Apple Updates In-App Subscription Terms for iOS, Lets Publishers Sell Outside for Less

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J. Angelo Racoma avatar

Apple Updates In-App Subscription Terms for iOS, Lets Publishers Sell Outside for Less
Apple's (news, site) digital subscription policy for iOS applications has been criticized for being pricey and restricting. For one, it wants 30% of publishers' subscription revenue. Further, Apple won't share subscriber data with the publishers. A subtle -- but important -- change in Apple's subscription policy now allows publishers to sell subscriptions outside of the Apple Store at a lower price.

Cost Savings vs. Convenience?

Apple's latest App Store Review Guidelines, which will be in place within the week, includes a few changes in the way the policy on digital subscriptions has been worded. In essence, application publishers can now offer subscriptions from outside of the App or App Store, with a few restrictions.

Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app."

The restriction basically means that publishers cannot add a "buy" or "subscribe" button from within the app that links outside of App Store. The policy update also means -- although implicitly -- that publishers can price their subscriptions a bit lower when bought directly from the source. This can help them recoup the 30% share that Apple gets. But will subscribers bite?

Is It a Win-Win Situation?

This way, it's somewhat of a win-win situation for all. Apple won't have to contend with publishers jumping ship because they find the rules too restrictive. Publishers have a buffer for the 30% Apple share. They can basically just add this share as a markup to the in-App subscription price. Subscribers, meanwhile, have a choice. They can either buy directly from within the app if they prefer instant gratification, or go through extra steps if they want to save a few bucks. At least publishers get the best of both worlds -- Apple can market them through the App Store subscription channel, but they can also do everything their way, if so desired.

Learning Opportunities

Still, it might not be a good solution for everyone concerned. Recall that the Financial Times is dropping its iPad app in favor of an iPhone and iPad-optimized mobile version for subscribers. FT wants to prevent Apple from getting a 30% cut off of its subscriptions. However, it goes deeper than that. FT contends that the subscriber data and the freedom to sell subscriptions are more important than the money. The Apple apps channel still doesn't give publishers "the freedom to sell subscriptions the way you want to," as FT's Rob Grimshaw, MD, told PaidContent.

Apple's taking a softer stance on in-app subscriptions might mean it's aware of publishers' concerns about the revenue share and subscriber data. Rather than scare away content and app developers with restrictive policies, Apple updated its terms and conditions as a concession. Now the question is whether this will weaken Apple's subscription business model, or improve it further by encouraging publishers to push subscriptions both ways.