This means that magazine and newspaper publishers will be able to offer in-app subscriptions to customers. Price and subscription length can be set by the publisher and consumers will be charged using their iTunes account. Renewals and cancellations will take place through iTunes. In exchange for handling payment processing and the logistical backend of the system, Apple will get the same 30% revenue cut it gets from other in-app and App Store purchases.
Magazine publishers have been clamoring for a subscription model from Apple since the iPad was first announced, back in January of 2010.
As we noted in September, magazine and newspaper publishers have been at odds with Apple over the company’s terms for offering in-app, iTunes handled subscriptions. Looking at Apple’s official announcement, it appears that the company has agreed to at least compromise on two of the biggest points of contention: revenue share and subscriber data.
Although Apple will take its 30% revenue cut for in-app subscriptions and sign-ups, the company points out that publishers can also cultivate and acquire digital subscribers outside of the app itself.
From the Apple:
For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple.
There is a caveat, with this new policy, however:
…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.
In other words, there is nothing preventing Time Inc. from offering iPad-compatible digital subscriptions to Sports Illustrated outside of the Sports Illustrated app, provided the company also gives users an opportunity to subscribe within the application itself.
Earlier this month, the Sony Reader app for iOS was reportedly not accepted into the App Store because it violated some of Apple’s policies. At the time, it was unclear if the cited policy violations would extend to other e-book applications like those from Amazon and Barnes & Noble.
Because Apple’s latest remarks concentrate on subscription content, it still isn’t clear to us if these new provisions also apply to other types of apps. We don’t know if this means that applications — like Amazon’s Kindle app that sell purchases a la carte — must now remove links to outside web stores. The Kindle app for iOS received an update Monday and, for the record, the link to the Amazon Kindle website is still in the app.
Beyond Magazines and Newspapers
Magazines and newspapers are clearly the focus of the new subscription feature, but Apple stresses that the subscription service is available for “all publishers of content-based apps on the App Store” and this includes music and video.
This raises interesting questions about what impact this policy will have on apps from music subscription services like Spotify, Rdio, MOG and Rhapsody, as well as video subscriptions from Netflix and Hulu Plus.
If we had to guess, we would say that those applications will now be able to offer users a way to subscribe to the services using iTunes (and Apple will get its 30% revenue cut) or to sign in with an existing account.
Apple’s gamble, it appears, will be that services like MOG and Netflix will be willing to lose out on some subscription revenue from app-created subscriptions, in exchange for the ability to serve iOS customers.
That’s likely a good gamble, given the well-established base of iOS subscribers. However, this is a value proposition that may decline as Android devices continue to gain steam and other platforms like webOS and Windows Phone 7 attack the market with more vigor.
A Win for Consumers
Fundamentally, the ability to subscribe to content using iTunes is good for consumers because it creates a more cohesive experience. It also means that publishers will be more likely to investigate offering various subscription options for multiple device types — whether those subscriptions are gained using iTunes or through a third-party website.
For publishers, losing out on 30% of subscriber revenue may be a tough pill to swallow, but Apple has at least conceded on some terms that will make it possible to acquire customers through non-in-app means.