4 Comments

Summary:

Apple today introduced in-app subscriptions alongside newspaper app The Daily. No details about subscriptions were revealed at the announcement event for the app, but luckily Apple’s own updated terms of service for the iTunes Store shed some light on what to expect.

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Apple today introduced in-app subscriptions alongside newspaper app The Daily, and though during the app’s press conference, Apple VP of Internet Services Eddy Cue said an announcement regarding details would be forthcoming, little else about how subscriptions would work was discussed. Luckily, Apple’s own updated terms of service (via Macworld) for the iTunes Store shed some light on what to expect.

Under a new “Paid Subscriptions” model, developers will soon be able to offer renewable subscription pricing plans through the iTunes Store via in-app purchasing. Subscriptions will work as follows:

  • Subscriptions can cover different lengths of time, like a weekly or monthly period
  • Subscription charges can be set to auto-renew
  • Auto-renewal will not remove funds from your account any more than 24 hours before your renewal period is up
  • If a publisher raises the price of subscription, your auto-renewal will be instantly disabled
  • Subscriptions are charged immediately upon sign-up, even if you’re in the middle of a free trial
  • Subscriptions can be managed from one central location in your iTunes account (much like they’re handled on the Kindle store)
  • Publishers can ask for permission to collect your name, email address and zip code information, and iTunes will pass that data along to them to use for marketing purposes

It was originally a point of contention between publishers and Apple that the Mac-maker wouldn’t pass on access to customer information, but it appears as though Apple decided to make a concession to make the payment scheme more appealing. Maybe that’s what the company traded in exchange for reserving the right to block free access to print subscribers.

Though some are speculating that Apple also relaxed its stance regarding the traditional 70/30 revenue split shared between developers and itself for app sales and in-app purchases for The Daily, Murdoch is on the record as saying that Apple is indeed getting a third of the $0.99 weekly subscription price, at least for the first year. Whether or not other publishers will accept that deal, or can match or beat paper subscription prices while still giving Apple it’s cut remains to be seen.

If publishers do agree to Apple’s terms and prices go down, magazines on the iPad just got a whole lot more appealing. What do you think? Will the availability of subscriptions affect your decision to buy iPad news and magazine applications?

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  1. So what happens to current subscriptions?
    I have an annual subscription on Zinio for a few monthly mags. Will the price now go up by 30%? If so it kills the savings on print versions.

    I think it is a crap move by Apple. Are they going to start charging for RSS feeds next?

  2. This is disgusting. Newspapers and the book industry are hurting badly. Many newspapers are running in the red and book industry profit margins are small. Even more important, they’re also among the most vital players in our democracy. Without them, the First Amendment becomes useless.

    And yet here is Apple, with tens of billions in cash reserves and profit margins up to 50% specifically targeting them, of all people, and demanding 30% of their gross income for doing little more than play the delivery man.

    Oh, but they say that they are suppling the hardware and OS? So what! They’re not selling those iPhones or iPads at a loss. They’re making a large profit on them. Yet here they are demanding a 30% slice of the gross income (not even the modest profits) for books they’ve not written, for books they’ve not edited or designed, and for books they’ve not marketed or sold. All they’re doing is allowing the presence of an app (among hundreds of thousands of others) on their already lucrative gadgets. If that’s not an attempt to exploit their monopoly position, what is?

    None of the nineteenth century robber barons were that greedy. John Rockefeller really did extract oil from the ground, refine it and transport it to his customers. His Standard Oil made a lot of money, but they earned it though their own labor. The same was true of Andrew Carnegie. His company really did mine the ore, refine it, shape it and deliver it to customers.

    Apple isn’t doing anything remotely similar. In fact, it’s doing little more than my postman does when he delivers a package. The iPad may little prettier, but it’s no different functionally from the vehicle my postman uses.

    We can also look at the rest of the high-tech industry. Microsoft certainly doesn’t demand a cut from all the transactions handled via Windows nor does Dell demand a 30% share of the income that doctors, dentists and lawyers send out their bills. We may gripe and grumble about them, but they’re earning their money through their own labor rather than that of others. Make not mistake about it. They’re far better people than Apple.

    I suspect that a excellent case could be made in federal court that this is an illegal ‘bundling’ arrangement. Amazon tried to do something similar with POD books a few years ago. (They told publishers: “Print using our BookSurge affiliate or we delist your books.”) Only by offering to settle out of court after a lawsuit was brought by a gutsy Maine publisher (and friend of mine), did Amazon avoid a costly defeat and the burden of a nasty and restrictive court order.

    I dislike most of the lawsuits filed against Apple, but in this case, I’d stand up and cheer if some bold lawyers would go after them. A law firm wouldn’t need to get the anti-trust division of the Department of Justice on board. ‘You can’t get this unless you let us profit on that’ is the essence of bundling. All those lawyers would need is a publisher, however small, who has digital books to sell and an iPad/iPhone app to sell them with.

  3. Right on Mike. Apple’s greed scares the hell out of me. I can see in a few years, Apple deciding that because they made the Mac, all developers of mac software have to sell thru the App store and give Apple 30%.

    Even Microsoft at its worst wasn’t this greedy.

  4. I think it makes buying a iPad look really good. I subscribe to a few magazines, and after awhile they start to stack up and I eventually just throw out a huge stack of paper. I can see in the future magazine companies going completely paperless. I am not a huge green economy person or anything but it just seems wasteful to send out these magazines to people like me who only read them once, and only a couple articles at that.

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