Apple launches in-app Subscriptions…

  • Posted: 15 February 2011 09:47 AM

    Apple Launches Subscriptions on the App Store

    Press Release Source: Apple On Tuesday February 15, 2011, 8:30 am
    CUPERTINO, Calif.—(BUSINESS WIRE)—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. This is the same innovative digital subscription billing service that Apple recently launched with News Corp.?s ?The Daily? app.

    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.

    ?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,? 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. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.?

    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.

    Protecting customer privacy is a key feature of all App Store transactions. 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.

    The revolutionary App Store offers more than 350,000 apps to consumers in 90 countries, with more than 60,000 native iPad? apps. Customers of the more than 160 million iOS devices around the world can choose from an incredible range of apps in 20 categories, including games, business, news, sports, health, reference and travel.

    Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

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    Posted: 15 February 2011 10:02 AM #1

    One key issue to assuage all those complaining about Apple taking 30% of their in app revenues; Apple will honor all subscriptions that are made outside of the App and the App Store i.e.: from the publishers own website.

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  • Posted: 15 February 2011 10:19 AM #2

    ?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,? said Steve Jobs, Apple?s CEO.”

    Interesting business model. Apple never earns any money from subscribers brought in by the publisher.

    ?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 think what Apple is counting on - and what publishers fear - is that almost all subscriptions and renewals will take place through the easier to access and easier to use in-app purchase.

         
  • Posted: 15 February 2011 10:25 AM #3

    FalKirk - 15 February 2011 02:19 PM

    ?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,? said Steve Jobs, Apple?s CEO.”

    Interesting business model. Apple never earns any money from subscribers brought in by the publisher.

    Looks like Apple have found a way to grandfather in existing subscribers at no cost or at least no hit to the publisher. Is it just me or is this BIG news?

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    Posted: 15 February 2011 10:55 AM #4

    Well, here’s to hoping that more publishers join on.  I say that as a reader more than as investor.

         
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    Posted: 15 February 2011 02:47 PM #5

    Much hinges on the how The Daily fares this year. They’ve got the pricing part right, but the interface and content needs to improve before they’ll get enough subscribers to hit the break-even point. I’d say if they can accomplish that this year even with the 30% cut they give to Apple, it will show other publishers the path.

    Unfortunately, I think many publishers may get drawn into trying the Android route. They’ll be allowed to continue their lazy ways and develop Flash-based content (huge files that drain battery life). They’ll try to sell it to Android users for high prices even though those users have not shown any signs that they’re willing to pay for anything. A year or two later they’ll find themselves in even a deeper hole with no new revenue to speak of.

    I agree with Jobs that we still need “real”, editorially controlled journalism. The problem is many of those people are greedy, biased and dumb. That’s a lot of major shortcomings to overcome.

    Meanwhile, the “amateur” bloggers are researching & writing good stuff. They find ways to provide their content on the web or via an app for little cost or paid by ad revenue. Why would people pay for dross when they can get gold for free?

    Back to The Daily. I really hope they succeed. I just don’t find most of their content appealing. The only two online publications I’ve considered paying for are WSJ & The Economist. It’s just my reading these days has narrowed to very specific areas and those publications are too broad for me to spend much time on. It’d be like the old CD days when you paid for an album only to listen to 2 or 3 songs. I’d pay for the WSJ or Economist only to read 10-20% of the content.

    The result is that I’ve become a news forager. I hit forums like this and aggregators like Techmeme, MacSurfer, Yahoo Finance, etc. and learn to identify sources worth clicking on. I’ve learned to identify link-bait headlines. It takes a bit of time and effort, but until there’s a news outlet that will provide editorialized, unbiased, personalized content for a reasonable cost, this is the way I’m going to get my news.

         
  • Posted: 15 February 2011 03:01 PM #6

    Drew Bear - 15 February 2011 06:47 PM

    Much hinges on the how The Daily fares this year. They’ve got the pricing part right, but the interface and content needs to improve before they’ll get enough subscribers to hit the break-even point. I’d say if they can accomplish that this year even with the 30% cut they give to Apple, it will show other publishers the path.

    I don’t think the Daily is going to make it. I agree with you that they’ve got the pricing right. I was woefully dismayed at the lack of polish in the App when it debuted. But the most important thing is that I don’t like their model. I don’t think that they’ve come anywhere close to figuring out how to make digital content compelling.

    I’m not too worried about Publishers rushing off to Android. Google has never shown any ability to sell anything. Their App Store is a mess and it discourages buying content. And while Google has many brilliant software engineers, they don’t seem to have the willingness to create a fully finished product. When they get to 80% of the way there, they deem it good enough and stop. I’m not sure they’re capable of creating and administering a smooth running subscription payment program.

    As for Apple’s 30%, I think it’s fair, but it may be impractical. In other words, I have no problem with Apple asking for and taking that cut. But I’m just not sure that publishing can afford to pay those rates no matter if they are fair or not.

         
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    Posted: 15 February 2011 03:19 PM #7

    Some FUD going around is that Amazon & Netflix can’t afford this and will remove their iPad apps. These two are different in that most of their customers already have accounts apart from their respective apps. For example, I already had Amazon and Netflix accounts before I downloaded the app. So all my payments to these two companies completely bypass the App Store.

         
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    Posted: 15 February 2011 03:45 PM #8

    FalKirk - 15 February 2011 07:01 PM

    I don’t think the Daily is going to make it. I agree with you that they’ve got the pricing right. I was woefully dismayed at the lack of polish in the App when it debuted. But the most important thing is that I don’t like their model. I don’t think that they’ve come anywhere close to figuring out how to make digital content compelling.

    They won’t make it if they don’t fix certain things. Although the content may not appeal to you or me, it’s very possible it appeals to a majority of folks. I don’t read The Enquirer, but a lot of people do.

    They way I found myself reading The Daily was simply to start from page one and flip through the entire “paper”. If something caught my interest, I’d read it in detail. Unfortunately the percentage of articles that interest me is low. It’s like the magazines at the dentist’s office. I’ll flip through them, but I won’t pay money for them.

    I’m pretty sure Murdoch is committed to at least 2 yrs. He’s got deep pockets and will give this a good go. They need to fire their tech/developer group and hire that guy who smoothed out the carousel feature in a couple of hours.

         
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    Posted: 15 February 2011 03:50 PM #9

    Smaller publishers will jump on first if the older empires balk.  That said, the Daily is the exception, being one of the empires. 

    But smaller publishers have smaller resources.  Somebody has got to be first.  I hope its in the sciences, geek magazines.  No, Wired, I am not looking at you.

         
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    Posted: 15 February 2011 04:05 PM #10

    ?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,?

    I wish Apple would remind everyone that they are providing the infrastructure to deliver the apps and the subscribed content. Apple is essentially paying for the delivery costs, which the publishers have not yet had to pay a single cent for.

    What the publishers want is for Apple to create the market (iOS users), pay for the infrastructure to deliver the apps & content and let them profit from all that without sharing anything with Apple. Sounds fair.

         
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    Posted: 15 February 2011 04:43 PM #11

    Drew Bear - 15 February 2011 08:05 PM

    ?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,?

    I wish Apple would remind everyone that they are providing the infrastructure to deliver the apps and the subscribed content. Apple is essentially paying for the delivery costs, which the publishers have not yet had to pay a single cent for.

    What the publishers want is for Apple to create the market (iOS users), pay for the infrastructure to deliver the apps & content and let them profit from all that without sharing anything with Apple. Sounds fair.

    It Sure is ironic that the store owner should actually get paid to carry your product.  The problem for the publications is they are competing against the free Internet, and often times themselves.  Why should I pay for popular science for example when I can read the articles via flipboard.  With The daily I was hopeful they might somehow provide local content in addition to the national/international news.  If they want me to subscribe they need to cover more than the scores in sports for the local teams.  Use syndicated or something, but my sport section needs a local flavor .  Im not interested in what the NY teams are doing.

         
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    Posted: 15 February 2011 04:44 PM #12

    adamthompson3232 - 15 February 2011 08:28 PM

    Per the WSJ, Elle magazine is on board already.

    Elle magazine will give consumers the option of buying monthly or yearly subscriptions through their iTunes accounts. Customers can pay $2.99 per month or $18.99 per year. Existing print subscribers will be able to download Elle’s iPad edition at no additional cost.

    You can buy the print version for $14 per year if you’re willing to give the publisher your info and receive hard copy deliveries. 30% of $18.99 = $5.70, which means the publisher gets $13.29, but they don’t have to print or deliver a physical product.

    Might work, but $14.99 would draw more new readers. They’d still get $10.50 after Apple’s cut.

         
  • Posted: 15 February 2011 05:16 PM #13

    Drew Bear - 15 February 2011 07:45 PM
    FalKirk - 15 February 2011 07:01 PM

    I don’t think the Daily is going to make it. I agree with you that they’ve got the pricing right. I was woefully dismayed at the lack of polish in the App when it debuted. But the most important thing is that I don’t like their model. I don’t think that they’ve come anywhere close to figuring out how to make digital content compelling.

    They won’t make it if they don’t fix certain things. Although the content may not appeal to you or me, it’s very possible it appeals to a majority of folks. I don’t read The Enquirer, but a lot of people do.

    I hope I’m wrong and the Daily makes it. It’s not the content, per se. The delivery is wrong. I’ll sadly admit that I don’t have a clue of the proper way to deliver online content or even if there is one. But the Daily just doesn’t do enough to take advantage of the power of the iPad.

    It’s like when movies first got started. The early movies were just plays that they filmed. It took them a while to learn how to incorporate movie making techniques such as the close up and the pan shot and the flashback etc. Right now the Daily feels like an attempt to put an old style newspaper/magazine onto the iPad. What’s needed is something that’s made for the iPad, not something old imposed on the iPad.

         
  • Posted: 15 February 2011 07:02 PM #14

    M.G. Siegler has a very thoughtful take on this matter here:

    Apple?s Big Subscription Bet: Brilliant, Brazen, Or Batsh*t Crazy?

    EDIT: I’m not sure I worded this post strongly enough. I highly recommend this article for anyone interested in this topic.

    [ Edited: 15 February 2011 07:54 PM by FalKirk ]      
  • Posted: 15 February 2011 07:30 PM #15

    Anyone else see this as a huge gamble?  I think Apple knows the Ipad is gonna be huge, so they are laying the ground rules.  If or when Ipad 2 and Iphone 5 hit it out of the park, Apple is ready to turn on the cash machine. 

    On a side note, I would say it is a good time to short Netflix.  They are gonna get sandwiched between Apple’s subscriber cut and Comcast’s desire to charge for data.  Should be interesting after these rules go into effect.