
Apple Launches Subscriptions on the App Store - bjonathan
http://www.apple.com/pr/library/2011/02/15appstore.html
======
GHFigs
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=2...](http://www.amazon.com/gp/help/customer/display.html?nodeId=200396170)

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ryancarson
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.

~~~
apike
This is actually great for consumer SaaS. Getting consumers to subscribe to
software is extremely hard, and this adds a low-friction way to get new
subscribers.

If they come through App Store one-click, you get additional revenue that is
at least 30% more likely to happen than if you stuck up a credit card form. If
they come through your website, your revenue is the same.

~~~
ryancarson
If you serve a niche vertical, this is NOT great. You don't need Apple.

~~~
apike
Indeed - it only helps for services that target many "normal" people. For B2B
and prosumer services with a high cost per subscriber, you're a lot less
likely to get a 30% boost in sales.

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saturdaysaint
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
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
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.

~~~
dpritchett
The Kindle and Netflix apps were free when I downloaded them. The interesting
part to me is that Apple apparently insists that providers' external sales
prices not undercut the iOS price:

 _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, to customers who wish to
subscribe from within the app. 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._

This means that Netflix would either have to take a $3 hit on any $10/mo.
subscription initiated from within iOS or raise the price for both the iOS and
external subscriptions by a few dollars in order to offset the apple fee.

Not sure how this will play out, but it's interesting. Obviously Netflix and
Apple can change their terms at any time. This is a decent opening move by
Apple.

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jrnkntl
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
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.

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anonymoushn
This is less friendly in the sense that it explicitly forbids the 43% Apple-
racket-cancellation markup.

~~~
swombat
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
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
_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.

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cletus
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
I am a bit confused - is kindle ebook considered a subscription?

~~~
evilduck
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
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.

~~~
c2
That's replacing one middleman (Amazon) with another (Apple). Also Amazon
typically has much better selection then Apple, not to mention all the content
you already purchased on the Kindle store and were planning to read with your
iPad becomes inaccessible, if Apple does end up pulling the Kindle app.

~~~
davidcann
Yes, exactly: replacing Amazon with Apple. Why should publishers and customers
have two middlemen?

I highly doubt that Apple will ever pull a Kindle-viewer app, so your second
concern is likely a non-issue.

~~~
potatolicious
> _"Why should publishers and customers have two middlemen?"_

That's the point, there _aren't_ 2 middlemen. There is only one: Amazon. Apple
wants to take Amazon's place by asserting their privilege over the platform.

~~~
davidcann
Yea, so what's wrong with Apple edging out Amazon?

Why doesn't Amazon allow iBooks to be purchased on the Kindle? They're in
direct competition.

I use and love Amazon services, but I have a hard time feeling bad for them in
this matter.

~~~
nooneelse
I believe the last time I saw this retort on HN, someone pointed to some "how
to develop for the kindle" information that Apple is free to use if they
choose. Until they do so and Amazon rejects their work, the retort does not
hold up.

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russnewcomer
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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donohoe
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._

~~~
hop
"Apple claims 30% just for being there."

They created the iPad, they created the App Store. Where was the NYT et al
when the canvas was blank?

Also what is the cost for digital delivery versus print? And all publishers
surely can have a web based subscription service if they desired - fully
accessible from any iOS browser or other smartphone.

~~~
invertd
yes they created the iPad...and I paid for it! Why should I pay more after
that? It's like Ford saying they want 30% of all cab income since they created
the "Crown Victoria" taxi car....

~~~
flurie
I think this analogy only holds true if Ford is asking for a take of a
seamless dispatch service built into all Crown Vics sold to taxi fleets.

~~~
ZeroGravitas
... and forcing all taxi companies to use it, and preventing them from putting
pointers to their other payment options inside the car.

(Is it just coincidence that every analogy in support of Apple forgets that
second bit. Are the analogy writers unaware of that clause, or does it start
to sound oppressive so they just leave it out?)

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apress
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.

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jhancock
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.

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Bitmobrich
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
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.

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bnycum
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?

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dstein
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?

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jaaron
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?

~~~
smiler
Why did Rupert Murdoch decide to launch on the iPad then? The fact is the
majority of tablet users right now are iPad users and iPad users are far more
likely to pay for premium content.

~~~
ZeroGravitas
He did specify at the launch that he thought this 30% would be negotiable
after a year. Should be an interesting conversation when it happens.

~~~
ams6110
That will all depend on what competition emerges.

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adolph
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
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."

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elai
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
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.

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Kylekramer
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
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.

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qas1981
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.

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kgermino
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.

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

~~~
ascendant
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.

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Debugreality
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...

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davidedicillo
"Publishers of content-based apps"

I wonder if this can be used for other non-content-driven applications.

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YooLi
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
Magazines.

~~~
nhangen
and blog subscriptions.

~~~
wallflower
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

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mkramlich
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.

