is whether Apple can claim 30% in perpetuity or just for the first X months.
- saturdaysaint 16y ago
  I downloaded the Kindle and Netflix apps exclusively based on my experience with Amazon's and Netflix's services. These companies handle all of the backend for the services - Apple does nothing. Where is any "marketing" taking place on Apple's part - simply letting these companies' apps be searchable? I'm not opposed to Apple charging what it wishes for in-app content purchases, but making this a mandatory option for all services at a fairly steep rate might not be viable for all businesses. I don't think this will last. If iOS were to lose Netflix , Kindle and Pandora(which isn't unimaginable) the platform would instantly be less appealing than lowly WP7 and WebOS for a lot of users.
  - sambe 16y ago
    Not saying your wrong, but the marketing was to build the entire sales channel. You are free to use your Amazon Kindle for your Kindle purchases. It's all a bit of a grey area, more so than some make out if you ask me.

dstein 16y ago

Is this only for media/content subscriptions? If I have an SaaS app that I'd like to make an iPhone front-end to, can this subscription service be used?

ryancarson 16y ago

A lot of you are focusing on content subscriptions in your comments. I don't think that's the real story. I'm hugely concerned about all of us who are running SaaS apps that are complemented by an iOS app. We've worked our assess off to reach profitability and now Apple thinks they can come along an extort 30% of our revenue. The power of the App Store is in reaching the mass market. That's awesome for people who are building apps/services that service that market. They benefit hugely from this powerful distribution channel. But all of us folks who have built up a following in a niche market (web design and development, for us) don't need this and we're certainly not going to put up with Apple demanding we fork over 30% of our revenue just so our customers can have an iOS experience. IMHO, this is the push we all need to go HTML5, CSS3, jQuery for our next 'iOS' app (the way 37s recently did with the mobile version of Basecamp). I'm a huge Apple fan (probably spent $30K+ over the years for our company) but this is bullshit.

pclark 16y ago
I thought you sold subscriptions through your site, and they could then be viewed on the iPhone? Can you purchase your content via in app purchases presently? I don't see how it changes for you guys. Apple only takes 30% if you use their payment platform - if you offer a subscription service outside of the iOS application, you're free to use authentication and let users transfer their subscription from the web to iOS and Apple never takes a cut.
- hallmark 16y ago
  One key point that ryancarson points out in his post (http://thinkvitamin.com/web-industry/why-you-should-fight-apples-subscription-extortion/ http://thinkvitamin.com/web-industry/why-you-should-fight-ap...) is this: ".. 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." I sort of understand why Apple has this language, in addition to the same-or-better pricing clause. Otherwise, a publisher could effectively circumvent Apple's 30% cut by offering subscriptions at a much cheaper price off the platform and link to the sign-up form from within the app. To prevent these crafty workarounds, Apple needs rules. Unfortunately, SaaS web app developers who create companion iOS apps become collateral damage in Apple's efforts to grab profit from content publishers' subscription revenues. Apple could and should keep the same-or-better pricing constraint and remove the in-app link restriction.

jhancock 16y ago

Apple's 30% is a tax on the consumer, not the app publisher. The tax is always on the person whose wallet was opened. Apple and the publisher are beneficiaries. The publisher will make money off these sales or not stay in business. Its the consumer that will ultimately lose choice and quality. Apple's business model is not Microsoft, its Wal-Mart. And like Wal-Mart, companies will respond to Apple's predatory behavior by filling the shelves with inferior product. If you haven't shopped at Target recently, go check out something as simple as Hanes undershirts at Target and then the seemingly similar Hanes product at Wal-mart. There is a marked difference in quality as this is the only way suppliers can make money off sales to Wal-mart. Of course, software follows very different rules of scale than textiles. We may expect to see product differentiation such as "MyApp for Android" having more R&D into it than "MyApp for iOS". Its hard to say how this differentiation will take place, its new territory.

kgermino 16y ago

It seems that everybody forgets about web apps. Take Netflix for example, the app is useless without an internet connection anyway, is there any reason that they can't come out with a web-app designed for the iPhone and leave Apple out of it completely? Or would they not be able to play videos properly? Separately, I personally hate it when I have to download an app that does nothing you couldn't do with a regular website. Sports score apps for example, the MLB At Bat and NHL Ice Time apps are nice and provide a lot of extra features so I understand those, but there's also countless apps that only download scores from the web and display them. I hate that, give me a iPhone formatted web page, and if I like it I'll put it on my home screen, saves me having to update it and saves space on my drive.

Bitmobrich 16y ago

Lets take Hulu for example, who currently has a subscription model of $8.00 a month. Now if a users decides to subscribe to Hulu through an iOS app the price of the subscription is the same for the user. But for Hulu instead of collecting $8.00, they are now collecting $5.60, since 30% is now going to apple, because that person used an iOS device. So it is a tax on both the app publisher and the consumer. Apple's new term of service states: "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". For the app maker, the quickest way to compensate for a 30% Apple tariff is to raise the price by at least 30%, which hurts the app maker and the consumer. Even before this announcement the app market as we know it today, is on it's way out. In favor of creating a browser based mobile web app. With this new tax, I believe the adoption rate to create browser based mobile web apps will continue forward at full throttle so app makers and consumers are not losing 30% of subscriptions and content purchases to apple.

zacharypinter 16y ago
Flash pros/cons aside, it's a shame Apple blocks any and all browser plugins on iOS, which could help mobile web apps innovate faster.

elai 16y ago

What I would do in response is make iOS editions with a few extra 'features', charge ticket master style connivence fees or use some other artificial marketing editioning (consumer vs "enterprise" editions with few differences). Or I'll separate out the main service and smartphone service, somewhat like instapaper, charging more saying that the iOS service tier is a different user experience that has a higher price.

zacharypinter 16y ago
The problem with this is that you're betting an investment in design, development, and marketing into a loophole that Apple could very well close.

qas1981 16y ago

I think as apple continues the clamp down on there products people will gain interest in the Android platform. Google can really destroy apple by providing the same services at a lower cost. I would imagine that is there game plan. So when Apple has completely offended every content producer they will jump ship.

mkramlich 16y ago

new feaures are always good but this new restriction-lightning-bolt-from-the-blue is for me "straws[final+3]" why I have decided to never make iOS apps whenever I can help it, strongly preferring web apps, where I have considerably more freedom and stability combined with more efficient tools and less bureaucracy.

Debugreality 16y ago

I can see a lot of publishers offering special deals for purchasing through their website instead of through the app store to offset the 30%. For example "Subscribe via the web and receive 3 months free subscription." At least until Apple further restricts their terms...

ericbrunstad 16y ago

Paypal should be watching this very carefully. Apple is increasingly filling Paypal's role as a micro-transaction processor.