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.
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.
Nathan Koppel reports for The Wall Street Journal, “Apple Inc.’s new subscription service could draw antitrust scrutiny, according to law professors… ‘My inclination is to be suspect’ about Apple’s new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh’s mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting ‘anticompetitive pressures on price.'”
MacDailyNews Take: No, and therefore, no. And, when law professors’ “inclinations” become meaningful in a court of law, let us know.
Koppel continues, “‘Millions will be spent litigating how broad the market is,’ said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law. Mr. Hovenkamp said digital media is the most plausible market. He said he doubted that Apple, currently, has a sufficiently dominant position in that market to warrant antitrust scrutiny. But, he said, if Apple gets to a point where it is selling 60% or more of all digital subscriptions through its App Store, ‘then you might move into territory where an antitrust challenge would seem feasible.'”
MacDailyNews Take: Then let’s revisit the issue of whether 60% of anything constitutes a “monopoly” if it happens, okay? And, by the way, using 60% share as the criteria would make Coca-Cola a “monopoly” in the carbonated cola market. Surely Pepsi would beg to differ.
Koppel continues, “Mr. Ghosh said courts in antitrust inquiries may look favorably when a company can articulate a legitimate business justification for behavior alleged to be anticompetitive. For this reason, Apple may ‘come up with a business justification’ for some of its restrictive subscription terms, he said. ‘They have invested in a platform so they need to create incentives to use the platform.'”
Read more in the full article here.
MacDailyNews Take: The sooner publishers, especially those of newspapers and magazines, realize that the old rules no longer apply, the better off they will be.
“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