Apple unveils long-awaited App Store subscription service
By Darren Quick
February 15, 2011
Filling a gap that has long been a source of complaints for publishers of content-based apps, Apple has finally revealed details of a subscription service on its App Store for digital content including magazines, newspapers, video and music. Expectations of such an announcement rose two weeks ago following the launch of The Daily and the new subscription service will follow the same subscription model ushered in by News Corp.’s tablet-specific newspaper.
Instead of having to purchase each edition (of a magazine, for example), as has been the case until now, users can now buy a weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly subscription. Publishers will be able to set the price and length of subscription, with subscriptions purchased using the same App Store billing system currently used to purchase existing apps. Users will be able to manage their subscriptions and cancel automatic renewals from their personal account page.
Because Apple will process all payments, some publishers have concerns about consumer data, which can be particularly valuable to publishers in allowing them to attract advertisers and market new products. Under the current plan, customers will decide how much information is supplied to publishers when they sign up for a subscription with the publishers then deciding how that information is used.
As it does today for other in-app purchases, Apple will keep a 30 percent share when users purchase a subscription through an app on their iDevice. However, when users purchase a subscription directly through the publisher’s website, the publisher will retain 100 percent of the fee. This is with the caveat that the subscription deal offered by the publisher must be identical to the one offered through the app.
"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," said Apple Chief Executive Steve Jobs.
While such a system is likely to benefit many publishers by helping boost flagging sales due to its simplicity, others are worried about turning over too much power to Apple. Whatever the publishers decide, they have until June 30 to comply with the new rules.
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