Apple clearly knew their App Store subscription terms “would spark controversy, and you can see that very plainly in Apple’s press release today,” MG Siegler writes for TechCrunch. “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. – Apple CEO Steve Jobs, February 15, 2011
“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,” Siegler writes. “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.”
Siegler writes, “At the same time, Apple has a point. Actually, a few of them… Apple’s aim here is not only to make money, but to enable everyone to make money with a system that actually works. How are they going to do that? By doing something that all companies say they do, but few actually really do: focus on the consumer.”
Much more in the full article – recommended – here.
MacDailyNews Take: As we wrote earlier today, “Apple’s on the side of the consumer yet again. Publishers who don’t like Apple’s terms are more than welcome to invest in the creation of apps for tablets not named iPad if they mistakenly believe that will net them more profits.”
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]
Apple has always been about the consumers’ experience.
First and foremost Apple is about the profits. There isn’t one thing that Apple does for the consumer that isn’t tied somehow to their healthy bottom line. If that is the case how can they be all about the consumer’s experience?
Did it ever occur to you that profits are a sign of having pleased the consumers??
Bunk.
Apple has had MANY projects over the years (including iTunes itself for the first — let me see — six years of its existance!) that didn’t make much, if any, money.
Profit is *a* factor in Apple’s thinking, most definitely — but it’s not *the* factor, which is why they aren’t and never will be like most corporations. As Jobs himself said, “we like to meet at the intersection of art and commerce.”
Here’s the best summary of of this storm in a teacup today.
Not that the press release was’nt simple and concise, but this guy gets the true values that Apple brings to anyone that wants into it’s ecosystem while understanding full well how Apple understands and boosts the value of it for themselves.
The days of Apple eating Apple’s lunch by stealing it’s innovatative technology and efforts without paying the piper are over.
It’s all about the integration of Apple’s hardware and software now -and this time, Apples IP is well protected and it’s cash pile will insure it.
Not sure why the publishers are up in arms. They expect Apple to direct iOS users to their apps just so the publisher can pull the consumer out of the app to sign up for a subscription on the publisher’s site to avoid paying Apple the 30% fee? Steve said it best. Nothing’s stopping the publishers from selling subscriptions on their own site and keeping 100% of the revenue. But, if they use the app store, they have to pay the fee. What’s the confusion?
One fly I see in this ointment is the possibility that publishers could crank up their subscription rates to then allow them to crank up the rates in app.
Ifvtheyre supid enough to outprice themselves the they’ll see that consumers will shun them.
I think Apple can appease publishers AND create more revenue by reducing their take to 15%-20%.
The REALITY is that consumers are not benefitted by having less to consume. Publishers won’t bring content to iOS ecosystem if they feel Apple is gouging them. And this does not address the issue of who gains access to the circulation data. Is Apple sharing the subscriber data with the Publishers. They need this to set rates for advertising.
They’ll never find a deeper consumer base than Apple’s anywhere. Amazon sure ain’t letting anyone have access to theirs..,
Apple isn’t gouging anyone, they are putting money into publishers’ pockets. The data the publishers say they need (which I doubt) they can get from the subscriptions they get direct. And I trust Apple with my data far more than I trust these guys who sell subscriber lsts as a routine part of their business model.
Ok, so now Dropbox has to include an in-app purchase to renew their service, right?
It looks that way to me. Dropbox will just need to add an in-app subscription option that matches the out-of-app subscription option. It doesn’t seem like a big deal to me. Developers update useful iApps all of the time. They’ll just add these subscription features in the next versions.
I disagree, I think the promotion and infrastructure is worth %30 or more.
This is bad for everyone. This means that to sell a subscription accesible by an App the content provider will need to up pricing all over to make up the difference. Otherwise they can not provide an app to access the content. How in Te world is this fair? This is the stupidest thing apple has ever done. Bravo apple. Way to screw us. Either they up prices across all markets to
Cover in the event of an iOS purchase or we don’t offer the content on iPhone. What do u think publishers will do? U know what I would do. I’ll just build a better mobile website using html5 that way I need no app in the app store. I have had an iPhone since 3G came out and love me 4. However I want a tablet now and I was sold on the iPad. But this is an issue. I can see how content providers would
Choose andoird over iOS now. Stupid move.
OK Joe. Build your better web site. Good luck.
Troll
You are an idiot. Enough said
Joe, you are the idiot. Publishers sell a lot of their product through third parties at greater than 30% discounts. Bookstores, newsstands, grocery stores, magazine subscription tetemarketers, you name it.
Apple is no different other than the fact that Apple has 130 million iOS users that are ready to buy the publishers wares. Apple deserves the 30% sales fee just as much as the newsstand does. The price will not go up. The sky will not fall. Your Android phone is still crap. Did I mention you’re an idiot?
Really smart guy? What about hulu and Netflix dumb ass. So that means all new subscribers that want to access through iOS now need to be provided with an option in app to subscribe and apple gets a 30% cut of revenue? So how exactly does that work? Oh yea u have it all figured out don’t you fan boy. And I love how everyone is an expert now on the costs and logistics of subscription content providers. Next u will be telling me u are coo for a major magazine. U are a joke.
The Instapaper developer has it right – this action by AAPL is all about money and virtually nothing to do with improving the “customer experience”. 30% is an outrageous fee for what is provided. Expect more expensive or fewer apps – how’s that for improving the “customer experience”. Gotta love Apple fanboys – when they say “grab your ankles” you smile and comply.
Maybe I don’t get it, but if Apple brings you a customer, you pay a “finder’s fee”. If you got the customer yourself, then you don’t pay the finder’s fee.
Not sure why that is so terribly unfair.
Apple built the ecosystem from the ground up, and it seems logical they would want to capitalize on their investment.
I’m not suggesting Apple should charge nothing for their ecosystem. If I develop an app – say Angry Birds – I can price my product to account for the cost of having it available in the App Store. However, if I cannot control the price of my product – say Amazon and books – paying a 30% surcharge for being in the App Store cannot be accommodated. Under your argument, Visa, Discover and Mastercard (You are using their ecosystem when you use the card.) could justifiable charge 30%.
Really? You think that Visa and Apple are equivalent? One provides a marketplace and the other a means of payment. Back to school for you. Or maybe not …
Perhaps his example is a little off, but there’s no need to mock. I feel a 30% finders fee excessive considering they are not hosting the content.
What if all the Internet providers decided to charge businesses a 30% fee for every Internet sale? They could justify it by saying that you could always mail in the order form.
I guess all I’m saying is “how much does apple really need to charge on in app purchases if they are not hosting the content?” I feel 30% is too much. Last I checked visa charged about 5%, debit cards a flat fee per transaction. Paying 30% to apple is still a cost. You volume may go up, but if you are already running slim margins, you will lose money.
Apple is the bookstore, the newspaper stand, the magazine rack owner at the airport. They all make a profit retailing the publisher’s goods and so should Apple. 30% is not exorbitant or unusual for these transactions.
Why is that so hard to understand? Doesn’t anyone know the difference between wholesale and retail? In this case it’s 30%.
All of those examples assume that apple has to store the content somehow, like the newsstand at the airport. But they don’t host netflix or kindle or any content from many of the providers that helped make iOS popular.
No he doesn’t. The one thing he and you have in common is you will never amount to anything because you have no idea how anything works. Apple is the distributor and the retailer, 30% is way cheaper than what you paid before. But then you didn’t did you, because you don’t make nothing and you don’t sell anything. Lip flapper.
You are an idiot fan boy. Enough said.
And you are an idiot period.
At least I’m not just a fan boy blind zealot. Good luck with that.
Drennyn:
Blow me.
@anybodyButJoe
(Everybody is sick and tired of the name calling)
Someone suggested that the 30% is OK because it represents a finder’s fee. But finder’s fees are one-time.
Elsewhere it was suggested that Apple’s 30% cut would cause publishers to just charge more to compensate.
So in the end they would charge more for the electronic version, while they should be charging LESS for this overheadless way of doing business. What an upside down world we have !
joe = fandroid
Fact is, 30% is a steal for providing 100+ million paying customers with one-click access to purchase the subscription. Publishers will complain but they currently pay way more for printing and circulation. They make way more in advertising. The more subscribers the more ad $ they get. Likely around $3 per subscription. Apple doesn’t get any of that. Publishers won’t leave iOS. Far too lucrative and profitable.
Hulu and Netflix will either need to do the same or charge a subscription fee for mobile access. Let’s say they charge $2 for mobile access per month if you have a Netflix subscription. Apple has earned the $0.60. You seem to think everything in life should be free. Just like Google who steals code, infringes copyrights but makes billions collecting and selling all your personal data. Like I said, you’re a fandroid.
Wow Apple earned this fee on netFlix subscriptions why? Because they decided one day that they want part of the subscription fee? They didn’t earn it yesterday. I already pay direct to Netflix. Now I need to pay extra according to you for the same access I have now? Awesome , that is really looking out for the consumer right? And stop comparing to music, u have always had the choice to add music to your iTunes app without buying through an iTunes account.
LOL Damn all of this sounds familiar…
Apple wanted a 30% cut of all music sold through iTunes. All the haters said it would fail. What happened? iTunes became the biggest distributor of online music in the world. Did the price of music go up? Nope.
Apple wanted a 30% cut of all apps that sold through the AppStore. All the haters said it would fail, apps would be priced too high, developers would refuse to write apps for the platform. What happened? The AppStore is the largest online app store in the world. In fact, 80% of all revenue made last year from all mobile devices combined came from iOS devices. Did the prices of apps go up? Nope. They actually went down. Developers were able to reach more users (willing to pay) and could sell more copies for less of a price.
Now Apple wants a 30% cut of all subscriptions that sell through iOS apps. All the haters once again are out and whining about how it’s going to fail and how it’s going to raise subscription prices. Based on precedent, I’m going to say that it will kick start the digital subscription market and not only that, as more people subscribe, the prices will go down, not up.
Apple gets a 30% cut of all sales through its AppStore, regardless of content type, provider or sales volume. If an independent app developer has to give Apple 30% for in app purchases, then why shouldn’t huge companies like Amazon or Time Magazine?
Same as Ticketmaster charging their fee except the consumer pays it. Here, Apple is trying to help the consumer by having the publishers pay it.
I work in the publishing business so I know our business model and you guys have it all wrong.
There are a number of issues.
#1 – 30% is too high. Apple wants to take 30% of EVERY recurring charge. A finder’s fee is a one-time payment, not recurring monthly.
#2 – consumer information. Do you know why magazine subscriptions are so cheap? It’s because magazines recoup the cost of production through ADVERTISING. How do they sell advertising? By PROVING that their content is reach the advertiser’s demographic. Without that information, selling ads and marketing is next to impossible.
MDN may not care because they’re not a content producer – but if MDN ever got serious about selling ads to large advertisers (think Unilever, etc) they would know this.
What Apple should do is allow some price flexibility in their model. An in-app subscription purchase is almost worthless to a content provider. You get nothing but a few dollars per issue. Plus – Apple takes their 30%.
If publishers were allowed to charge $2.99 per issue through their store, and $4.99 per issue through an in-app purchase that would resolve the VALUE discrepancy for publishers. But Apple won’t do this…
Apple wants to rob publishers pretending it’s for consumer’s sake. Complete bullshit. Apple is in the game for themselves only. In this case actually their position is too gready and will hurt consumers. There will be lawsuits flying, publishers leaving Apple ecosystem and prices going higher. Steve Jobs will cave back in. This is too extreme and ridiculous.