Apple’s App Store Subscription Plans

Apple’s rolled out a new subscriptions platform with their usual penchant for surprise, and apparently it caught a lot of people off-guard. Some are even, shall we say, riled.

Briefly,

  • Apple will provide a subscription and purchase infrastructure, for which it’ll charge 30% per transaction. (This is the least objectionable part of the new platform.)
  • You can’t offer a lower price anywhere else on the web (Alarm bells should be going off about now)
  • You can’t link outside the app (e.g. to your website) in your app to allow “off-app purchases” (Yow!)
  • And the kicker: you have to transition to the new payments process by Summer, or get booted off the App Store. (Apple’s way … or the highway)

The obvious answer to this bit of control-freakery is to create an iOS-specific subscription plan. This way publishers can keep their iOS user base while a) not raising costs for non-iOS users and b) making very clear to iOS users that their choice of gadgetry will cost them not just at purchase time, but almost every time they pay for almost anything. And the reason for that is, well, Apple’s greed1.

Let’s consider Spotify. Note that Spotify already offers a PC-only subscription for £5/month.

  • A Spotify Everywhere will cost £10/month and will not be sold on the iTunes App Store. You will be able to buy it on their website and on other proprietary platforms if allowed. You will not be able to listen to songs on iOS devices using this plan, but you will be able to listen on the PC, Mac, Android, Blackberry, WP7, etc. This is very similar to Spotify’s current £10/month plan, which of course includes iOS devices.
  • A hypothetical “Spotify Everywhere with Apple Devices” plan will cost £13/month (£10 + Apple’s 30% cut) and will be sold on the iTunes App Store and on the Web. With this you can listen to songs on PC, Mac, Android, Blackberry, WP7, etc and iOS devices.

I believe this neatly gets around the requirement that you cannot offer a lower price elsewhere on the web. The implicit assumption here is that the lower price cannot be for a “like” product. A subscription plan that excludes iOS devices is clearly not “like” one that includes iOS devices and therefore could be cheaper.

Of course, if an app developer believes there’s enough sales from the App Store channel to justify it, they can keep their iOS-only subscription plans at the same price level (or even cheaper) than the other plans. The important thing is that content providers will have some say in the matter. Whether they actually do so and increase the number of products they offer (potentially increasing user confusion) is another story.

I’d love to hear comments and reactions to this idea. I’m very aware that increasing the number of available subscription types is a suboptimal solution, and I’d love to find out what, if any, the alternatives are.

Footnote. 1 There is no technical or user-experience reason that a link (a link!) to the content provider’s website is now verboten. As for all the Apple fans blithely commenting that they’d rather trust Apple than content providers; well, that’s sweet of you but others might not agree. For myself, I’d trust the Economist, the Guardian, the Independent et al more than Apple any day of the week.

3 thoughts on “Apple’s App Store Subscription Plans”

  1. Prasenjeet,

    If I’m reading this right you’re proposing what amounts to a “premium” subscription that includes iOS devices, at a 30% increase? If I’m not mistaken, and I definitely could be, Apple prohibits raising the price. You can offer an electronic version of the subscription but it has to be the same price as the traditional subscription. Maybe having two plans gets around it?

    This all seems pretty confusing. If you read the comments in the Think Vitamin article there seems to be quite a bit of confusion, and argument, over what in-app purchase really means. Some claim it’s ok to have in-app subscription services other than Apples’, but that seems highly unlikely.

  2. I thought Apple’s rules said you can’t offer the same product for a lower price. Which is why one wouldn’t offer the non-iOS plan for sale in-app or on the app store. The only product you could buy in-app or on the app store is the iOS plan, whose price may be different from the non-iOS plan. And the iOS plan would cost the same whether you buy it in the app store or on the web.

    If Apple now prohibits vendors from offering different subscription plans, that’s imho worse: they’d not only be telling content providers how to price their products, but also what products they can or cannot sell. I can’t imagine too many people agreeing, and it’ll probably end up in the hands of regulators.

    But on the other hand, I realise I’m just speculating. Apple could very well turn around tomorrow and say, guys, we’re going to do the right thing here. It’s just that the Cupertino Cone of Silence(tm) doesn’t play very well when you’re the second-most valuable company in the world, and certainly the most powerful tech company around. People will read the worst into your intentions.

  3. I’m glad as well as amused that you even took an early attempt to figure out what ‘Apple’ really meant by their policy statement.

    As noted in another article on Gigaom, most often the policy statements are vague and these are often interpreted differently based on what Apple wants to do. http://gigaom.com/apple/jobs-new-in-app-subscription-rules-just-for-publishers/

    Coming back to what Apple really wanted to do here, following is my understanding.

    1. They see Tablet as the next big thing and as front runner it’s a massive source of revenue for them. Unlike iPhone, iPad is a great device to consume content, thus attracting lot more ‘Content Publishers’ than it did for iPod/iPhone.

    2. What they don’t want is, a publisher uses the App store to publish a free/cheap App and only share 30% of that proceed to Apple, while make huge amount of money by selling subscription that’s consumed through these Apps/the Platform. They want a piece of that business.

    What Apple will consider as fair or compliant to their guideline is almost anybody’s guess. Once again from the Gigaom piece it appears that readability was classified as a ‘publisher’ while it’s purely a software component [SaaS?] that allows ‘easier’ readability of content on cluttered web pages.

    There’s been speculations about regulatory actions on this, however I don’t believe that’s going to happen any time soon. Apple has played difficult in past as well, but that hardly ever resulted in such actions. It’s the flexibility they have by writing vague policies and having different interpretation depending on the case.

    Whether this will continue/succeed and not drive away content publishers to other platforms is to be seen. iPhone started with the idea of Web Only Apps and later allowed native Apps when they came under pressure. Something similar might happen here as well, but I doubt that. Like RIM, iPhone/iPad always will always hold a large share in the market share, thus forcing people to go after that X% of the market catering to people who only chose to buy a iDevice and consume content using that.

    MS and Sony used to make losses in XBox and PS3 they sold, while made profit in the games that were sold for these devices. Now Apple wants to make profit from iDevices and also make profit from what’s sold/consumed through that.

    Thinking of posting an interpretation of what Apple meant in their press release.

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