General Question

Douglas114's avatar

What do you think of Apple's new subscription requirement for the app store?

Asked by Douglas114 (1points) February 20th, 2011

Apple is requiring apps like the kindle app to offer their content for sale from within the app, meaning apple will get a 30% cut of it.

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12 Answers

XOIIO's avatar

Ithink being able to buy stuff from in the app is a horrible idea. It leads to misleading apps that say they are the full version, and keeps costs hidden if you want full parts of the app.I hate it.

shpadoinkle_sue's avatar

That sounds dumb to me and I don’t even have anything that can have an app put on it. Hell, I can’t even get Itunes to recognize my account profile.

jerv's avatar

I’m thinking I am glad I have a Droid X. Unlike Apple, you cannot install an app to an Android device that will cost you money without it explicitly asking for the appropriate permission before it is installed. If you ignore the little thing that says “Services that may cost you money” then you have only yourself to blame.

I am also thinking that a lot of Apple Fan-bois will say that that is the way all software vendors should operate since anything Apple does is the way it should be done.

Seriously though, Apple already has profit margins considerably fatter than the industry average. WTF?!

cookieman's avatar

It’s actually worse than that.

First of all, it’s not mandatory that apps use the subscription model. It’s optional.

Regardless, Apple still takes 30% of the initial sale of every app. To be fair, this is not new. It’s been such since the app store opened and many developers have still chosen to sell their wares through the Apple Eco-system.

Now, if a developer chooses to offer a subscription service (magazines for example), they must do so through an in-app purchase (of which Apple takes 30% again). A developer can still offer a subscription service outside of the app (at their own website for example) but their agreement with Apple dictates that the developer must charge the same (or less) for subscriptions here. And while the developer would then get 100% profit from those subscription purchases, they’re prohibited from placing links to their site inside the app – which pretty much makes the in-app purchase the foregone conclusion for most consumers.

To play devils advocate… Why does Apple take a whopping 30% off the top? Because they can!

Despite the awesomeness of Droid, the Apple Eco-system still drives millions in sales from a devoted fan-base – and developers (especially smaller ones) want a piece of that action despite the 30% bite.

I mean, why do teams pay athletes millions of dollars? Why is my plumber $150 just to walk in the door?

When I started out in Graphic Design (as an illustrator), I hired a rep to get me gigs as I was having a hell of a time on my own. He got me lots of good paying jobs. Ya know what his commission was? 30% of every dollar I made.

Retail mark-up on most items is often double (or more) of what was paid to the wholesaler (meanwhile buyers relentlessly beat down vendors for better deals).

This sort of thing is not uncommon – and while 30% seems steep, and won’t mean a hill of beans so long as developers keep selling their good through Apple.

And I’m a huge Apple fan myself.

lillycoyote's avatar

Am I missing something? I haven’t noticed it. I have an iMac, a Mac mini, an iPad, an iPod Touch and now an iPhone; I just got the iPhone a few days ago because Verizon just started offering them… so I’m pretty damn Appled up and even I haven’t seen this. Where would I encounter this subscription business?

robmandu's avatar

My opinion:

30% take by Apple for APPS is fine. Apple maintains the App Store, handles the commerce, provides a marketing platform, vets the integrity of the app, etc. Developers might do that on their own, but they’d likely spent almost the same money. This is a huge leg up for the small, indie developer who just wants to focus on app development, and little else.

30% take by Apple for SUBSCRIPTION CONTENT is greed… and fine as @cprevite explained already. Demographically speaking, iOS users (iPhone, iPad, iPod touch) have higher amounts of disposable income and a higher propensity to actually spend it than Android users. While capitalism isn’t a silver bullet to solve all the world’s ills, it is what we rely on in the U.S. for commerce… and this is exactly how it’s supposed to work.

I wouldn’t be surprised if Apple’s cut for content eventually was reduced over time because they’re really not doing as much. Subscription content is not hosted on Apple’s servers (like the apps themselves are). Nor does Apple vet the content like they do with apps. Sure, Apple processes the payment, but in most cases for legacy print content, they already have established subscription commerce systems they’ve invested in.

Additional 2¢:

Newspapers, magazines, and other media have a real opportunity here. Apple still allows them to provide customers with a way to subscribe to new content outside of the App Store. It’s just that they cannot mention or link to such route inside an app.

Interesting thing, you know what newspapers, magazines, and other media already has? Advertising space in their product! If they want to stick it to Apple, then use their existing advertising venues (i.e. not within an app, but everywhere else) and give people a “free gift” when they subscribe… funding the “gift” with the 30% they’re not giving to Apple.

If that’s successful, great! Hype it up and make it known. However, if it’s not successful, then it’s evident that Apple’s provision of in-app subscription capabilities is superior and hence worth the price.

rawrgrr's avatar

I’m not really for or against it, it does seem a little greedy of Apple but the 30% isn’t new. It seems a bit better for users than it is for developers. Also here are a few reasons that it is good news from John Gruber

1. In-app subscriptions are easy to sign up for.

2. In-app subscriptions are easy to unsubscribe from. This is where things start getting way better than the old days. It’s always been in magazines’ and newspapers’ interests to make it easy to sign up for a new subscription. They couldn’t replicate iTunes-style one-click-and-a-password ease, but they could get close. But they never made it easy to unsubscribe later on, because it wasn’t in their interests.

3. Privacy protection. Publishers only get your personal information if you opt-in. They want that information so they can sell it to junk-mail companies. This is a big deal to publishers, and most subscribers don’t even know it’s happening. It’s a dirtbag deal, and Apple isn’t allowing it.

4. The price protection rule — which prohibits publishers from charging iOS App Store users more for in-app subscriptions than they would pay from outside the store — might be a bad deal for publishers, but it’s good for users, because they know they’re getting the best price.

One thing that does suck though is how it kicks out lots of good apps from the app store which end up affecting the users.

jerv's avatar

@rawrgrr Number 4 is a double-edged sword. In fact, it may amount to “You must charge anyone who does not use iOS more for any subscription.” I know that if I were a publisher, I would seriously reconsider having an iOS app.
Also, 30% is more than a bit greedy, but since Apple’s profit margins on other things (like hardware) run nearer to 50% than the industry average 20–40%, I am not surprised.

To be fair though, it isn’t like Apple is the only greedy, profit-minded company on Earth. They just happen to do it in a way that makes some people crawl back for more.

rawrgrr's avatar

@jerv “They just happen to do it in a way that makes some people crawl back for more.”
True. But hey, why lower the price when everyone already buys your products ahah

jerv's avatar

@rawrgrr That’s Capitalism for ya :D

Of course, it’s a bell-curve akin to the Laffer Curve of taxation; there is a sweet spot between tax rates (or price per unit) and revenue collection. Sometimes you can take in more total profit by lowering prices and thus increasing the volume. I know that price is one of my major reasons for not buying Apple products.
And in an economy where many households are seeing a decline in disposable income, Apple may not be able to keep it up much longer. Look at how strongly Android is selling and how much of a market share PCs have, and part of that is because it’s less expensive. Let’s not argue (again) about whether you get what you pay for; my point is about how much people are able/willing to pay for anything. Apple is going to have to sink a lot of it’s revenue into R&D (and hope they don’t suffer another Newton-like flop) in order to stay in the game. And unless Steve jobs stays at the helm in perpetuity, I don’t see it.

rawrgrr's avatar

@jerv and it seems that apple has found that sweet spot.

“And in an economy where many households are seeing a decline in disposable income, Apple may not be able to keep it up much longer.”
Thats what I used to think, but when the economy was much worse Apple was one of the only companies to have record breaking sales and revenue quarter after quarter. (I also remember reading an article saying more and more people with lower income are purchasing iPhones. Unfortunately I can’t find the article but I remember it being on AppleInsider)

Also here’s a quote by Steve. “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”

robmandu's avatar

I thought Matt Drance had a pretty good insight about the consistency of Apple always taking a 30% cut:

Some say the 70/30 revenue split that accompanies IAP is too high for subscriptions, but precedent wins here. 30% to Apple across the board — app sales, IAP, and now subscriptions — is consistent, clear, and uncheatable. That cheating bit is significant: a 10% commission for subscriptions, for example, would see developers adopting the subscription system en masse so they could keep more money. Apps that were once $2.99 would suddenly be asking for installments like late-night infomercials. This would not only be a huge headache for Apple, but it would be an awful user experience. Don’t expect subscriptions to deviate from a 70/30 split unless everything does.

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