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Summary:

Apple today introduced in-app subscriptions in the iOS App Store, and there’s reason to believe the new revenue model could extend beyond publishers of periodicals like magazines and digital newspapers. Here are just a few of the other possible applications of subscription pricing.

app-store-subscriptions

Apple today introduced in-app subscriptions in the iOS App Store, and while the announcement seems aimed at publishers of periodicals like magazines and digital newspapers, there’s little reason to expect subscriptions to be limited to those apps alone.

By expanding the availability of in-app purchasing to more application types, Apple could usher in new revenue models for apps offering online gaming, tiered customer support, in-app currency, premium content and software-as-a-service (SaaS).

An easy example of how this might work would be a pay-to-play MMO along the lines of World of Warcraft, which would charge users a monthly subscription fee. A developer could make their game strictly limited to subscribers after a trial period (like The Daily is now), or provide ongoing access to additional premium content for those who hold a recurring subscription, and basic, free access to all other users.

Apps could also offer tiered customer support on a subscription basis. For example, Shane Ketterman, editor of TCGeeks, suggested to me that app developers might offer a $4.99/month subscription package that would guarantee lifetime upgrades and 24-hour customer support. Such packages are commonplace with desktop software, after all. Obviously, this would only appeal to a limited subset of iOS users, but it could be popular among enterprise customers.

Devs could even choose to wall-off special sections of their apps behind subscription-based pay wall or provide varying levels of access to SaaS customers, as Ken Seto pointed out on Twitter. The just-launched ZenDesk web-based customer support iPad app, for instance, could offer differing levels of access and feature sets depending on a user’s subscription level, just like it does on the web.

Apple’s press release detailing the in-app subscription model was key to use “publishers” throughout when referring to the parties who would be implementing the feature, and even specified that it would be “available to all publishers of content-based apps on the App Store, including magazines, newspapers, video, music, etc.” While it’s unclear whether that means uses like those mentioned above will fly (the “etc.” leaves a lot of wiggle room), it’s obvious Apple intends this model to be used by music and video-based apps, too. Subscription-based music services like Spotify (and now Last.fm) will then possibly have to comply, which could be bad news for their revenue share, but good news for user convenience and adoption. Netflix and Hulu, too, might have to begin offering an in-app subscription option, although it isn’t clear whether Apple’s use of the term “publisher” in this context includes large-scale distributors like the companies I’ve just mentioned.

Small producers like Majek Studios, on the other hand, which produces an ongoing web series specifically for the iOS platform, seem like exactly the type of content providers Apple is referring to. The availability of in-app subscriptions could be a huge boon to independent producers like Majek, since it provides a dependable, recurring revenue stream for ongoing film and video projects.

In-app subscriptions open up a realm of new possibilities for iOS revenue models, but Apple is clearly keen to keep tight control over which of those possibilities it allows to see the light of day. Here’s hoping they open it up to a variety of different implementations, because I think it could user in a new level of platform maturity for Apple’s smartphone operating system.

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  1. Regarding the article, I’ve got a strange feeling of being shocked at Apple’s unfettered greed as well as an admiration for their slyness at creating even more revenues in the digital age. Good for them/bad for us.

    On another administrative note, I love clicking on your links in your articles to get smarter. But your blog is set up to open links in the same page. So it’s a real drag to get back to the original article. Could you help us minions by setting up the blog to open links in a new page? That would be MUCH appreciated.

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    1. Interesting. I figured most would prefer things the other way around. Nonetheless, I’ll let it be known at the office that it might not be the case.

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