After helping News Corp. launch The Daily, a new tablet-based news service a couple weeks ago, Apple is now providing the same subscription service to all other developers and publishers in its App Store. The company’s press release — timed for right in the middle of the largest mobile conference of the year, the Mobile World Congress — details the product, and how Apple stands to benefit.
Chief executive Steve Jobs explains: “Our philosophy is simple—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.”
Reading between the lines, the implication is that purchasing within the App Store purchase is going to be the preferred option going forward, as it provides a more seamless experience with the rest of Apple’s user interface.
This is similar to how Apple is providing the desktop-focused Mac Store for developers while taking a 30 percent cut, even though developers can distribute desktop software for Mac on their own and keep 100 percent of the revenue. That newly-launched store is already off to a strong start according to reports, because users appreciate Apple’s vetting and tie-in to their existing iTunes accounts.
If publishers don’t go through Apple for payments, they’ll need to provide their own, presumably inferior authentication process inside of the app. They also won’t be able to use the app to promote other means of generating revenue that don’t include Apple.
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. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. 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.
So Apple’s terms (shown below) are what publishers are going to have to live with if they want the benefits of App Store distribution and sales.
Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.