Apple launches in-app Subscriptions…

  • Posted: 15 February 2011 08:06 PM #16

    huskerrx - 15 February 2011 11:30 PM

    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..

    Welcome huskerrx.

    I am still trying to get a handle on this, but I’m beginning to see this a battle similar to the one that gave birth to the iTunes store. The iTunes store is clearly good for the consumer and it is good for Apple and it is good for the content provider in that it makes them a lot of money. But it also strips the content provider of almost all control over the distribution of their product. Apple is gambling that the lure of the App Store - like the iTunes Store before it - will be a great enough draw to pull the content providers in.

    It’s a gamble alright.

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    Posted: 15 February 2011 08:13 PM #17

    Consumers Rule.

    That’s why Apple will win this fight.  Apple has shown itself to be pro-consumer ever since the times of the iTunes Music Store, what with the you’re-killing-the-album 99 cent songs.  (Funny how the customer was never seriously invoked by artists and labels during that bellyaching.)

    Simple as that.


    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Teamâ„¢
    Thanks, Steve.

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    Posted: 15 February 2011 09:40 PM #18

    [quote author=“huskerrx” date=“1297830648”

    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.

    Netflix could easily raise prices by 30% and lose almost no customers.

    It really is WAY UNDERPRICED now for what they are delivering.

    However, the STOCK is grossly overpriced even for any expected growth.


    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

  • Posted: 15 February 2011 09:58 PM #19

    take a look at who hates this announcement the most: publishers.
    (and some consumers who think publishers will simply raise prices or leave the app store).

    Publishers always assumed that they can put their app in the app store and just have potential subscribers leave the app and sign up for a subscription.

    Apple is now telling these publishers…pay up and give consumers a better experience.

    Publishers will bitch and moan about this until the day they go along with it.

    When will that day come?

    Well I know some established members here have some lofty iPad sales estimates for 2011 and 2012.  Take a look at those possible iPad circulation figures and then ask yourself what publisher wont want a piece of that action.

    in-app purchasing has the potential of turning into a key aspect within the app store, similar to the ability to buy individual songs vs. entire records in iTunes.


    aka Sammy the Walrus IV
    AAPL Orchard


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    Posted: 15 February 2011 10:08 PM #20

    The empire publishers have something to lose, so they complain and drag their feet in creating content.  They want the home run.

    The scrappy-fight-for-every-consumer attitude (like the NY Giants of 1951) is where new or small publishers can find some fame.  If writers and columnists for the empires are losing money, some will jump ship.

    The bigger they come, the hard they fall.

  • Posted: 15 February 2011 11:24 PM #21

    Was it Ratty who wrote, ?this could be big??  This could be very big indeed.  We are in the early stages of another major SJ disruption.  The periodical publishing industry will never be the same again.

    I concur with those who write that the Daily will fail; at least as it is currently constituted.  The layout and interface can be fixed, but there is a larger problem.  The broad content news daily is an artifact of the need to put out a single paper that would interest everyone.  This was driven by the newsprint medium.  So even after the interface is fixed, I don?t see this working.  Focused content is the future.

    Steve is right that we need ?real? editorially controlled content.  But it is wrong to think it will all be coming from traditional sources.  New publishers have emerged and even more are coming.  Often the amateur contributors are putting out a better product and in some cases making the so-called professionals look incompetent.  I?ll cite just one example: Michael Yon.

    Look at the AppStore and consider all of the quality products that have come into existence from sources nobody ever heard of.  The established developers have mostly survived; some have even continued to flourish.  But to do so, they have adapted.  ERTS does not try to get $50 for their iPhone games.  Publishers had better do the same.  Adapt.  TV did not kill radio, because radio adapted.  Gannet will not die tomorrow, but they had better adapt if they want to be relevant in 2020.

    In sum this is big for Apple, but bigger for the publishers.  Major disruption.

    (I agree that Netflix might get caught in the middle; I would not short a company growing this fast and executing this well, but I don?t see an endgame where they are a big winner.)

  • Posted: 15 February 2011 11:45 PM #22

    Nice piece, Capablanca. Particularly liked your dissection and post-mortem of the Daily. Why doesn’t Rupert Murdoch have someone like you telling him this stuff?

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    Posted: 16 February 2011 12:07 AM #23

    capablanca - 16 February 2011 03:24 AM

    Was it Ratty who wrote, ?this could be big??

    Shucks yes. We still have to wait a few days for the morons and hit whores to get over their knee-jerk reactions. But yes this will be big. I don’t really see how Netflix and Amazon need to change things really. Both apps allow you to use content you have bought elsewhere on the iPad / iPhone… On paper there seems to be a crossover but in reality less so.

    I concur with those who write that the Daily will fail; at least as it is currently constituted.

    The Daily is suffering from the main problem that books and magazines are suffering from at the moment. This is not how you do it. Really. There is no real book solution. There is no real magazine solution. Adobe’s take an image of every page is, ‘scuse the french, f***ing useless. I think HTML 5 probably holds the solution but no one seems to have leveraged it properly yet.

    (I agree that Netflix might get caught in the middle; I would not short a company growing this fast and executing this well, but I don?t see an endgame where they are a big winner.)

    I am not so sure. As mentioned above although the Netflix thing could be considered a subscription in reality the apps allow you to access data you have paid for and consume elsewhere. If you don’t have a valid login you don’t get access to their data.



  • Posted: 16 February 2011 12:11 AM #24

    FalKirk - 15 February 2011 09:16 PM


    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.

    Same to you.  This is a good analogy.

  • Posted: 16 February 2011 12:18 AM #25

    rattyuk - 16 February 2011 04:07 AM


    capablanca - 16 February 2011 03:24 AM

    (I agree that Netflix might get caught in the middle; I would not short a company growing this fast and executing this well, but I don?t see an endgame where they are a big winner.)

    I am not so sure. As mentioned above although the Netflix thing could be considered a subscription in reality the apps allow you to access data you have paid for and consume elsewhere. If you don’t have a valid login you don’t get access to their data.

    Sure, but what makes Netflix so valuable in this model. 

    Just to be clear, I am not predicting Netflix demise, simply offering the probably useless information that they are not getting any of my investment dollars.

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    Posted: 16 February 2011 12:39 AM #26

    capablanca - 16 February 2011 04:18 AM

    Just to be clear, I am not predicting Netflix demise, simply offering the probably useless information that they are not getting any of my investment dollars.

    That I understand… But at the moment the 8 bucks a month gives me enough on demand material to keep me busy at any lost moment I have. Not suggesting that this is a good ground for investment either, but as a punter…



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    Posted: 16 February 2011 01:22 AM #27

    This will be an S-curve or innovator, early adopter, early majority, late majority and laggard deva vu.  App Store games are still early adopter in my opinion.  Subscriptions are only at innovator.  Don’t forget that the revised timing as a gap between early adopter and early majority.  and

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    Posted: 16 February 2011 03:09 AM #28

    adamthompson3232 - 16 February 2011 06:58 AM

    From 9to5mac dot com.
    Apple to world: put up or shut up
    Seth Weintraub | Discussion (19) 1
    February 15, 2011 at 8:41 pm

    All we need to know. Seth is a huge Android Fanboy and is probably enjoying this kerfuffle and happy to add fuel to the fire. When he’s not writing for 9to5 Mac he is the Android version of PED at Fortune. Except unlike PED he rarely updates his comments section thereby killing any conversation his articles start… (mostly correcting points). Quite how he still holds his job at 9to5Mac I have no idea.



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    Posted: 16 February 2011 03:42 AM #29

    Lots of whining going on about this. Publishers who want a free ride, and some in the Mac community who are obviously not shareholders, making dumb comments like, “Apple are being dicks.”

    Unbelievable how stupid so many people are about the LEGAL DUTIES of corporations, i.e., to maximize shareholder value.

    I’m also tired of the “developers/publishers are getting pissed and will leave” meme. No, either they won’t leave, or someone else will replace them if they do. It’s Apple’s world; deal with it, or go back to toiling in a cubicle for someone else. Apple is here to serve shareholders and customers, not publishers and developer nerds.


    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007

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    Posted: 16 February 2011 04:22 AM #30

    FalKirk posted this link earlier, but since Weintraub’s rant was posted in full I thought it best to at least post excerpts of MG’s more accurate & balanced article. It’s a long article.

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

    We all knew it was coming, but the details of the App Store subscription model, which Apple outlined today, are fascinating on a number of levels. Simply put: this is one of the boldest bets Apple has ever made. And it could backfire. Or it could be huge beyond belief. a quick recap: any service offering an app with any sort of subscription component must now offer it within the app using the new in-app subscription options. Those companies are welcome to offer subscriptions outside of the app as well, but they must also have to option to do it in-app and it must be for the same price (or cheaper) than the out-of-app option. If a subscriber signs up in-app, Apple keeps 30 percent of those revenues. If they sign up outside of the app (still granting them accesses to the app), the company keeps 100 percent of the revenues.

    Apple clearly knew this announcement would spark controversy, and you can see that very plainly in Apple?s press release today. Just look at the quote included, from no less than CEO Steve Jobs:

      ?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. 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.?

    He might as well be saying: ?Everyone take a deep breath ? here?s why this makes sense.? And there?s no question that it does make sense ? for Apple. But a lot of third-party developers both large and small are going to be very, very pissed off by this move. Why? Because it totally changes the game. Companies with subscription elements of their content had been accustomed to leveraging Apple?s platform for free. Now there will be a fee. And it will be a significant fee.

    Apple has built a new backend system that any of these apps can take advantage of. And when they do, it will give them within one-click access to some 100 million-plus credit cards…Apple knows that a ton of users will use such a system when it?s in place. And so they want their cut for enabling that ? but only when that system actually brings in new subscribers. They?re making a bet that it will. And you can bet that for any companies that play along, it will.

    And that?s perhaps the most overlooked key to all of this so far. Apple?s aim here is not only to make money, but to enable everyone to make money with a system that actually works.

    Apple has created a centralized place to handle a wide variety of subscriptions spanning many different companies. All streamlined. All with one-click capabilities…And that?s exactly why consumers would use such a system. And it may finally be the answer for getting people to pay for content such as magazines, online.

    Creating a system that consumers will actually want to use means that they will no longer want to use the old, archaic system made by the companies that control the content. Again, great for consumers, but bad for those companies. And so they?re going to be faced with a very real and very challenging choice: do they stick with Apple or pull their content?

    Presumably, apps like Netflix and Hulu are now going to have to pony up this 30 percent fee to Apple to keep their apps in the App Store. Will they?...When you think about Netflix users paying $8 a month, 30 percent to Apple is a huge chunk of change for Netflix to lose. At the same time, how many more subscribers would a simple subscription system bring in? Essentially, Netflix would be paying Apple a 30 percent finder?s fee for new customers. Is that worth it to them? Maybe at first, but not over the entire life of the customer…So Netflix has a very difficult choice to make.

      * This new subscription system is great for Apple as they?ll make a lot of money and create a new, better experience for their customers (and maybe publishers too). But if it backfires, they could lose a significant part of their ecosystem support. And if some companies pull their apps, consumers may start to leave.
      * The new system is awesome for customers as Apple has enabled a way for them to easily get new content on their devices at a fair price. But if companies back out of the App Store as a result, they will be shafted.
      * This new system sucks for companies that provider subscription services, as they?ll now be forced into Apple?s way of doing things and must pay them 30 percent for it. But if it leads to a massive amount of new customers, it could actually be a very good thing.

    This is a big time power play by Apple in the name of better user experience. The maneuver is brilliant, brazen, and perhaps bat-shit crazy. Now it?s time for everyone to show their cards.