As expected, Apple has announced that the App Store now supports subscriptions, allowing publishers to release free or paid apps and then charge users for subscriptions to magazine, newspaper, music, video, or other content. Publishers will be able to collect payment through App Store billing on a weekly, monthly, bi-monthly, quarterly, bi-yearly, or yearly basis.
The good news is that this will make it easier for companies to create apps like Rupert Murdoch’s The Daily which offer fresh content on a regular basis to subscribers. The less good news is that Apple will take a 30 percent cut of any revenues gained from subscriptions — and requires that any app that offers subscriptions outside of the App Store to also make those subscriptions available through Apple’s channels.
In other words, say you’re an internet radio company like Pandora or Slacker that has long been offering users the chance to subscribe for premium features. Now you have to offer the option of subscribing through the App Store, giving Apple a chance to get its 30% cut. You can continue to offer users the ability to pay for subscriptions outside of the App Store, but according to Apple’s press release “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.”
On the one hand, this will provide a much more seamless experience for users who won’t have to go through a web site to sign up for subscription content anymore. On the other hand, this means Apple is requiring third party companies to remove all payment links from their apps which show uses how to subscribe without sending nearly a third of their money to Apple. Oh yeah, publishers are also prohibited from offering better prices for their content outside of the app.
I could see this new policy doing a few things. It could cause publishers to raise the cost of subscriptions, go out of business, or jump ship to Android and other platforms. Or maybe the whole thing will blow over and publishers will be cool with it. The least likely (but not impossible) outcome? Maybe Apple could change the rules if there’s enough outcry.
For now, it looks like publishers who already offer subscription-based apps have until June 30th to comply with Apple’s new requirements.