Hulu Complies With Apple's New iOS In-App Subscription Rules Without Sharing Revenue

Monday June 20, 2011 8:33 am PDT by Eric Slivka
All Things Digital reports that in the latest update to its Hulu Plus application, television streaming company Hulu has brought itself into compliance with Apple's new In-App Subscription rules, taking advantage of a recent shift in Apple's stance to simply remove an external link to sign up for the paid service rather than offering subscriptions inside the application under a system in which Apple would take 30% of the revenue.
All Hulu had to do was strip out the link that sent potential subscribers to its Web site, because Apple's new rule will ban "apps that link to external mechanisms for purchases or subscriptions to be used in the app."
As initially deployed back in mid-February, Apple's In-App Subscription mechanism allowed publishers to set prices, but also required them to offer the same offers inside their applications as found through external mechanisms. Under the program, Apple would retain 30% of the revenue on subscriptions generated within the applications as a fee for bringing the subscriber to the service. The new terms were set to go into effect on June 30th for existing subscription-based applications, leading many to wonder how services such as Hulu and Netflix would deal with the requirements.

External subscription link text (bottom) removed from Hulu Plus login screen

But with Apple reversing course earlier this month, those services now have a much easier path to compliance with Apple In-App Subscriptions terms. Under the revised terms, publishers with subscription programs are not required to also offer In App Subscriptions, provided that they do not link users to external purchasing mechanisms.

Consequently, apps like Hulu Plus can meet the requirements by simply having their subscription links removed from within the app. Hulu loses the benefit of direct link-outs for new subscribers, but does not have to offer In-App Subscriptions that would undoubtedly result in significant amounts of revenue being diverted to Apple. Users interested in subscribing to Hulu will simply have to visit Hulu's site on their own, manually entering the address or finding it through a search engine, in order to sign up.

All Things Digital notes that the solution adopted by Hulu is likely to make its way to a number of other prominent services such as Netflix and Rhapsody, although it is unclear how others such as Amazon's Kindle Store will be able to satisfactorily comply with the new rules going into effect next week without removing a significant convenience factor of being able to purchase individual e-books via link-outs from the app itself.

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arn
113 months ago

Clever move. I wonder if Apple will do anything against that, they seems to shift their policies every week..


unlikely, since this was the intended purpose of the rule changes. So apps like Hulu and Netflix could continue to exist in the app store

arn
Rating: 9 Votes
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Oletros
113 months ago

No. If App developers are going to use the Apple infrastructure to sell subscriptions then Apple should get a share of the revenue.


Which infrastruture is using Amazon when a Kindle book is sold?
Rating: 6 Votes
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Oletros
113 months ago

Forgive him. Everybody wants their free ride in Apple's iTunes Store.


What free ride?
Rating: 4 Votes
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bsolar
113 months ago

I think removing the links is a good outcome that balances Apple and the third parties' commercial interests without making things particularly difficult on consumers. It puts the ball in the third parties' court to make the user experience easier for the consumer by providing them a way to subscribe through an in-app purchase.

I agree that using the in-app purchase would be better, but 30% is a ridiculous fee, it's obvious it's not going to work for most third parties, some of which already have in place their payment processing infrastructure.

Also to "cripple" a bit these apps might be a double-edged sword. I love my iPhone but I would never have bought it without the Kindle app. If using the Kindle app on the iPhone becomes a nuisance I will surely consider switching to a different device instead of the new iPhone model.
Rating: 4 Votes
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alhedges
113 months ago

It is illegal to use your monopoly in one market to gain a monopoly in another market.

Microsoft was a monopoly. Microsoft Windows controlled 95% of the OS market. Microsoft was using this monopoly to try and corner the browser market.

Actually, MS controlled 90% of the *consumer* OS market. Which points out the importance of defining what the relevant market is in determining whether there is a monopoly.



Apple's iOS does not have a monopoly. Android is neck and neck with iOS. Apple can do whatever it wants with it's AppStore, because you don't NEED an iOS device to do anything. You have choices. This was not the case back in the Windows days - there were very little legitimate options.


IOS does not have a monopoly on mobile OS's. However, iOS may be coming close to having a monopoly on tablet OS's. And of course iTunes is also close to having a monopoly on music downloads. So Apple does have to at least keep an eye on possible anti-competitive issues.
Rating: 3 Votes
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JusChexin
113 months ago

Really?

When you buy a Kindle book on Kindle for Mac or Kindle for Windows do you use Apple or MS infrastructure?


Are you missing the fact that iOS belongs to Apple?


The thing I don't understand about this argument is this: Apparently Apple owning iOS means that if I download a 3rd-party application through Apple's mechanism for downloading applications on their operating system (ie the App Store), Apple is somehow entitled revenue when I conduct an economic transaction within that third-party application and only with/between that third-party, because Apple gave them the benefit of distributing the original 3rd-party application in the App Store. Yet, if I download or buy an application from a 3rd party on Apple's mechanism for accessing acquiring applications over the Internet on a regular pc (ie downloading an application through Safari on OSX) or the same from Microsoft (downloading an application through IE on Windows), then the OS company isn't entitled revenue from the third-party transaction. (of course this is changing with the advent of the Mac App Store and Lion, but you can still access apps through the Internet on Safari and other web browsers, to be installed in the OS, whereas on an iOS device, you have to go through Apple's official mechanism of the App Store, as far as I know).

I just don't understand how it was found anti-competitive back in the day for MS to only offer IE pre-installed on a Windows PC, and yet today Apple can lock down iOS devices and set all the rules for dealing with applications installed on their devices to their hearts content. I really enjoy Apple and iOS devices, but I'm just so curious if anyone can explain the legal distinctions to me. Thanks!
Rating: 3 Votes
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BaldiMac
113 months ago

Windows belongs to MS. Should they get a cut of every piece of software sold to run on Windows?


You mean like they do on the xBox?

MS would be laughed at and then sued for anti-trust if they tried to get a cut of Netflix subscriptions.


That would be because they are a monopoly. There are different rules for monopoloies that for everyone else. What is illegal for a monopoly is not illegal for everone.
Rating: 3 Votes
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nwcs
113 months ago

No, they can't. They mus obey laws.


Yes but the "anti-competitive" crap being thrown around here doesn't apply.

http://en.wikipedia.org/wiki/Competition_law
Rating: 3 Votes
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marksman
113 months ago

I don't know if they can do a non-active link, but they should be able to mention the existence of their website or provide a link to their homepage.


No. If App developers are going to use the Apple infrastructure to sell subscriptions then Apple should get a share of the revenue. I suspect given these very lenient considerations by Apple that the will be pretty strict with people who try to circumvent these rules.

It is ridiculous to think that App developers should just be able to perch on Apple's infrastructure and sell their product to Apple's customers with Apple not being involved. This is why this is.

Companies can bring their own customers to their apps, but they can't just use Apple's platform to recruit new paying customers for free.


I'm no lawyer, but this seems to me to be anti-competitive practices, especially considering it has the ability to stop Netflix & Amazon (both of whom have competing products to Apple) from functioning in a manner that 1) is profitable, and 2) is in any way competitive with Apple's own offerings - in reality, this is edging a little too close towards the IE/Windows debacle for my liking.



You are way off base here. The App Store is a retail store. Retail stores can sell whatever they want, pretty much however they want. This has nothing to do with any sort of anti-trust issue or competitive practices.
Rating: 3 Votes
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Rodimus Prime
113 months ago

I have a feeling that if Netflix pulled support for iOS, it would hurt Netflix's bottom line more than Apple's.

If any of these companies felt they could make more money by doing only Android apps, and not iOS apps because they didn't like Apple's rules, they would.


unlikely. I know very few people who get netflix for iOS. It being on iOS is pure bonus to them and some of the reason why they bought there iPad was because netflix could be used on it.
I have see and been ask the question way to many times on does netflix play on *blank* and if the answer is no they go on and find something it will play on. People get netflix for the home TV. Not to play on iOS.
Rating: 2 Votes

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