Apple Reverses Course On In-App Subscriptions [Apple Confirms]

Apple has quietly changed its guidelines on the pricing of In-App Subscriptions on the App Store. There are no longer any requirements that a subscription be the "same price or less than it is offered outside the app". There are no longer any guidelines about price at all. Apple also removed the requirement that external subscriptions must be also offered as an in-app purchase.

UPDATE 12:15 PDT: An Apple spokesperson confirmed to Dow Jones Newswire that the company had, in fact, revised its policies regarding In-App Subscriptions.

Content providers may offer In-App subscriptions at whatever price they wish and they are not required to offer an in-app subscription simply because they sell a subscription outside the App Store as well.

This past February, Apple introduced App Store Subscriptions. This opened the door to a wide range of in-app subscription services such as magazines and newspapers. Just last month, Conde Nast rolled out iPad magazine subscriptions for a number of its periodicals.

When Apple rolled out the new subscription plan, however, it placed several requirements on app developers -- via the App Store Review Guidelines -- with regard to pricing of subscriptions. Enforcement of the new policies were to go into effect on June 30 of this year. By far the most controversial was section 11.13:
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. [Emphasis added]
Apple also emphasized these points in its press release announcing the In-App Subscription service. For publishers who choose to "sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app."

However, this left publishers with the requirement that App Store users be given the lowest possible pricing on all subscriptions. Just this week, the business newspaper the Financial Times dropped its iOS App in favor of a web app to give it more control over subscription pricing. The guidelines were also somewhat vague on whether companies like Netflix, Hulu or Rhapsody were required to implement an in-app purchasing mechanism and meet the pricing guidelines Apple put forth.

With the enforcement deadline looming, this week Apple introduced updated App Store Review Guidelines, of which MacRumors has obtained a copy. The corresponding 11.13 (now 11.14) section is significantly different:
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 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 new section 11.14 states that apps can play content "subscribed to or purchased outside of the app" as long as the app doesn't include a way for users to go directly from the app to the outside purchasing mechanism. That is, these apps can't have a "buy" button that takes users to an external subscription page.

According to these new guidelines, existing subscription services such as Netflix may continue to function without offering in-app purchases. Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a premium to cover Apple's 30% cut for In-App Subscription payments.

This is a significant reversal from Apple's position in February, and it will have a major impact on the strategy of content providers regarding the App Store.

Thanks to Armin for the tip, and to Heise Online's Mac & i blog

Top Rated Comments

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111 months ago
Glad Apple did the sensible thing now rather than stubbornly keep pushing this until they had done irreparable damage. There's a time to stick to your guns, and a time to realise you've got it wrong; it's the successful companies who get this judgement right. I wonder if the FT move was what finally pushed them to backtrack?
Rating: 9 Votes
111 months ago
Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.
Rating: 9 Votes
111 months ago
Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.
Rating: 7 Votes
111 months ago

On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again.\

I didn't see anything that prevents the app developer from WARNING the customer that buying the app externally SAVES them XX vs buying in-app. In fact - if anything it could increase sales as people like the perceived notion they are getting a deal.

Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.

Exactly kdarling - and this is why you are one of the most level headed and respected (by at LEAST me) poster on these forums.
Rating: 5 Votes
111 months ago
We're seeing again and again that Android is keeping Apple honest, so to speak.

Remember Vic Gundotra's "draconian future" remark at Google I/O? Although overly dramatic, situations like this is what he was talking about.

Apple is a great number 2 and a pretty horrible number 1.
Rating: 4 Votes
111 months ago

On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again. More likely to give your app a minus five star rating (or the lowest rating possible) on the store before uninstalling it.

Easy to solve, tell them before they buy it.

As you click to subscribe they should be able to inform you that the in-app purchase includes a surcharge to cover Apple's charges and let you know it is available at the normal price elsewhere.
Rating: 4 Votes
111 months ago

I wish people would stop making such a big deal out of the 30% cut. Those who do obviously have little or no business sense.

If I made a product and a distributor said they would provide:

1. Placement in a store visited by millions of people every day from all over the world
2. With millions of already registered and proven customers from all over the world
3. With purchase devices (iPhones, Macs, etc.) already owned by millions of people from all over the world
3. With no worries about credit card approval or fraud
4. That can be purchased with gift cards that are available nearly everywhere, from corner convenience store to mall department stores
5. That provided full and excellent sales tech support
6. Where I could set my own price
7. Where I could upsell features (In-app purchasing) to increase income
8. That required me to manufacture (and pay for) not one physical item

And wanted only 30% of the net, I would say, "Where do I sign" not "let me think about it."

Do people really think that, if they buy software in a Best Buy (for example) for $100 that the entire $100 goes to the software company? Best Buy most likely purchased that software for less than 50% of the sales price. So Best Buy is taking their 50%, and rightfully so, and people complain about Apple's 30%? Get off the soapbox. Your griping doesn't make any sense at all. Do you have any idea as to the value of what Apple is offering? It's enormous.

Sure, you can make 100% off of a website sale, but deduct server hosting fees and lines (you're not selling this with your home computer and a cable modem), sales tech support, credit card fees, credit card fraud, website development costs, maintenance and repair, advertising, advertising, advertising to reach as many people as Apple does (if that's even possible), plus time and effort, and a host of other unseen costs associated with online sales, and you're not much further ahead, if at all.

Hello? Earth to noob. The article is about publishers, not software makers. Publishers already have the infrastructure you mention as they use it for the 80% of the market that is non-iOS such as computers, Android, web, etc...

Next time, read the article before typing out a thesis based on something completely unrelated. LOL. :rolleyes:
Rating: 3 Votes
111 months ago

Are you forgetting that the app store app was the vehicle which led the customer to purchase??? What is being said was all the standards of excellence that encourages people to use the app store is not a free nor easy service for apple to provide.

The App Store app itself is covered by the 99$ yearly developer fee or the 30% of its price on purchase. The 30% for in-app purchases/subscription has nothing to do with the app itself, which is paid for through other means.

So no, I am not forgetting it. It's not even a factor in the equation.
Rating: 3 Votes
111 months ago

Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

I think that it is misdirected to imply that Apple's 30% cut is simply a credit card transaction fee, they are charging developers for providing them with easy access to millions of impulsive customers.
Rating: 3 Votes
111 months ago

So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?

Apple doesn't transfer subscription content. They don't host it, nor store it either. For the in-app subscription and in-app purchase, all Apple does is cover billing. If you're going to go on this wild emotional "Apple is a victim!" tangeant, at least get the facts straight. ;)

Apple is a payment processor. They are charging 30% to process a payment and you are left on your own with : Server storage, content transfer, account management, marketing, etc...

That's one hefty payment charge, even Visa and Mastercard don't charge that much to process payments.

And they should maintain the same level of excellence while not receiving a penny, right?

Who said not receiving a penny ? They should simply charge reasonable rates for payment processing. What's the industry going rate for that ? Under 5% ? Do they even do percentage based transactions or is it fixed charges ? Charge that. You still get money for processing the payment and maybe a few more devs will embrace your service.

These new rules at least let the service stand on its own in the market. You now at least have a choice of payment processors for your in-app subscription stuff. Will it be Apple at 30% or Visa at 5% or a fixed rate payment processor ?
Rating: 3 Votes

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