Apple subscription model launched and clarified
Wednesday, 16 February 2011

Apple unveiled its in-app subscription model at the launch of The Daily on February 2. Now the subscription service, which has caused worry about what is being rolled out to all the content-based apps in the iTunes store - including Kindle.


Apple's latest announcement clarifies that subscriptions to magazines and newspaper will be sold via the same iTunes App Store billing system used for apps and with Apple collecting its 30 percent share as for other In-App purchases.

The press release explains the process:

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.

To pacify those, in particular the European Newspaper Publishers' Association, who raised concerns about the In-App subscription model Apple's press release points out:

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple.

There is also a statement from Steve Jobs that attempts both justification and mollification: 

“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. 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.”


While this might sound fair on the grounds that there is provision for the alternative in which the publisher keeps 100 percent of a subscription, the fact that In-App subscription is so easy for the customer compared to visiting the publisher's own site means that Apple is likely to be raking in its 30 percent on a very high proportion of subs. 

There is also the small matter that publishers who want nothing to do with the Apple App Store and don't want to take any advantage of it "bringing new subscriptions" simply cannot. You cannot go it alone and offer your iOS application to end users without submitting it to Apple.

And the part of the model that will be hard for Amazon, for example, to swallow 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.

The Kindle apps for the iPad, iPhone and iPod touch currently direct Kindle users to Amazon's Kindle store and in future this stricture implies that they will have to make the same content (books in the case of Kindle) available through the Apple App Store and hand over 30 percent.  

To date Amazon hasn't indicated either what it feels about the situation or what it intends to do.

With so many revolutions in support of freedom being provoked, supposedly by the Internet, it is very surprising that so many users, developers and now publishers are walking into such a tightly controlled operating environment owned by a single entity - Apple. Perhaps they hope that a benevolent dictator will reap the rewards for them that they are looking for.



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Last Updated ( Wednesday, 16 February 2011 )