
Apple Reverses Course On In-App Subscriptions - whiskers
http://www.macrumors.com/2011/06/09/apple-reverses-course-on-in-app-subscriptions/
======
cpr
Why is everyone assuming Apple's being evil here?

Not that they're perfect by any means, but the pattern seems pretty clear:
they start off with a restrictive situation, see how it works, and then
adjust. (Sometimes they restrict more, then relax; sometimes they stay more
restrictive.)

They're engaged in a learning process, folks. Nothing quite like the App Store
has been attempted before on this scale, and you know they've gotta be rather
conservative at each step. You would if you were in their shoes.

Yes, they're trying to make money, but I see lots of signs that they're also
trying to accommodate the needs of users first, then developers.

Never assume malice when it could just be incompetence (i.e., learning from
mistakes), etc.

(I'm not shilling for Apple. I didn't even attend WWDC this year for the first
time in many years. ;-)

~~~
mortenjorck
The "same price or less than it is offered outside the app" clause was the
part I always imagined to be most likely to set off a DOJ smoke detector. Not
surprised to see it go.

~~~
dlikhten
Right after that e-book competitor shut it's doors (It's been like 3 weeks.)

This is how apple kills off competitors. They "experiment", competitors close
shop, then they come to their senses and undo the damage.

I am surprised Apple is not being brought up on monopoly charges.

~~~
jad
"Right after that e-book competitor shut it's doors (It's been like 3 weeks.)"

"This is how apple kills off competitors. They "experiment", competitors close
shop, then they come to their senses and undo the damage."

Do you really think Apple went through all this to kill off some tiny company
building software for their platform? No. They're relenting to make sure
companies like Amazon, Netflix, and major newspaper and magazine publishers
stay on iOS.

"I am surprised Apple is not being brought up on monopoly charges."

In what market does Apple enjoy a monopoly?

~~~
mortenjorck
The DOJ would have most likely been looking for evidence of restraint of
trade. <http://definitions.uslegal.com/r/restraint-of-trade/>

Note that only Section 2 of the Sherman Anti-Trust act even mentions
monopolies. The rest of it deals with anti-competitive actions, of which
monopoly may only be a potential outcome.

------
jarin
Essentially Apple wanted to see if they could get away with being greedy, and
when it didn't work out they abandoned it.

It's similar to what they've done with app approvals, features, terms of
service, signal strength bars, location data, etc.

~~~
GHFigs
Yeah, I sure do hate it when Apple responds positively to feedback.

~~~
pornel
Yes, it's great when husband stops beating his wife. What a great husband!

The policy was greedy, and current policy is not a complete reversal — any
other purchase systems and even linking to an external shop are still
forbidden.

~~~
Tyrannosaurs
Ignoring the hideous inappropriateness of the metaphor, you'd prefer the
husband kept beating the wife?

People do bad stuff for any number of reasons but stopping doing bad stuff is
always a good thing.

~~~
StavrosK
pornel's point is that this isn't a point in Apple's favor, they just saw that
being horrible didn't work for them and scaled it down to being merely
terrible.

Also, I find the metaphor quite apt.

~~~
Tyrannosaurs
You really equate continual physical and mental abuse with unfavourable trade
practices?

Each to their own I guess.

EDIT: My point is that it's a bad metaphor not because there are no links
between the two but, as with most heavily emotive metaphors, it comes with too
much baggage which distracts from the intended message.

A metaphor doesn't have to be a perfect match for what it's describing but the
broad content and emotional tone should be similar and here I think it's hard
to justify that this is the case.

~~~
StavrosK
Ah, that must be why people complain about my metaphors all the time. I am
pretty good at not paying any attention to the baggage, which makes me judge a
metaphor just on its merits, whereas other people complain because,
ostensibly, they are offended by that.

~~~
Tyrannosaurs
Given that metaphors are about communication, that people complain about them
all the time, and that communication is about other people, you might want to
accept that they are bad metaphors.

~~~
StavrosK
Never! My metaphors are good like other things that are good.

~~~
Tyrannosaurs
That's a simile, not a metaphor...

~~~
StavrosK
A simile _is_ a metaphor.

------
pieter
The problem with in-app purchases was always that Apple HAS to use the same
30% fee. If they use another percentage, developers just create free apps and
make 'premium' features available for the same price as their paid app would
otherwise be, thereby handing over less money to Apple.

Because Apple's in-app purchases don't distinguish between features and
content, Apple can't use different pricing schemes.

I think Apple may try to change this situation with their News Stand system in
iOS5. The content appearing there are still normal apps, they're just grouped
together in a special folder and feature automatic downloads.

My guess is that content purchased in those News Stand apps will be less taxed
than other in-app purchases, for example just 10%. That way Apple will keep
some of their most important 'partners' happy.

~~~
dstein
I still don't buy any argument that Apple is entitled to any subscription fee
at all.

If I use my own subscription system, own payment system, own user system, and
my own bandwidth to supply the content, then I shouldn't have to give anything
to Apple. I don't need to send a fee to Microsoft if I have software that
delivers content in the same way. That Apple thinks they are entitled to
anything in this regard is absurd.

~~~
binarycrusader
Apple brought you the customers, Apple adevertised your application, Apple
provided you with the bandwidth to distribute your software and updates, Apple
provided you with the SDK/APIs to write the application, Apple provided you
with support for that SDK and the OS it runs on, and Apple takes on some legal
liability for selling it.

How are they not entitled to something?

You wouldn't have the customers if they hadn't provided the market place.

~~~
Steko
This (and don't forget apple made the device itself).

Basically Apple is like a giant cruise ship company that can stop at any of
thousands of islands along it's way. The islands that don't want to follow
their rules (give us 30% of your bananas, don't use our private radio channel,
wear some pants for god's sake, etc.) well that's their prerogative but they
won't be able to sell their wares to Apple's thousands of well heeled
tourists.

~~~
jodrellblank
_wear some pants for god's sake_

As if you could offend The Creator, who made humans[1] pantsless, by not
wearing pants.

[1] source: a creation story

------
statictype
Is it possible that Amazon was playing 'chicken' with the Kindle app, and
finally at the last moment, Apple relented and Amazon won?

On an episode of The Talkshow, Gruber was speculating that this would come to
a head in early June and that something had to happen either way: The Kindle
app gets pulled or Apple makes some kind of exception to the rule.

~~~
guywithabike
Or maybe Amazon/Netflix/et al acted like mature, responsible companies and
worked out a compromise with Apple?

~~~
patrickk
_"....worked out a compromise with Apple?"_

I chuckled when I read this. Work out a compromise with Apple? Most reasonable
people would view Apple's position as being too constraining on content
providers. If another tech giant whom I won't mention pulled a move like this,
then people who be up in arms about it. But no, not for Apple ;-)

------
whiskers
The key difference between the old policy...

"provided that the same content is also offered in the app using IAP at the
same price or less than it is offered outside the app."

...and the new...

"that is subscribed to or purchased outside of the app, as long as there is no
button or external link in the app to purchase the approved content. Apple
will not receive any portion of the revenues for approved content that is
subscribed to or purchased outside of the app"

Now it appears that it's fine to show content that is subscribed for outside
of the App Store ecosystem (but you may not link directly to your payment
pages).

------
pseudonym
I'm pleased that they've made at least this change, but saddened that so many
good services that used this functionality have already disappeared.

~~~
whiskers
Yes, it's closing the stable door after the horse has bolted somewhat.

Presumably the recent announcements from large media brands (Playboy, FT) of
their intention to deliver through webapps has caused this, so we should be
thankful to them for this result!

I don't understand why they didn't position subscriptions more sensibly from
the start - if it had been a 5-10% cut this situation probably wouldn't have
happened in the first place.

~~~
paulofisch
30% would be somewhat defensible if Apple provided the CDN for the content. As
they don't, they're taxing convenience and taking it far too high. The 5-10%
number holds a lot more water.

On the flip side, young upstarts will still lap the system up. Apple has has
given them a chance to get one up on old media. The problem is it makes Apple
a very large, capricious gorilla in the market.

~~~
dhimes
My problem was more about setting restrictions on what I could charge my
customer. If the customer wants to pay the premium for buying from the iphone
application, fine by me.

As far as a "reasonable" fee, I think it should be more in the range of what a
credit card charges.

 _young upstarts will still lap the system up_

I totally agree here. I wonder if it's a viable long-term strategy. In the
first wave Apple's store got a bit of a reputation for having a lot of crap in
it.

But they could be doing the following, which I think would be pretty
brilliant:

We have a new platform, and a new way of interacting with media and with each
other. What is the best use of this? What ideas will be seen as valuable?
Well, let's just get as many ideas as we can as cheaply as we can, let the
system percolate for a bit and see what is great.

When we know what is great, we'll then steer things strongly that way either
by (1) building more stuff in-house and relegating indie applications to the
cellar, or (2) very tight restrictions on the devs. This amounts to a _huge_
marketing experiment that they _make_ a ton of money from rather than having
to spend a ton of money. Brilliant.

------
silverlight
Wow, this could not have come at a better time, since I was just wondering the
other day if our companion app to our SaaS offering would be approved. Very
pleased to see them reversing their position on this, and further clarifying
that even this guideline excludes SaaS subscriptions (which I think is why
they specifically spell out audio, video, etc. as the types of content).
Thanks, Apple!

~~~
statictype
I think at that time there was one of those one-word email from Steve Jobs to
someone basically clarifying that SaaS subscriptions were not part of that
model anyway. Now the whole thing is moot though.

------
sylvinus
Looks like Apple is (successfully?) copying Facebook's policy strategy... Two
big steps forward, then one little step backwards!

~~~
Zakuzaa
Facebook doesn't take any step backwards.

~~~
allenp
Oh really?

[http://articles.cnn.com/2009-02-18/tech/facebook.reversal_1_...](http://articles.cnn.com/2009-02-18/tech/facebook.reversal_1_facebook-
social-networking-site-barry-schnitt?_s=PM:TECH)

------
MatthewPhillips
Probably their lawyers got to them. They have a near monopoly in legal music
downloads (market share at 70%), so if their app store policies led to
Rhapsody or Rdio going out of business it would look pretty bad in the eyes of
regulators.

~~~
lurch_mojoff
I don't know, "near monopoly" doesn't mean anything - 70% or 7%, you either
have a leverage over the market and are a monopoly or you don't and aren't.

I think it's rather that Apple figured that those two (and others) going out
of business (or at least ditching iOS) will hurt their platform more than
anything they'll gain from the subscription rule change.

------
guelo
I don't know how it is you're supposed to build a business on top of Apple's
platforms. I'm staying as far away as I can.

~~~
loumf
Apple has paid 2.5 billion to developers -- and that doesn't include other
ways of making money on the ecosystem (e.g. writing apps for others)

The danger parts are if you are trying to make money in the same way Apple is,
or threatening them in some way.

Some examples:

\- if you are going to try to make some kind of significant (30%) affiliate
payment as a go-between. (iFlow)

\- if you try to fill a temporary obvious gap in iOS, that nearly every user
would want -- this only works if you can keep out-innovating Apple (if they
even allow it). (Instapaper -- but I think he'll out-innovate)

\- if somehow your app/service gives some advantage to Apple's competitors
(AdMob)

~~~
dgeb
"Apple has paid 2.5 billion to developers"

Let's change our perspective here: customers have paid $2.5 billion to
developers and $1.1 billion to Apple for apps.

~~~
recoiledsnake
And many still claim that the App Store and iTunes are run at zero profit or a
loss. Could that be true?

~~~
ugh
They claim that because it’s what Apple CFO Oppenheimer said in February
during a shareholder meeting: “We run the App Store just a little over break-
even.”

Apple makes money by selling hardware with good margins. The App Store and the
Music Store help them sell more hardware.

------
pdenya
Planned the whole time?

1) Apple introduces a strict requirement for using IAP with a deadline

2) All the devs who were planning to comply to keep their apps in the store
have likely done the work integrating IAP already

3) Apple reverses policies

4) Devs have the option to drop IAP in their apps but it's not likely that
many will IMO

------
lini
Does this mean that people like iFlow
(<https://www.iflowreader.com/Closing.aspx>) can start selling eBooks again
now? Or is it too late for them already?

~~~
kyleslattery
Well, I'd imagine they still can't sell it in the app, because the agency
model means that they have to pay out 70% of the sale price to the publisher.
After Apple's 30% cut, that leaves nothing for them.

However, it seems as though Apple's ok with apps selling content through a
website, as long as it isn't linked to from the app.

~~~
mason55
The requirement that in-app purchases be the same price is gone as well, so
now they can charge a 30% markup to buy from the iPhone app.

~~~
alanfalcon
Not under the Agency model where they still owe publishers 70% of the sale and
Apple 30% of the sale. If they want a cut, they can only sell from a website,
outside the app. They had a flawed business model to egin with in my opinion.

------
schrototo
It makes perfect sense now that they have Newsstand in iOS 5. Netflix, Amazon
Kindle, SaaS apps and what-have-you can do what they want subscription-wise
and still provide immense value to the platform, while magazines and
newspapers will want to be part of Newsstand and will give Apple their 30%
without much of a fuss. Everybody wins.

------
dageshi
I truly don't understand why apple does this, I can only assume its because
they have nothing but contempt for the people who develop apps for their
platform.

~~~
whiskers
Firstly this is a positive change (not perfect, but better).

But the original rules as stated already in these comments were presumably to
see if

a) they could get away with it

b) to stop people using subscriptions to avoid normal purchases

c) to start from the most extreme point to leave room to manoeuvre later

~~~
dageshi
I'm aware this is a positive change, my point is as a developer it breeds ever
increasing uncertainty. Apple introduce draconian changes penciled in to come
into effect in four months time, everyone complains about it, they don't say
or do anything about it for four months and then quietly change policy a
couple of weeks before it comes into effect.

I'm not saying apple can't act like that, I'm not saying that it might not be
in their own business interests, I am saying that it shows complete contempt
for the people developing apps for their platform who have to plan around
changes that might or might not come into effect and which might or might not
be clarified at some point sooner or later but probably later.

~~~
whiskers
On that point we are in complete agreement :)

------
sambeau
I would like to point out to people who say that Apple is being greedy: until
they came out with their 30% deal it was normal for Phone companies to ban all
software from their phones except for their own. When phone companies did
include outside developers software, deals of 90%+ were common (as they still
are in the games' industry)

~~~
necubi
This was never true on the two dominant smart phone platforms, Palm OS and
Windows Mobile. Development on the former required only Codewarrior while the
latter VS.Net, which became free. Neither Palm nor Microsoft ever required you
to pay them money either to develop or release applications, nor did they
require approval for those applications to run on devices.

You're comparing Apple's smart phone ecosytem against other companies' dumb
phone ecosystems. A more reasonable comparison against other smart phone
platforms shows that Apple's is unusually restrictive.

~~~
sambeau
When I owned a Palm, software was prohibitively expensive, hard-to-find, buggy
and rarely did what it advertised.

------
davidedicillo
I wonder if I can use In-App subscriptions to subscribe to a service instead
of content. And, if not, if I can link to the external site.

~~~
DenisM
Check out my GeeTasksLite app, I do exactly that. If you follow in my foot
steps you should be ok.

------
Qz
_That is, these apps can't have a "buy" button that takes users to an external
subscription page._

I can't see how this is good for the user at all.

------
codiist
I think this also has to do with the in-App Patent trouble. Now Apple can say,
hey, we did not force you to offer in-App purchase in your app, you can sell
your subscriptions just outside the store; in the end, you as the developer of
the app are responsible for any resulting legal trouble.

------
Straubiz
Is it confirmed?

~~~
whiskers
Yes, I've just logged in to Developer Centre to check and the policy is
updated on there.

~~~
warmfuzzykitten
This is still there:

"Apps that link to external mechanisms for purchases or subscriptions to be
used in the app, such as a “buy" button that goes to a web site to purchase a
digital book, will be rejected"

The Kindle app still doesn't conform to this.

------
hnsmurf
The logo certainly makes Apple guilty of a trade dress infringement. This guy
will have no shortage of IP attorneys willing to take his case pro bono.

------
MatthewPhillips
What does this mean for Readability?

~~~
berberich
They said they're going to review their options:
<https://twitter.com/#!/readability/status/78858529263464448>

------
alecco
IMHO, they probably freaked out everybody is eyeing HTML5 as a viable cross-
platform app alternative.

