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Apple alters in-app subscription terms, relaxes price controls
Apple has modified its subscription policy to remove the pricing requirement that forced content providers to sell in-app subscriptions at the same price it sells them outside the app. These older terms and conditions were supposed to go into effect on June 30, and caused a stir when they were first introduced and used to reject apps like Sony Reader from the App Store. The older subscription terms stated: 11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions. The new conditions, shown below, let providers set their own prices on subscriptions. Newspapers or magazines, for example, can raise the price of their iOS subscription prices to compensate for Apple's 30% cut. The terms also make it clear that subscribed content like books, video, music and more can be sent to an iOS device as long as there is no "Buy Now" button or link within the app that lets users buy this content in a browser/outside the app. For example, Amazon can send all your purchased Kindle books to your phone as long as it does not include an in-app button to buy books directly from Amazon's website. Here are the new terms as reported by MacRumors: 11.14 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 buy 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
iFlow Reader calls it quits, abandons App Store
Back in February, Apple began enforcing App Store rules regarding requiring in-app purchases of e-books in addition having options outside the app. Sadly, today that has caused the people behind iFlowReader to shutter their business because "Apple is giving us the boot by making it financially impossible for us to survive." Users of the e-book reader app are being warned to back up their data carefully, or they might lose access to the content they have purchased through it. Previously, apps like iFlow Reader were able to sell content for the app only via non-App Store purchases. For example, with Amazon's Kindle app, you can use the Mobile Safari web browser to purchase books via your Amazon account. Apple doesn't take its usual 30% cut of these transactions. The new rules mean that developers wouldn't be allowed to do this. All such business would have to go via the in-app purchase API, using the user's iTunes account and with Apple taking 30% of the money. Existing apps apparently were given until the end of June to change how they work or face removal from the store. UPDATE: Companies are not required to only offer in-app purchasing, but they are required to offer it as an option and, according to section 11.13 of the T&C, must price the in-app purchase the same as or lower than purchases made outside the app. In effect, this does mean that most purchases are likely to move to the in-app model and incur the 30% surcharge. Customers will presumably prefer to carry out the smallest number of steps to make the purchase, which is the in-app model. I speculated in February that Apple's change could cause some popular apps to flee the store. We know that Sony's Reader app was rejected, that Readability had to shelve its native app (it later released a web app) and that TinyGrab also abandoned plans for an iOS app.
Subscription squabbling in iOS apps rumbles ever onwards
There have been some very sharply worded defences of Apple's new subscription payments requirements written over the last 24 hours: John Gruber: What [Readability are] pissed about is that Apple has the stronger hand. Readability needs Apple to publish an app in the App Store. Apple doesn't need Readability. "Kontra" at counternotions: Apple, the one company that makes bet-the-company type moves all the time, has done it again: they have decided to cull parasitic middlemen and aggregators from the ecosystem. Ben Brooks: If you want to jump on Tommy's trampoline then you are going to have to be friends with Tommy and that means going to his stupid birthday parties and playing by his rules - but its (sic) a freaking trampoline so its (sic) worth it. The Cocoanetics company blog: Right now you have to play under Apple's rule if you want a piece of the pie that's up for grabs on the iOS eco system. Stop whining and start building a service/products that Apple cannot be without. Then they'll either buy your business or find ways to let you breathe on their turf. I have a simple question for these guys.
TinyGrab declines to sell subscriptions through the App Store
Add another name to the list of developers who are choosing to opt-out of Apple's subscription restrictions lately. Rhapsody and Readability were the first two we posted about, although Readability didn't so much opt-out as get rejected and decide not to play the subscription game. Now, a service called TinyGrab has posted that it won't be developing for the App Store because of "Apple's new greedy model." The company says that it was looking forward to providing its premium subscription-based file sharing service through the iOS and Mac App Store platforms, but Apple's restrictions on sharing user data and accounts that expire after a certain time are untenable for their business. The company is willing to pay the 30 percent cut, but unwilling to deal with Apple's terms that disallow any paid upgrades or features added to the app via outside subscriptions. The company still plans to develop for the Mac and, in fact, is about to release a new version of its software this week. But TinyGrab says that Apple has effectively "locked us out" of the App Stores by asking far too much in terms of the restrictions. Granted, none of these companies publicly fighting the restrictions are all that big, and we've already heard of plenty of companies who feel the rules are perfectly reasonable (and indeed, have already started making subscriptions available). Despite TinyGrab's objections, Apple is completely within its rights to make these requirements as long as they don't violate any antitrust laws. Still, there's definitely a growing number of developers unhappy with the deal they're being offered on in-app subscription purchases. Perhaps if Apple lowered the percent cut for services that happen to have content as a functional component of the service (as opposed to pure content plays like Kindle, Netflix, PopSci, The Daily, etc.) they would be more amenable to Apple's terms? TinyGrab will, at least, still be available as a standalone Mac application.
Android may save the day for Apple's iPad subscription policy in the EU
There may never be an official "thank you" note sent, but Apple may be secretly grateful for the explosion of Android tablets about to hit the market. Apple is under the watchful eye of both the United States and the European Union's regulatory bodies regarding its new subscription policy for the iPad, iPhone and iPod touch. The terms of this new policy have prompted some to question whether it runs afoul of current anti-competitive regulations. These anti-competitive concerns may be allayed when the tidal wave of Android tablets lands, and both consumers and publishers can choose between Android and iOS for their media consumption and distribution needs. European Union commissioner Andris Piebalgs echoes this sentiment when he writes to a European Parliament member, saying that "alternative applications platforms exist and several companies have recently launched or are expected to launch in the near future a number of devices similar in terms of functionality to the iPad." Though this statement was released prior to Apple's subscription changes and Google's One Pass announcement, its premise of increased competition from Android tablets remains the same. With an influx of Android tablets slated for release and an alternative subscription service, market forces and not a single company's policies will shape the future of digital media. Of course, this laissez-faire sentiment may change when regulators catch wind of Readability, a paid web service whose app was reportedly rejected from the App Store because it does not offer an in-app subscription option.
Apple rejects Readability due to subscription policy -- where will it end?
Readability simplifies websites for easier reading. It's a service which strips online articles of annoying jiggly-belly ads and other distractions, puts that content into a very readable format, and delivers it to you in Safari or on mobile browsers. Readability was so loved by someone at Apple that it was even put into Safari. Unfortunately, you won't see a Readability app in the App Store. Why? Readability requires a $5-a-month subscription. Your $5 a month doesn't just go to the developers -- they take 70 percent ($3.50) of your monthly fee and give it back to the writers and publishers of said content. Seems like a simple, elegant solution to the clutter on the web, doesn't it? Content is delivered, but a software service declutters that content for a price. According to Apple, this constitutes a content app with a subscription fee, and under section 11.2 in the app guidlines: 11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected. Thus, Readability will not appear in the App Store -- it was rejected by Apple, citing the above clause. In a rather scathing open letter to Apple, the developers behind Readability point out that tiny shops like theirs charge tiny subscription fees, a "tiny sliver of app sales that represent a tiny sliver of your revenue." Now the big question: Where will this end? Content is one thing -- Amazon and others charge publishers various fees to publish their content on their stores. Functionality is an understandable use of in-app purchases, like buying more guns or Smurfberries, enabling you to do more things within an app. But services? One huge problem, and a recurring one for the normally tight-lipped Apple, is what constitutes a "content-based" app.
FTC and DOJ monitoring Apple's new subscription policy
Both the Justice Department and the Federal Trade Commission are aware of the new policy Apple implemented for media companies with applications in the App Store. The new terms state "that if an app offers customers the ability to purchase books outside of the app, the same option is also available to customers from within the app with in-app purchase." A prime example is the Sony Reader app which was reportedly rejected from the App Store because its iOS app linked to its own digital store and did not use Apple's in-app purchase system to sell its eBooks. This new policy takes effect June 30 and will drive many purchases through the App Store, giving Apple a 30% cut. U.S. regulators are taking a closer look at this policy to determine if it runs afoul of any federal antitrust laws. This interest is preliminary and may not turn into a formal investigation or sanctions against the company. The European Union is also closely monitoring this situation, but is currently not taking any action either. Apple was under the microscope last year following its decision to ban iOS applications developed using third-party tools such as Adobe Flash. Both the FTC and the European Commission launched an investigation, but Apple reversed this policy before a decision could be made by either regulatory body.
Elle, Nylon and Pop Sci gladly adopt Apple's subscription terms
Not every publisher's feathers were ruffled by the changes Apple made to its subscription policy earlier this week. While Rhapsody may have responded negatively to the changes, some publishers are accepting the new terms and adopting Apple's new subscription model. According to Advertising Age, three popular magazines, Elle, Nylon and Popular Science, will let customers subscribe via the App Store and, in return, will concede some of their valuable customer data to Apple. The trio believes the advantages of distributing content via Apple's mobile platform outweigh any potential disadvantages. Nylon is the smallest magazine of the bunch and will be least affected by the loss of customer information. The independent magazine eyes the monetary reward of increased subscriptions and assumes its customers will still provide demographic information via other methods. Popular Science shares a similar approach and may prompt users to share their information after they have purchased a subscription and received their second or third issue of the digital magazine. Hachette Filipacchi Media U.S., the publisher behind Elle magazine, is taking a wait and see approach. Rather than become enemies with Apple, the magazine is going to adopt the model and see how it turns out. The publisher also sees the model as being very fluid and one that Apple and publishers can modify over time. "I don't think this is something that is set in stone either for us or for Apple. I'd rather work with them to improve it over time than just sit on the sidelines," said Philippe Guelton, Executive Vice President and COO at Hachette Filipacchi Media U.S.
Are free digital content apps a free ride on Apple? How to move forward
Sony Reader. Amazon Kindle. Rhapsody. In the App Store, they all have (or would have, if Sony's app had been approved) one thing in common: they're represented by free apps that serve as profitable storefronts to their digital content. They all pay their $99/year entrance fee to the App Store, but once in, they're not sharing their extensive off-store revenue systems with Apple. Apple provides the infrastructure, the delivery mechanism and the customer support for millions of free applications. And now, at least for those free apps that lead to digital goods sales, Apple is asking for a slice of the pie beyond the utility and attention that free apps bring. In a move that has Rhapsody ready to pull its offerings from the App Store, Apple has demanded that providers who offer subscription content outside of App Store channels now offer the same subscriptions within the applications as well. Meanwhile, even non-subscription purchases may be coming under the App Store umbrella. That would involve a 30 percent cut for all in-app subscriptions and media buys for Apple (which makes Apple's accountants happy), as well as an insane amount of overhead to approve each and every in-app purchase item (imagine what it will take to code, submit and oversee not just Rhapsody's once-a-month charge but every e-book in Amazon's catalog).
Rhapsody won't sing Apple's subscription tune
Hit the fight bell, because here we go -- Harry McCracken reports that Rhapsody is the first company to pass on Apple's new subscription rules, saying in a statement that Apple's arrangement is "economically untenable." Typically, they say, a Rhapsody subscription only costs them a 2.5 percent credit card fee, but with Apple asking for 30 percent of any subscription payments accepted through the app, it just wouldn't work for Rhapsody to offer that service. And in what could possibly be seen as a veiled threat, Rhapsody mentions that it will "be collaborating with our market peers in determining an appropriate legal and business response to this latest development." Legal, you say? Interesting. In reality, one of two things is likely to happen here -- either Rhapsody will change its mind and decide to take the hit from Apple, or it will not be allowed to release the app on the App Store at all, and it will have to look elsewhere for users. Apple's unlikely to back down from the 30 percent deal -- that's the deal it's seen lots of success with in the rest of iTunes, and I'm sure there are plenty of companies happy to offer subscriptions and let the cut go. The bottom line, whether Rhapsody likes it or not, is that Apple built this platform up, and it's Apple's prerogative to charge what it wants and allow apps or not based on its own guidelines. If we see lots more companies take this tack, Apple might be forced to change, but as long as others buy into the subscription model, Apple's unlikely to back down first.
App Store guidelines updated for subscriptions, more tweaks
Apple's guidelines for developers who place their wares in the App Store have been updated, with a few key bullets. Changes to accommodate the new subscription models are there in section 11, along with a stern warning up front to developers who might game the review system or steal other devs' work: "[Y]our apps will be removed from the store and you will be expelled from the developer program." Additions and changes also include more specific examples of problematic me-too apps in section 2.11 (now noted "such as fart, burp, flashlight and Kama Sutra apps"); section 2.13 citing "simply web sites bundled as apps" or "do not provide any lasting entertainment value"; section 2.21 suggesting apps that are media-only should be submitted to the iTunes store instead. Section 2.22 warns against arbitrary carrier differentiation in apps (no 'Angry Birds for Verizon'!); section 3.11 cautions apps not to warn users to restart before installing; and section 3.12 tells developers to have all included URLs live and working when the app is submitted (otherwise known by its street nickname, "The Embargo Crusher"). Where Apple was previously "thrilled" to have developers invest time and talent in creating App Store apps, now the company says it is merely "pleased." The document (hosted behind the Dev Center registration wall) retains its conversational and just-us-geeks folksy introduction -- "We will reject Apps for any content or behavior that we believe is over the line. What line, you ask? Well, as a Supreme Court Justice once said, "I'll know it when I see it." And we think that you will also know it when you cross it." The opening section still ends with the familiar namaste for responsible and user-centric development: Lastly, we love this stuff too, and honor what you do. We're really trying our best to create the best platform in the world for you to express your talents and make a living too. If it sounds like we're control freaks, well, maybe it's because we're so committed to our users and making sure they have a quality experience with our products. Just like almost all of you are too. Our favorite clause remains 4.2: "Apps that use location-based APIs for automatic or autonomous control of vehicles, aircraft, or other devices will be rejected." If you want to use iPhones as the brains of your army of drone dirigibles, you're gonna have to jailbreak. [hat tip MacRumors]
Apple's subscription model is boon to consumers, bad for publishers
As we reported earlier, Apple announced the arrival of new subscription services for apps in the App Store today. According to the press release, subscriptions purchased from within the App Store will utilize the same billing system currently employed for app and in-app purchases. Publishers are free to set the length and price of the subscriptions, which can be weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly. Then with one click, customers choose the length of their subscription and are immediately charged for it. The great thing about these digital subscriptions for customers is that they can cancel their subscription at any time with very little hassle. They simply need to go to their personal account page to stop re-billing or cancel a current subscription. Anyone who has ever dealt with the headache of getting out of a magazine subscription will recognize this as a huge benefit of Apple's subscription model. However, as we've already seen, many content-based app publishers might not like all the new terms that Apple has laid out. All publishers of content-based apps (like Netflix, Hulu, etc.) must comply with Apple's new subscription service guidelines by June 30 or risk removal of their app from the App Store. The guideline compliance was originally rumored to go into effect March 31, but it seems that app publishers have four more months to make their apps compliant. Content-based app publishers are still free to sell content outside of the apps (like buying a Kindle magazine subscription from Amazon.com), but they now must offer the same content available for purchase directly within the app itself at the same or better price.
