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Apple launches subscription service on App Store

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By Charles Starrett

Contributing Editor
Published: Tuesday, February 15, 2011
News Categories: Apple, Apps + Games

Apple today announced the launch of its long-rumored subscription service for the App Store. According to the announcement, the service is available to all publishers of content-based apps on the store, including magazines, newspapers, video, music, and more. The service will use the same App Store billing system as In-App Purchases, and will allow publishers to set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Customers are able to choose their subscription length with one-click, are automatically charged based based on their chosen length of commitment, and will be able to review and manage all of their subscriptions from their personal account page, including canceling automatic renewals. Notably, Apple processes the payments, and keeps the same 30 percent share as it does for other In-App Purchases.

Customers who purchase a subscription through the App Store will be given the option of providing personal information—such as their name, email address, and zip code—to the publisher when they subscribe. The use of such information will fall under the publisher’s privacy policy, rather than Apple’s. The same rules will apply for any additional information provided to the publisher via the app, assuming the customers are offered a clear choice as to whether or not they want to provide the information, and are clearly told that any additional information will be handled under the publisher’s privacy policy and not Apple’s.

“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,” said 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. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

The announcement goes on to say that publishers offering Apple’s subscription service from inside the app may also leverage other methods of acquiring digital subscribers outside of the app, such as selling digital subscriptions online, or providing free access to existing subscribers. Apple notes that there is no revenue sharing or exchange of customer information in such cases, and that it will be up to the publisher to provide an authentication process for such subscribers. In addition, publishers may no longer provide links in their apps which allow the customer to purchase content or subscriptions outside of the app.

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Comments

1

It’s refreshing to see that Apple will continue to offer a way to authorize subscriptions purchased outside the iOS ecosystem. I would hate to see prices on sports subscriptions (such as MLB.TV) be raised to compensate for the 30% fees.

Posted by Galley in Greenville, SC on February 15, 2011 at 8:47 AM (PDT)

2

Some kind of App Store subscription mechanism is sorely needed for magazine and newspaper publishers to make a go of selling iPad-based versions of their publications. However, I find this aspect ...

“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 ....”

... to be disturbing. Why should Apple be able to tell publishers what to charge for subscriptions purchased outside the app? I’m not a lawyer, but it sure seems anticompetitive to me.

Also, why should Apple expect the same cut on a recurring, subscription-type purchase as it gets on a new purchase? Apple should be willing to cut publishers some slack here. These days, pretty much all periodical publishers are barely getting by. By being as aggressive as they have been in this situation, Apple risks killing the goose that lays the golden egg. Of course, that’s assuming Apple anticipates having a long-term revenue stream from iPad-based publications, and maybe they just assume newspapers and magazines will go the way of the dodo before too long.

Whatever happens with periodicals, I sure hope this ...

“[P]ublishers may no longer provide links in their apps which allow the customer to purchase content ... outside of the app”

... isn’t extended to reader software from booksellers, as suggested by the recent Sony rejection. IMO, that’d constitute Apple jumping with both feet into the anticompetitve arena.

Posted by orgel in Falls Church, VA on February 15, 2011 at 9:43 AM (PDT)

3

@2: Good points, but one should keep in mind that Apple’s standard operating method IS to be as absolutely anti-competitive as possible within the law and the market. Sometimes it works: holding out on playing nicely over DRM with music gave them an overwhelming hold on the digital music sales marketplace and helped to destroy their competition. Sometimes it doesn’t: Mac OS holding steady around 3%-5% going on 20 years no matter what sort of mindshare and buzz it may have.

While I think they’re making a mistake by keeping content delivery so closed on the iTunes app store, they wouldn’t be being Apple if this weren’t the case.

As for the bit about eReaders, what they’re doing seems to be splitting the baby down the middle: If you don’t provide any in app purchase or links, so long as you handle the servers and authentication, you can make anything you want available at whatever price you want. If you do provide in app purchases or links, you can’t make a better offer outside the app than in it, basically forcing Amazon, Sony, and periodical publishers to make a wager with their bottom line: where will they lose more, by giving Apple their 30% for any in-app sales, or by doing away with any direct in-app links to the store and just pointing and/or directing people to a store front where they can acquire subscriptions or eBooks on their own?

Posted by Code Monkey in Midstate New York on February 15, 2011 at 10:11 AM (PDT)

4

@2 - “Why should Apple be able to tell publishers what to charge for subscriptions purchased outside the app?”

“if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app”.

This does not say anything about dictating what a publisher charges outside of the app. It simply states that IF a publisher is selling the subscription OUTSIDE the app at a discount/special offer, then Apple requires them to MATCH or BETTER that offer within the app. Nothing at all about telling the publisher what to charge outside the iTunes universe. Nothing at all.

Posted by Mitch on February 15, 2011 at 4:20 PM (PDT)

5

@#4,
Exactly. Tis is a consumer-friendly move on Apple’s part.
You’ll have to excuse the resident Apple-bashed here for once again trying to make Apple out to be the Stalin regime.
Publishers don’t have to sell one thing on Apple’s store.  They are free to go elsewhere or start their own services.  It’s called free market.

Posted by Sb on February 15, 2011 at 9:29 PM (PDT)

6

I think Apple is on thin ice here. If users are restricted from downloading content on the iOS device, they will start looking for alternatives, such as competing tablets or ultra-portable PCs.

Apple should perhaps redefine itself as a platform provider, not a content provider. The App Store is beneficial in that the environment is controlled (and perhaps virus-free), but Apple’s control should stop there. They should not try to control content purchases (e.g., eBooks).

As of now, Apple does not benefit from the Kindle app, except to make the iPad a platform of choice for many eBook readers. Apple’s own eBook platform, iBooks, is (sorry to say) a complete failure, and not a viable alternative to the Kindle app:

* The iBookstore has very limited content compared to Kindle

* The search, preview, recommendations, and review functionality you find at Amazon.com is completely lacking in the iBookstore

* There is no way of reading iBooks on other media than iOS (not even on a Mac, as of now!)

* The iBooks app might be a little more visually appealing than the Kindle app, but this is about the only positive thing you can say of iBooks.

Conclusion: Amazon knows how to sell books, Apple does not. Apple should realize this, and withdraw from the eBook market. Trying to lock competing eBook platforms out, in order to promote their own concept, will never work out. Instead, Apple should actively promote the Kindle app, as a killer eBook app for the iPad.

Of course, Apple is all about generating profit, so this scenario may not be likely. But there can be other ways to generate profit, which may be more acceptable to the content providers:

* What if, instead of insisting of an App store alternative, Apple simply keeps count of commercial downloads to the iOS platform? If I buy a eBook on Amazon’s web site, and read it on a PC, Apple obviously gets nothing. But if I download the eBook on my iPad, via the Kindle app, Apple could possibly collect a small revenue from Amazon, for the “service” of allowing Amazon access to the iPad ecosystem. Perhaps not very palatable from Amazon’s point of view, but certainly better than making a duplicate Amazon.com environment in the App store.

If Amazon find Apple’s policy unacceptable, what will happen? They may pull out of the iPad ecosystem, and perhaps sell a lot of Kindles too, when iPad users no longer are able to read Kindle eBooks. Will it hurt Amazon more than Apple? Or will Apple be the big loser?

Posted by NilsO on February 16, 2011 at 2:26 AM (PDT)

7

#6: Or Apple could invent a “tax”, billed to your iTunes account, for each Kindle eBook you download to your iPad. Certainly, this will not be popular with the users, exposing Apple’s greediness in all it’s glory. But it certainly is doable. And it will be in accordance with Apple’s policy:

“We want a profit from all downloads to your device.”

Posted by BenRogers on February 16, 2011 at 4:02 AM (PDT)

8

@6 & 7: The thing is that Amazon is not affected by this policy much if at all. Apple isn’t interfering in any way with you buying Kindle books from Safari on your iOS device, going into the Kindle app and then downloading that book. So a provider like Amazon’s Kindle service won’t even blink at this “clarification” of their policy. They just won’t be able to provide an in-app store, which they already don’t, all they have is a Kindle store front button that takes you to the web store front page - what you do after that is up to you.

This policy is aimed more at strong arming those smaller providers who don’t already have strong consumer mindshare outside the iTunes app store to not making things any more “complicated” than Apple wants them.

Posted by Code Monkey in Midstate New York on February 16, 2011 at 4:31 AM (PDT)

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