Apple Launches Subscriptions on the App Store | Hacker News Reader

Apple Launches Subscriptions on the App Store

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119 pointsbjonathan130 comments

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...

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.

This is Apple's version of suicide -- attacking the developer's that made the platform popular in the first place.

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.

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

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.

Are you serious? I just subscribed to a stock trading app's data service in-app. So Apple gets to keep 30% of my monthly fee in perpetuity although I've had a relationship with the brokerage longer than I've had with Apple.

This is frigging bullshit. And the sad thing is that Google et al will seek to emulate this ($800 tablet anyone?) rather than demolish it. Also Android devices' UX sucks, which is why I had to reluctantly buy an iPhone.

Stock trading apps' data services are decidedly not consumer SaaS for the mass market. They're business/prosumer, a world that already has success in getting small numbers of profitable subscribers.

The winners are apps that weren't even possible before - $1/month subscriptions for normal people.

Umm, I think you're missing the point. The point was about a pre-existing relationship that was exercised on a Apple-designed device. How does it matter whether it's prosumer or not.

My point is that the relationship you describe doesn't exist in the mass consumer space, and Apple is enabling something exciting and new there. Your point is that the pro/business space Apple's "must go through the app store" rule is a nuisance. I think we're both right.

From Apple's press release:

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.

Ryan,

The HTML5 route only works where Mobile Safari has access to what bits of iOS you need eg. You still can't upload content via mobile safari.

Also how will this work with freemium models? What about trial models?

If they enforce this for SaaS there are a ton of use cases where it looks like it fails entirely.

Hell even for non SaaS stuff. Cineworld has an app which takes Credit Cards. Will this be barred? Banks have an app. Banks charge rates. Will this be barred?

This works for content, and only some content at that.

This will definitely need some work, to work.

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.

One key point that ryancarson points out in his post (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.

"Apple® today announced a new subscription service available to all publishers of content-based apps on the App Store℠, including magazines, newspapers, video, music, etc."

I'm hoping they aren't going to classify a SaaS client as a content-based app .. we definitely need clarification on this.

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.

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.

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.

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.

You make a valid point, but ultimately, I think the current state of affairs - where Apple provides a nice sales channel (marketing in a sense) on their already highly profitable devices and where Netflix brings an attractive service to the platform - is a fairly even trade. Apple is asking for such a drastic renegotiation of this "trade balance" that I predict services will need to reprice for iOS or abandon the platform. Music and video services are already struggling enough - and Apple has too many viable competitors! - for me to imagine them simply submitting. Sony's withdrawal of their app is the writing on the wall, I'm afraid.

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.

making this a mandatory option for all services at a fairly steep rate might not be viable for all businesses.

You're quite right. Businesses wishing to offer subscription content via iOS might need to retool their subscription plans to accomodate for the overhead this channel brings with it. I use the $9/mo. Netflix plan now to get unlimited streaming and 1 DVD at a time. Perhaps that plan will one day only support browser-based streaming and then Netflix will release an $11 all-devices, no DVDs plan.

Hulu Plus is trying something like that out - you can't get their content on mobiles at all without a premium subscription but you can get it free (ad-supported anyway) via the browser.

Or perhaps to comply with the letter of the rules, Netflix and Amazon will provide different pricing packages depending on which mobile platform you want to be on - that $9.99 Kindle book will come with free Android and Blackberry compatibility, but will have a $13 "Kindle + iOS" version. Netflix could be be compatible with other platforms by default but charge for iOS compatibility like they charge for Blu-ray. Etcetera.

The marketing/value add Apple brings is putting a highly desirable platform with great capabilities in front of loads of people who are proven to like spending money on apps etc. NetFlix and co. would never have this reach without Apple.

Apple does "nothing"? Hardly.

Apple is providing the most compelling user experience with which to enjoy Amazon and Netflix's services. You know what a service is worth without a cool, convenient way to enjoy it? Not much.

You think iOS users will jump to WP7? Once you've tasted quality, it's hard to go back to the lowest common denominator. And Apple isn't going to lose those three services. Apple didn't become the largest non-Exxon corporation in world history by being that stupid. Ain't happ'nin.

If you honestly believe that "Apple is providing the most compelling user experience with which to enjoy [Amazon's] services", then you evidently haven't used a Kindle.

The Kindle was designed to provide the most elegant and compelling user experience with which to enjoy Amazon's services and it succeeded wildly.

Not only have I used one and liked one, but I've bought one. The Kindle is great. But it's not very useful as a Netflix device, and my statement was about devices that can be used for both Amazon e-books and Netflix (which is why you had to use brackets while quoting me, and leave out part of what I said). The Kindle isn't a player in that market.

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...”"

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.

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

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.

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.

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.

Retailers like Amazon already take a cut of all transactions. The only reason why Apple's cut stands out is because it is the same as Amazon's. In effect, Apple is saying, "if you sell stuff on iTunes, you should be the producer, not the middleman, or, if you are a middleman, you better be damn thin."

Again, seems fair enough. Booksellers won't give a toss about whether it's Amazon or iBooks that takes the 30%, so long as users buy it. And Amazon doesn't deserve 30% just for syncing books between the kindle and the iPad (unless they're the one making the sale).

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.

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.

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.

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

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.

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.

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.

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.

> "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.

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.

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.

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.

But why should content sellers need to have such a middle man at all with the current technology? If there were a subscription-based-content reader installed on my laptop, I could just pay the content provider with a credit card and Dell would not be getting a cut.

Abstracted to middlemen in general, since most of it applies:

Convenience, product visibility, uniformity of services, buying power, plus they assume certain risks on my behalf (dealing with shady/inexperienced suppliers, maintaining distribution channels, chasing refunds, notifying me of recalls etc). It's the same reason I go to a grocery store instead of making trips to a dozen or more local farms.

In the digital arena, product suggestions are becoming important too. Amazon has a fairly accurate profile of what I like, and can show me stuff I might like but would never discover on my own. Independent niche suppliers can't build that profile and they usually don't want me checking out their competitors.

There's also the consumer willingness to trade product rights for cost savings. O'Reilly sells non-DRMed PDFs of their books on their own site, or I can buy a DRMed copy from Amazon for half price. For a book that'll might be antiquated in 3 years, that savings starts looking pretty good.

"Current technology" is no magic bullet either. The cost barrier of the infrastructure is lower, but it still requires talent a supplier may not specialize in to run it. Selling your own product poorly is probably worse for you than paying someone else to do it well.

The way I read it, this would only concern Amazon with the Kindle app if it had newspaper/magazine subscriptions in Kindle for iOS. Currently it doesn't, so I don't think it's a problem. That said, IANAL...

Also not a lawyer, but: " if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app"

That reads to me like they will be required to offer their subscription services in-app.

I don't think this means that you are required to build subscription functionality into your app if your app's company offers any sort of subscriptions. So if the Kindle app on iOS doesn't support subscriptions yet, then they aren't compelled to do so, right?

It's safe to say that an entity/group/company in control of a market will likely act to prevent circumvention of the market.

Amazon does this - any Amazon Marketplace seller who sells products independently of the Marketplace must offer the goods on Amazon for the same price or less -- "General Pricing Rule" - http://www.amazon.com/gp/help/customer/display.html?nodeId=1...

(I believe Kindle purchases aren't subscriptions, so let's leave that aside for now.)

(I'm also leaving aside whether this behavior is ethical, good, whathaveyou.)

The problem is Apple's insistence on a 30% commission. I think the backlash against this will be substantial.

Indeed. The issue is not the "best price" guarantee, which is common in business. It is the "holy crap that's a huge commission" issue.

You can't lose an app you've already downloaded. Well, maybe Apple could theoretically remotely kill it, but they've never done that for the 100s of apps they've pulled from the store.

Pretty easy for Apple to kill it in relatively short order by making it partially or entirely incompatible with a new iOS version, though.

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%?

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.

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...

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.

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.

I imagine the reason publishers dislike the Apple payment stuff is not the 30% but the fact that Apple owns the customer, not them.

"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.

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

Isn't that similar to saying Google can ask for a cut for all web subscriptions made in Chrome? Apple created the iPad, true. But it's not that I have not paid for the device.

I think its more like if Google had also developed their own standard for sending pages to replace HTML/JS/CSS, replaced DNS with their own page discovery system, provided tons of pre-built reusable components that make up almost all parts of most sites, and then paid for all of the bandwidth for transferring webapps using this new system.

And then, still supported the old way of doing things, only charging a cut if you used their new system.

So Microsoft should be taking a 30% cut of every dime spent on Windows?

Apple doesn't charge me (or Valve) anything to buy something from Steam for Mac.

Likewise, they don't charge me when Netflix streams a movie on my Macbook.

It's their _market_ that they impose fees on. Amazon charges their Marketplace sellers up to 25% "referral fee" for all sales. Kindle market is 30% as well, I believe. Valve also takes a cut on both "retail" versions and DLC packs released through Steam. There were companies (like Introversion, who makes the awesome Darwinia and Multiwinia RTS games) that almost went bankrupt if it wasn't for Steams mighty distribution service and marketing (dare I say) genius.

What I don't get is, if NYT and other publishers are so ginned up about Apple's cut, why don't they just say "Hey, iPad users, go to NYTimes.com and subscribe. You'll receive the same hard-hitting journalism and insightful commentary in the Safari-optimized nytimes.com edition as you would from our iPad App. Subscribe today!" Problem solved.

wrt "why dont they just say": Apple prohibits "links" off-app subscription sites. It likely they'll take a dim of plain text too (obviously clickable links are not allowed).

I can kinda sorta understand Amazon charging the Marketplace guys (although 25% seems excessive), since they're targeting the long tail who would otherwise be invisible.

Obviously, I think Amazon charging publishers 30% to reach Kindle owners is bullshit, just as I think about Apple.

Apple did not do it for free. They had a business motive - and as a consumer, I ain't getting the device for free either.

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....

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.

... 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?)

You're right...the "seamless dispatch service" has it value BUT nowhere near the value of the car itself including things like reliability, comfort, space (etc) and certainly not even close to 30%. I think Apple is just pushing this high anchor so that it'll be negotiated down in the future. I believe we'll see this number being gradually notched down until it becomes either very low (in the low teens) or eventually 0 - just like most taxi fleet services now include the dispatch as a standard feature.

Are you paying more? From a user perspective, they're explicitly being charged the same for the content.

We can't view it completely from our developers perspective, because the average user just doesn't care.

All taxes on corporations are passed down to consumers (including Apple's).

This is a separate argument but one I am so very tired of hearing so sorry if I come across as a bit terse.

The notion that because its electronic delivery then its cheap, or cheaper than print...

That is called an Assumption. And its a bad one too.

Print is expensive and labor intensive. It involves presses, unions, skill, delivery and distribution. However the big costs of that are offset by advertising in the pages.

Digital distribution is expensive but cheaper than print. It involves programmers, sys admins, dbas, CMS developers, web dev, consultants, support, hosting, ec2, bandwidth and more. However the big costs of this are not as easily offset by advertising on web pages because web advertising is dirt cheap.

donohoe, I am sorry but I had to laugh. It's not just "being there" - you had to pay to build the app, sure, but do you know how much Apple had to invest for creating the platform on which your app could be built? And implementing app store, and running app store, etc. etc...

But yes, 30% feels a bit high for repeated payments with no added discovery by Apple, i agree with you on this one.

I'm not claiming Apple did nothing. They have built a great platform and its been very successful for them.

I can imagine how much they spend building it but I can see how much they made back from that though. And this is before Subscriptions will add to that.

My point is that Subscriptions can happen without Apple. But they have chosen to not allow that. They have also chosen to take 30%.

Finally, they also take away any direct relationship a publisher can have with a customer (you can argue the pro's and con's of that but end result is publishers become dependent on Apple).

My point is that Subscriptions can happen without Apple.

Where they do, Apple takes no cut whatsoever. If you have a subscription-based web application, for example. The only way Apple can take a cut is if you're using what they provide.

they also take away any direct relationship a publisher can have with a customer

It takes 2 party to be in a relationship. Apple gives you the option of being in that relationship or not. Except for billing and shipping, I can't remember what the pros are for the publisher having my information. I do know that at the first chance they get they make money on the backside by blasting out my mailing address to every junkmail operation in existence.

Agreed. However if CompanyX has a relationship with CompanyY and is negotiating prices/deal/terms/whatever it is in on very shaky footing to get a favorable deal if CompanyY completely owns the customer base for CompanyX.

Thanks for representing the NYT viewpoint in the thread, donohoe. My question to you is, why should the NYT be so afraid of this? Customers will (mostly) know about Apple's 30% cut. If NYT wants the entire pie, can't they just sell the user an iPad NYT subscription on the NYT website or elsewhere, thus getting 100%?

Apple has NOT chosen to not allow subscriptions from the outside. Doesn't what Jobs said explain that clearly? If NYT already sold the user, Apple gets zero. If NYT sells a new user from somewhere outside the iPad app, Apple gets zero.

If, on the other hand, Apple sells a new NYT subscriber, from inside the iPad app, Apple gets a cut.

Now, we can argue about whether the 30% cut is way too big, but this seems pretty close to fair, to me.

This is NOT the NYT viewpoint but my own. I am a developer with the NYT but I'm not speaking for the NYT nor claim to be reflecting their views.

I apologize for my bad wording. I meant an NYT viewpoint, not the official views of the NYT. I would still be very interested in your answer and opinions.

If publishers choose to pay Apple 30% for "being there" then I guess it's worth 30%. They don't have to rationalize their fee (even though they try). They're not deceiving or coercing you. They're offering a deal in good faith -- take it or leave it.

Right, but they also have to charge that rate everywhere else.

So if a subscription without Apple is $10 (an easy round number) its not matter of upping the rate to $15 so you can still get your $10 to pay for the content since you now have to also charge that $15 to Amazon users and other subscribers.

That 1/3 price hike is pretty substantial to pass onto the reader, so it bites into the publishers margin instead. The rate remains at $10 or $12 so the publisher is getting much less that they'd like.

With talk of paywalls/subscriptions on web sites of news orgs there is a lot of chatter about people not wanting to pay for news in the first place. So subscription sales aren't a sure thing when it comes to a revenue stream for a publisher and also now Apple wants 30% of that...

Are we asking if the deal is competitive or if it's fair? They are very different questions and most of what I'm reading in this thread seems to treat them as the same.

Maybe Apple doesn't want big, low-margin publishers in the app store. Maybe they want to be the big publisher and they only want small time content that is worth many times what it cost to produce.

As a developer, I don't like that the hottest new platform is a walled garden, but I can't say that Apple has ever even implied that the app store is anything else and they haven't twisted any arms or abused any monopolies to get where they are. They just played really well, went straight to the source (consumers), and now they have everyone else by the balls.

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.

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.

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.

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.

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?

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?

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?

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)

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.

yep, they will.

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.

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.

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.

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.

That will all depend on what competition emerges.

Why did he buy MySpace? Maybe he's just behind the curve?

My only point is this kind of reasoning is weak.

With news/magazines, at least, yes, they will. They're already handing over more than 30% of their subscribe revenue to the folks who print and deliver their stuff.

Currently, Android Market doesn't support subscription billing. Please note that collecting payments through your application is not allowed under the Android Market Developer Distribution Agreement. -- http://market.android.com/support/bin/answer.py?hl=en&an...

I think this remains to be seen.

I have an iPhone, and an Android phone, as well as an iPad.

At the current time, there really is no Android tablet. Sure, rumors abound, but ground is being conquered NOW with the iPad.

The Android phones I've used have been nice, but the whole iPhone user experience, from app-store to interaction, just feels "cleaner" and more efficient to me.

The content providers will go after whatever space provides them the great profit. This is mostly a factor of user-base exposure in terms of users who actually purchase things, not just raw handset numbers. The Economist would take 60% of a $1.00 subscription from 200 Million users over 99% of a $5.00 subscription from 5 million users (just making up stats to make a point).

If Apple can deliver the users and the dollars, plus create a whole fully-integrated elegant content-delivery subsystem, they'll win this market. If they can't, they'll lose it or share it with Android, WinMo7, etc.

One thing about Apple though, they do not appear to make random sporadic decisions. They seem to price things with much consideration, factoring in their position, value-add, and what the market will bear.

> They seem to price things with much consideration, factoring in their position, value-add, and what the market will bear.

If Apple had different categories of content that required different rates, I might be able to see that point. However, this looks like they just said "let's get our 30% from subscriptions as well".

> Apple just gave up the content app space to Android.

* There is no android tablet (or android for tablet, for that matter

* The android market does not support subscriptions

> 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?

Depends on one thing and one thing only: do they believe they can reach (at least 70% of) those clients an other way. If they don't, then you bet your ass they will.

Several new tablets have been announced. Moreover, the lack of a subscription API didn't stop the mentioned services from creating iPad apps to begin with.

Those services are all successful independent of their iOS app. They have no reason to buckle. Instead, they can turn the pressure back onto Apple.

In speaking with several developers this morning, I know some are halting iOS development based on this. For those that can, they'll offer the service via website only.

"the lack of a subscription API didn't stop the mentioned services from creating iPad apps to begin with."

But, Android does not allow _any_ subscription services, especially self-developed ones:

"Please note that collecting payments through your application is not allowed under the Android Market Developer Distribution Agreement."

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.

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."

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.

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.

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.

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?

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.

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.

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.

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

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.

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...

"Publishers of content-based apps"

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

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??

Magazines.

and blog subscriptions.

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

Amazon takes a 30% cut of those.

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.

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.

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