Apple Reverses Course On In-App Subscriptions
macrumors.com
macrumors.com
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. ;-)
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.
I find that unlikely.
>Apple doesn’t give a damn about companies with business models that can’t afford a 70/30 split. Apple’s running a competitive business; competition is cold and hard. And who exactly can’t afford a 70/30 split? Middlemen. It’s not that Apple is opposed to middlemen — it’s that Apple wants to be the middleman. It’s difficult to expect them to be sympathetic to the plights of other middlemen.
..
>This is what galls some: Apple is doing this because they can, and no other company is in a position to do it. This is not a fear that in-app subscriptions will fail because Apple’s 30 percent slice is too high, but rather that in-app subscriptions will succeed despite Apple’s (in their minds) egregious profiteering. I.e. that charging what the market will bear is somehow unscrupulous. To the charge that Apple Inc. is a for-profit corporation run by staunch capitalists, I say, “Duh”.
>If it works, Apple’s 30-percent take of in-app subscriptions will prove as objectionable in the long run as the App Store itself: not very.
The above was from http://daringfireball.net/2011/03/dirty_percent
Looks like Apple didn't really succeed and backtracked once Amazon and Netflix started threatening to pull their apps which would make the iDevices much less valuable to many users. You can only pillage the ecosystem so much before it starts hurting you.
" 'It’s not that Apple is opposed to middlemen — it’s that Apple wants to be the middleman. It’s difficult to expect them to be sympathetic to the plights of other middlemen.'"
is clearly in agreement with what he replied to:
"this notion that Apple actively tried to kill iFlowReader is pure geek fantasy... Apple did not give a shit about them."
If you think they did, you're free to think that. I think it's profoundly unlikely that they even knew about them.
One rather dominant one didn't. Amazon are, fair to say, a fairly significant threat...
In the meantime, Apple started killing off the small guys while approving updates to Kindle and Netflix. Things were suppose to come to a head this month.
"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?
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.
There has been at least one "coincidence" of this sort before: http://sivers.org/itunes
Reject the app, sure. Build similar functionality yourself, perhaps a bit scumbaggy but also probably legal. (This crowd still hasn't forgiving Microsoft for doing that 20 years ago.) Do all of that and steal the logo too and you've crossed the line.
It never fails to amaze me how early adopters react to new services and technology. Of course it's understandable that devs want to be treated fairly and (notwithstanding Apple's missteps) make a living. However it would behoove us to bear in mind that these services are new and still being developed. It's natural that a system should go through changes some of which are actually mistakes that will hopefully be reversed. Such evolution, one would hope, ensures that at some point an equilibrium is reached wherein both parties interests are addressed. Keeping in mind that the better the AppStore is (for users) the wider the reach will become and in turn this should mean a larger user base for devs.
It's similar to what they've done with app approvals, features, terms of service, signal strength bars, location data, etc.
I suspect it will raise enough hackles.
The App Store doesn't exist in Leopard and Tiger, so Apple will probably release a full price DVD set for $180 that includes Lion, iWork, and iLife.
Not exactly great, but it is an alternative if you don't want to download from the Mac Store. Keep in mind, prior to Snow Leopard the OS X upgrades were $130 anyway.
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.
People do bad stuff for any number of reasons but stopping doing bad stuff is always a good thing.
Also, I find the metaphor quite apt.
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.
And yes, that is the point of the metaphor.
I'm happy to accept that negative is reasonable here, I don't accept that emotive in this way this metaphor is, is useful or a good reflection of the situation.
https://www.iflowreader.com/Closing.aspx
http://blog.readability.com/2011/02/an-open-letter-to-apple/
And those are just the tip of iceberg. Is killing the dreams of small businesses built on months of blood and sweat and money for no good reason an acceptable practice?
In terms of iflow their level of innovation was minimal and they started their business on a platform that took a cut of music sales and a cut of app sales and were then surprised that Apple wanted a cut of other sales.
Readability I'm very slightly more sad about because their model was slightly more interesting but fundamentally it's business and if you put yourself in a position where you're beholden to someone who has shown themselves to be ruthless then I can't get too worked up about it.
At what point do the people at iflowreader and readability put on their big boy pants and take some responsibility for lack of their dreams coming true?
The original [great great grandparent] comparison was not primarily noting the congruence between Apple's behavior and wife beating, but rather the congruence between the praise some people were giving Apple for their change of behavior and praising someone for ceasing to beat their spouse.
Things aren't that black and white, it's not a case of 100% good or 100% bad.
While the ideal would be that they'd got it right first time, it's clearly better that they correct their mistakes than continue with them.
And we should praise people for doing things that make things better because they should have the greatest possible incentive for doing so.
The reality is that companies only do things for their own benefit, directly or indirectly, Apple, Google and everyone else included and we shouldn't kid ourselves that they do anything else. Google don't make Android because they love freedom or giving stuff away, they do it because they make shedloads of cash through advertising off the back of mobile internet use on a platform they control. You may love the side effect but I honestly think you're kidding yourself if you think they're doing it out of altruism - after all, don't be evil is looking pretty flakey in quite a few areas now.
(And please note I'm not trying to make this an Apple vs. Google thing, I'm just saying that this is what companies do - they do what works and makes them money).
But ultimately when people screamed and shouted for them to change this stuff, what outcome were you looking for other than it be changed? People spoke and acted, they listened, surely that's good?
Right before the date arrived - In the analogy, a therapist would probably classify the behavior as emotional abuse.
In the real world, the negative feedback came right away, however Apple let the consequences of their announcement play out and thereby drove potential competitors from the markets in which they are interested.
In addition, Apple did not admit their behavior was wrong, nor did Apple commit to avoid similar behavior in the future.
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.
Gift card retailers get most or all of the standard 30% cut, as I understand it, leaving Apple with nothing. If that's true there's no way for Apple to withhold less than 30% without either breaking their unified payment system or losing money on each sale. Taking the loss would expose them to massive fraud from collusion between app vendors and retailers.
Charging a lower rate for some categories (like News Stand content) without risking losses from gift card arbitrage would mean creating another payment tier where gift card balances didn't work, complicating the model.
Can someone with knowledge of the situation confirm whether this is accurate?
This also shows where retailers can be confusing (to me): it takes labor to ship, display, and activate those cards (activation can be a huge pain) but that's all considered fixed overhead I suppose.
My sole means of paying for iTunes purchases is via giftcards because they can always be obtained for a discount of between 20-25% if you look. A retailer here was recently offering them at buy 2 get 1 free, or 33% discount.
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.
How are they not entitled to something?
You wouldn't have the customers if they hadn't provided the market place.
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.
As if you could offend The Creator, who made humans[1] pantsless, by not wearing pants.
[1] source: a creation story
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.
> while picking on the small guys because they could
Doesn't seem like evidence of them doing anything other than allowing the big players to update their apps as usual?
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 ;-)
"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).
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.
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.
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.
Tell me you can't be serious.
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.
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)
Let's change our perspective here: customers have paid $2.5 billion to developers and $1.1 billion to Apple for apps.
Apple makes money by selling hardware with good margins. The App Store and the Music Store help them sell more hardware.
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
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.
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
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.
*with the very large caveat that it drove (and would have continued to drive) competitors out of the market decreasing customer choice & ultimately innovation. It's possible (though, I think, unlikely) that they didn't really know the extent to which this would throw developers large and small into a tizzy. Hence a lot of the confusion about SaaS etc.
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.
This "bad all software for their phones" is an oft repeated falsehood that really needs to be stopped.
Because if you would have a normal Symbian devices, there would be plenty of free software available. Not as easily as through AppStore (almost with the Ovi) but the platform is much more open than iPhone in that it allows installation of software from any source.
Despite supposedly having email, video calling and internet both phones failed to do any of the three despite numerous attempts. I could get WAP but that was it (and typing a full url with the numeric keypad was a nightmare - it took about as long as the page took to render i.e. forever).
I and a friend got Nokia 3G phones at the same time sat down to make our first video call - a momentous moment. Total failure. Not even a pretense at a picture.
The Ericsson was a terrible MP3 player too. Really tricky to use. However it was a fantastic camera.
I stand by my assertion that Apple changed phones forever when it introduced the iPhone. Everything worked and was usable. Then, when they introduced the App store this was the first time I was able to use a phone with 3rd party software despite numerous attempts.
Because there sure was PLENTY of independent software for Symbian, and the system does very little to restrict what these apps can do.
Off the top of my head, a few simple ways to install apps in these devices that are independent of the operator and theis offerings:
1. Website that allows you to enter your phonenumber, and sends an installation URL via SMS. Just a few clicks on the phone side, very simple. For example Google uses this. <http://www.google.com/mobile/maps/>;
2. Enter the short mobile optimized URL in the phone. How hard exactly is it to enter something like "m.google.com/maps" to the browser of your phone?
3. Send SIS/JAR file over Bluetooth to the device -- quite a few of my "non-techie" friends have managed to do this.
I fully agree that Apple has made game changing improvements to mobile applications, especially on the user experience side. But to say that there is no independent software for Symbian is plain wrong.
I gave up on Symbian long before 2007 and I had plenty of 3rd party apps (and developed a few myself). If you took an iPhone, put a capacitive touch screen on it, and made it fat ugly and slow then you'd have the phone I had 10 years ago.
I find it extremely odd that someone working with Symbian wouldn't know HOW to install apps in the phone. Or maybe they were not tech people?
I had to check some dates:
We released "Pro Session Golf" first as part of the N93 Golf Edition package in 2006[1], and later in 2007[2] as a downloadable standalone. And it definitely wasn't the only Symbian app around at the time!
Where are you based? I am from Finland, I guess Symbian products and especially app culture varied a lot between countries.
[1] http://www.allaboutsymbian.com/news/item/4143_Nokia_N93_Golf...
[2] http://www.prosessiongolf.com/press/Pro_Session_Press_Releas...
BTW, about ways to install apps to Symbian devices, I forgot the popular and simple way that I personally hated: Nokia PC Suite and USB or Bluetooth -connection.
But if you want to provide the external link you'd have to also offer the service through the App Store payment method as well.
I can't see how this is good for the user at all.
"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.