Apple Adjusts In-App Subscription Policies

 
 
By Nicholas Kolakowski  |  Posted 2011-06-11 Email Print this article Print
 
 
 
 
 
 
 

Apple has adjusted its controversial in-app subscription policies, dropping requirements that had sparked controversy among publishers. How will the latter respond?

Apple has walked back its somewhat-controversial policy regarding subscriptions sold via the App Store.

Under the company's previous terms, media publishers were required to sell subscriptions through the App Store at rates preferable or equal to those offered via other channels, with Apple taking 30 percent of the fees.  

Spokespeople for Apple reportedly confirmed the reversal to various media outlets, including Bloomberg

"Content providers may offer In-App subscriptions at whatever price they wish," read a June 9 posting on the Apple-centric blog MacRumors, which is widely credited with first noticing the change to Apple's guidelines, "and they are not required to offer an in-app subscription simply because they sell a subscription outside the App Store as well."

Publishers hadn't exactly greeted Apple's original policy with glee, accusing the company of greediness in its dealings with publishers. "An Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable," Music-subscription service Rhapsody wrote in an emailed statement to eWEEK in February, soon after Apple announced its plans. "The bottom line is: We would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee."

At the time, analysts also questioned whether the marketplace would tolerate Apple's terms.

"At the end of the day, the market and customers will decide this," Gartner analyst Michael Gartenberg told eWEEK. "If services begin pulling out of the iTunes marketplace, customers will be frustrated, and Apple will respond."

That being said, he thought Apple had some flexibility in the matter: "From Apple's perspective, they can always move rates down, not raise them. Apple wants to make sure their customers are paying what they'd be paying anywhere."

Other analysts took a much more dire view.

"What Apple has done already is sufficient to make providers of content aggressively invest in alternative means to reach the market," James McQuivey, an analyst with Forrester, wrote in a Feb. 16 blog posting. "You can fault the company for choosing not to anticipate that seeking a 30 percent toll would bring any subscription model of any type to its knees."

Apple's rivals immediately rushed in to exploit the potential schism between Apple and publishers. On Feb. 16, Google announced Google One Pass, a service that the search engine described as letting "publishers set their own prices and terms for their digital content," with Google taking 10 percent of any revenue.

Now Apple's chosen to modify its policy, with some caveats. "Apps can read or play approved content (specifically magazines, newspapers, books, audio, music and video) that is subscribed to or purchased outside the app," reads the updated guidelines, "as long as there is no button or external link in the app to purchase the approved content." In-app purchasing will apparently continue to earn Apple its 30 percent, according to MacRumors, which could still rub some publishers the wrong way.

Nonetheless, the change is likely to adjust publishers' dealings with Apple yet again.

 
 
 
 
 
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
 
 
 
 
 
 
 

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