They're kicking up a shitstorm now. Just wait until many of the other services have weighed in. Do you think Pandora is going to want to give up 30% of its revenue?

Apple are bloody ludicrous and completely out to lunch.

This new rule is the equivalent of Radio Shack charging XM Radio a 30% cut on all their subscriptions for people who bought a radio in the store.

Never mind that many of the subscriptions which are used with iOS apps are also used elsewhere. Often the iOS app is a freebie and simply a bonus to a service that's primarily geared for consumption elsewhere.

I don't think a percentage of any amount is right for subscriptions. That is to say, sure, if someone wants to offer an in-app subscription, then Apple can take a cut for processing the transaction through iTunes. BUT, developers should be allowed to implement other subscription models without also having to include Apple's. And without having to include Apple's at the same or lower price.

I really want to see this make it to court in an anti-trust case. As much as I'm a fan of Apple's products, it's dick moves like this that make me really despise them at the same time.

It would even be fair if they took a one-time $2 minimum cut per subscriber, or simply 30% of the sale price of the app if it's a commercial app.

I don't currently subscribe to anything and I don't currently have any plans (even far out ones) to offer any subscription products, but this really does make me sick to my stomach. What's next, will they take a 30% cut of sales of other hardware you may release that also works with your iOS app? Will they take a 30% cut from Ford or Honda's car sales?

It's always been a slippery slope and today a lot of footing has been lost.

I'm not sure of my opinion on this yet, but how exactly is this an anti-trust action?

Yeah it sounds like a bunch of crap but I don't think it's anti-trust. Hopefully the service providers will fight this. They could charge more is you want to use an ios device like how Hulu charges if you want to use it on a TV. Then the users would get pissed off and fight it maybe

I'm not saying it is anti-trust, but it's what's been bandied about already by Rhapsody. It's definitely anti-competitive as they're not only making the subscription mandatory through them, they're also setting the minimum price.

And Matt, no, they can't charge more for in-app than they do elsewhere.

How can a music streaming service afford to cut Apple in for 30%? I doubt most of those make 30% as it is.

Is apple saying they can't or is there some technological reason they can't ?

Apple is saying that developers are not allowed. It's mandatory to offer subscriptions from within the app if you have subscription ability outside the app. You cannot link to the outside subscription method from the app and you have to charge the same amount or less for in-app subscriptions than you do for outside ones.

So I'll use my example again. What if a company has a subscription model it's been using for years, including a customer base that it's had for years with a service that's primarily consumed outside the app store - whatever it may be. Now let's say that company wants to create an app specifically for its subscribers, for whatever reason and to do whatever it happens to do - that's not important.

By Apple's rules, that app would have to allow subscribing from within it and it and Apple would take 30% of the subscription price. It doesn't matter that the app may only be for feature "Y" of the company's offering which offers features A through Z. They're going to get raped for 30% regardless.

I already thought 30% was way too high for app sales to begin with, but this is simply ridiculous.

You'll probably read "make it up in volume" tossed around a lot. Maybe by people who don't know that anything multiplied by 0 is still zero. Or that when you multiply a loss you only get a bigger loss. The folks making a huge play in volume with guaranteed points on every sale are Apple. They have the volume of the entire store, of every developer working for them, taking a neat 30% of everything. Those are some huge dollars.

You can argue of course that Apple hosts the apps and even hosts in-app purchases. But they're not going to host subscribed content for the most part. They certainly aren't going to cover the bill for the servers required to run someone else's music streaming company. But they still want 30%. For nothing.

If they want to take 30% they should be providing the infrastructure to run the back end of the business supplying the content. So they should host all the data and provide the connections and bandwidth to all the users. That would allow a music streaming company for instance to have pretty much zero overhead. The thing is, they still might not be able to afford to pay Apple 30% if their cut from the music isn't 30% to begin with.

This is only the beginning, and was all telegraphed a week or two ago. Sony dropped support for their ebook store on iOS devices because of this exact rumor, that Apple was going to start insisting that Sony had to sell their books in the app and give Apple a 30% cut, and also couldn't charge more (you know, 30% more) in their app than they did elsewhere.

At the time, people were wondering what this meant for the Kindle app. There's rumblings that Apple would place the same restrictions on Amazon, saying that they had to sell their books through the app only (currently the app opens to the Amazon's site, I believe), they would give Apple a 30% cut, and Amazon wouldn't be allowed to sell their books in their iOS app for more than they did elsewhere.

So, continuing these possibilities, what if Amazon pulled their Kindle app from iOS? That would be an enormous hit to iPad sales, as good as they are, and be a big boon to Android tablets.

Yeah that is an even bigger load of crap than I was thinking.

I can't see why amazon, pandora, or whoever would even bother having an iphone app. They aren't going to be giving them away for sure.

So next are they going to say they get a cut if I buy a physical item on amazon with an ipad.

You can do anything you want through the web browser.

I don't know how this will affect Kindle, because the new rules are subscription-specific as far as I know. We'll have to see.

Ah, but that's the thing, Apple now says you can't take users out of your app into a web browser to sign up for a subscription. This is exactly what they're supposedly going to say to the ebook stores as well.

But also, sure you can do whatever you want through the browser, but there's a reason people want apps: because they work better. The Amazon app on my phone is dangerously good because of how easy it is to browse products At this rate I wouldn't put it past Apple to ask for 30% of those products on their iPhone version.


I was saying there's already been talk about this. The Sony reader has already been rejected from the app store, with rumors that this is why it was rejected as a new app.

I doubt this will have an effect on the Kindle app. For buying books, the Kindle app hands the task off to Safari. You don't even have to start the Kindle app to buy a book. Hardware Kindles have the same kind of division of labor.

The Kindle app only pulls books from your Amazon digital library. Apple would really be pushing it to generate revenue at that point.

However, the iOS Kindle app, from the beginning, has never been allowed receive subscriptions to mag's. or newspapers.

Don't know if this means that Amazon was aware this was in the works, and chose not to play, or if it was some other happenstance preventing them from offering mags and news.

I was specifically talking about the web, not apps linking to the web. But for apps, where you're not allowed to do this is for subscription content. So far.



The Sony program was rejected because it supposedly implemented a way to purchase within the app that didn't involve Apple. No one knows for sure what went on there because the app was never available. Kindle currently forwards you to the web to make purchases, we'll have to see if Apple disallows this later. If they do, again, IMO, it's an egregious abuse of the app approval process.

But the fear is that Apple will not allow this in the future.


Of course you don't, but that's not the point. The point is that users will use the easiest path to get their books, and either they don't allow you to purchase books through the app at all, or they lose money on books sold through the app.

The Kindle app isn't handing off the purchase, it's just starting safari with it pointed at a link. Apple's going to stop that kind of operation? It would break any app that uses the web to open a relevant link of any kind. That would be denying apps the use of the hypertext protocol in absolute.

Hey, I don't know how they're going to police it, but there's an approval process in place, and they're going to catch the people doing it.

I know how it works now and I'm still telling you that Apple doesn't want it to work that way. They want Amazon to sell books directly in the Kindle app and they want a cut of it. I have no doubt that's where we're headed. That's pretty clear from this latest move.

But hey, I'm frequently wrong and I hope I am in this case.

Anyway, back to the original topic: I'm agreeing with the general consensus that this subscription program isn't good.

On a personal level, I was disappointed when I saw "Apple" and "subscription" popping up all over in my news feeds. I had thought iTunes was getting a subscription model, which would have been pretty cool for my wife, but oh well

Yep, after thinking about it for a while, I can't come up with a good way to argue this from Apple's point of view. The only reason the 30% cut for apps makes sense to me is that it justifies the cost of hosting the apps and updates, the payment service, and so on. Whether or not it's too high is another discussion, though I tend to think it's about right based on the iTunes store still just barley turning a profit. The 30% seems to be the appropriate level to also support hosting the free apps.

Anyhow, 30% for subscriptions just doesn't make sense as a "marketing" fee. If the subscription service isn't using Apple's servers to host content that takes up bandwidth, that takes away the major cost. Payment processing fees are much lower, and even adding in a small advertising fee for bring in new users doesn't approach 30%.

I must admit: lately I've been considering switching to Apple entirely here at home. I like their products, and by that I don't only mean the design. But it's stuff like this that holds me back. I know every company only has one goal in the end and that's making money, but some of the things Apple does, including this, just seem greedy to me. This, added to the price premium you're already paying when you are purchasing their products (compared to other systems which internally run essentially the same hardware), gives the platform that 'elitist' impression, which I believe is a real shame because it doesn't work in their favour.

In other words: I would really like to like Apple and their products, because I know it's good stuff, and it just works without much effort. But as said, something still holds me back, and that something is the greedy impression this company sets for itself. It seems with Apple, you never know when you're done paying.

It's only been a couple of weeks they pissed off all those newspaper publishers and now there's this again. I know they think they can get away with a lot of stuff, just because "they are Apple". But surely, there has to be a limit to how far this can be taken, and I really hope they are getting close to it. (or maybe they've already crossed it now - let's hope so).

I'm confused about this subscription thing. What if the iPad app is just an end device to use whatever the subscription is for, like Netflix. Are they saying that you will have to be able to buy the subscription exclusively through the app, even though that is one of many devices that access the content? That would just be insane.

The way I understand it is that if there is a subscription portion to your app then you're allowed to offer it via your own website but you must also offer it for in app purchasing through the Apple system for the same price. Apple will take a 30% cut of this. You can't send your app users to your website from within the app but if they are on your website for other reasons then its perfectly okay for them to purchase a subscription there which doesn't have the 30% Apple cut.

In the case of the Netflix app, I'm not sure. I assume that you'd have to pay Apple their 30% if you do have it...

This stops app publishers from charging extra for an in app purchase via the Apple system to recover the 30% cut that Apple take. It also stops people from ignoring in app purchases and just sending people to their own website to completely avoid the Apple 30% cut.

If purchased via the Apple system then you don't have any much information on who purchased it. Apple say that they'll have an option in the future which prompts the purchaser if they want to share their information with the publisher of the app but it will still be an optional step.

This move is great for end-users/customers because it means they don't have to give out financial information to anyone other than Apple and it also creates a very simple mechanism for the purchase/subscription/billing. Just a click or two within the app and you're done. You get billed on your next iTunes invoice.

It's the content publishers and developers that are getting the shaft here.

Depending on how exactly the UI is for this data transfer agreement, I'd expect the majority of people not to agree. I know I wouldn't unless I had a good reason to.

Publishers and developers are losing valuable information though which must really hurt.

Google's One Pass subscription system will take a 10% cut.

If I buy a copy of The Times from a Newsagent what sort of cut does he take ??? And if I want it delivering to my door how much does he charge for that additional service ???

I can see that from Apple's point of view they are the Newsagent/stand taking their fair share. What I don't see as fair is the restriction on matching pricing though other distribution outlets a publication may wish to choose. They should have the choice on setting prices and deciding if they want prices on Apple's App Store to match or not. I think it is fair that Apple take a 30% distribution cut.

Cheers

Cris

That analogy doesn't quite fit. Apple are only providing the billing in this case. The actual delivery is still done by the publisher.

But don't they supply the shop front and the massive loyal following it has ???

I think most newspapers are sold as sale or return, and delivered to the stores but the publisher via a distributer. This is how I understand it, so I think it fits near enough

Cheers

Cris

The shop front could be supplied by the publisher since this covers in app purchased subscriptions. The massive loyal following can also be argued as being supplied by the publisher if this subscription service is also available on other devices.

That's pretty much my opinion.

A couple factoids: Apple's 30% number is pretty much the same as Facebook's number for their virtual currency, and Facebook also requires that folks like Zynga must use Facebook currency. (Last I checked, anyway, but I don't follow that stuff very closely.) So, at the very least, there's some precedent for this sort of thing.

I'm no lawyer, but I would expect one or more major Apple app vendors (Amazon? Rhapsody?) to do literally nothing. No app updates. No in-app payments with Apple infrastructure. In effect, one or more of these vendors will play chicken with Apple. If Apple takes their app down, they sue. If Apple leaves their app up, they move on with life. If Apple rejects an update to the app that leaves the status quo alone, then they sue. Lather, rinse, repeat. Similarly, you could expect some vendors to violate Apple's terms and have higher prices for in-app purchases than external purchases, even going so far as to say "it's cheaper if you do it from our web site." This just dares Apple to file suit. Put that in front of a jury, and Apple won't do so well.

That ultimately leads to a negotiation. firms like Amazon are big enough, and enough money would potentially be moving through this system, that they can negotiate directly with Apple and have their own private agreement. Whatever happens in the end, Amazon isn't paying 30% to Apple, not when they've been fighting tooth and nail over sales taxes that are much lower.

If Apple somehow manages to maintain the 30% number and require the in-app payments, you can also imagine a variety of companies being incentivized to subsidize you into an Android device because they make more money on the back end. How many vendors might pitch in for such a subsidy? Would Microsoft try to get in on this game to pitch WP7? Sure, why not?

No I mean the shop front for the app store in the first place. As far as I can tell the publisher is allowed to go make their own handsets, design their own app store and start up their own distribution if they want. Like Amazon are trying. They don't have to use Apple's app store at all if they don't want.

Cheers

Cris

The issue is with subscriptions not the app store. Apple don't have to do a thing for the subscription but accept payments and take their 30% cut. An app however has hosting costs, bandwidth costs and QA costs for Apple. None of those apply to subscription content as its all handled by the publisher.

I agree with this part, and it's why I questioned the anti-trust aspect earlier. There are plenty of alternate routes, including many that don't require publishers to create their own entire pipeline.

My problem with the situation is I am on the side that Apple is going too far. Not because it impacts the subscribers negatively, but because I see it impacting users, by creating a situation where less content will make it to the iPad. Apple generally does right by the users, even if it irritates developers (like Bruno) or others. In the past though, I've seen the moves as reasonable for the benefits they bring and the costs appropriate.

Google announced a similar option for Android, with the split being 90/10. That percentage I would find much more agreeable, enough where the 10% seems right for the benefits, and not high enough to scare too much potential content away. At this point, Google has to be in the position to look more competitive, and they are doing so.

While I don't really have an opinion on this other story about taxes on overseas revenue, I did find someones comment amusing. Apple and others are trying to lobby to drop the tax rate from 35% to 5%, a drop of 30%, the same amount in dispute here.