Blog Post

Jobs: New In-App Subscription Rules Just for Publishers

Considering the controversy surrounding Apple’s new in-app purchasing rules, Steve Jobs was bound to provide an email response to a concerned user/developer at some point. That happened yesterday, when one dev reportedly emailed Jobs regarding his concern that the new subscription rules would endanger Software-as-a-Service (SaaS) apps. With typical Jobs-ian brevity, Steve sent the following reply (via MacRumors):

We created subscriptions for publishing apps, not SaaS apps.

The email exchange follows the recent rejection of the Readability app for not abiding by the in-app subscription App Store (s aapl) guidelines. Readability is an app that provides users with stripped-down, ad-free versions of web-based content for the sake of easier reading. The app’s developers announced yesterday that they had received a rejection notice for violating the terms of the new in-app subscription rules, and posted their reply to Apple, in which they argued that the policy was unfair and suggested they would remain focused on web-based solutions, rather than comply with Apple’s revenue sharing model.

Readability works by allowing users to pay a monthly subscription of their choosing (beginning at $5.00). That revenue is split 70/30 between the creators of the content (writers and publishers) and 30 percent goes to maintaining and building Readability itself. The app’s developers argue that if Apple takes a 30 percent cut, the whole basis of their business model is undermined.

Some, like Marco Arment, took Readability’s rejection as a sign that Apple was indeed planning on clamping down on all subscription-based apps, even those that merely offered users access to subscription-based services they’d signed up for on the web, such as Dropbox. Jobs’ reply seems to suggest that in fact, those apps won’t be affected. Looked at objectively, Readability seems to fall under the blanket category of “publisher” much more easily than do services like Dropbox and other SaaS apps like Evernote. Presumably, SaaS apps that chose to do so will still be able to access Apple’s in-app subscription tools, though we’ll have to wait and see if anyone decides to use them.

Of course, like other App Store guidelines, Apple’s in-app subscription policy is far from crystal clear, and leaves plenty of room for interpretation. The guidelines are designed like that on purpose to allow Apple plenty of wiggle room when deciding what applications are and aren’t allowed in the App Store. By keeping the definition of “publisher” nebulous, it can take stock of developer and customer response to its policy implementation and soften or crack down accordingly. Do streaming video providers like Netflix (s nflx) and Hulu count as SaaS apps, or publishers under Apple’s guidelines, for instance? How Apple decides to interpret their role could allow it to save relationships with major content partners that add value to the iOS platform.

For now at least, Apple’s interpretation of its new rules will spare SaaS providers, but that doesn’t mean they’re safe forever. Apple didn’t need to change its policy to block the sale of e-books through means other than in-app purchasing, it just changed the way it chose to recognize and enforce its own guidelines. If it makes business sense down the road, there’s no reason Apple couldn’t similarly change the way it views in-app subscriptions, too.

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7 Responses to “Jobs: New In-App Subscription Rules Just for Publishers”

  1. muddybulldog

    *Something they weren’t expecting? — Then they weren’t paying attention.

    *What did Apple do to deserve this income? — It’s their store. You want you stuff in BestBuy, you pay. Want it in WalMart, you pay. Want it in Amazon, you pay.

    Readability getting squeezed into oblivion? — Fact is, you can utilize Readability right through Mobile Safari, you don’t need an app. This has the plus of not being subject to Apple’s cut. If Readability can’t survive without being on the App Store it proves that they were counting on the marketing power of the app store to push their service which in turn justifies Apple’s cut.

    Covert, long-term schemes for steadily expanding revenue sources? — You mean like, a business plan?

    Bait and switch? If and are gone come June 1, then we can talk. Short of that this is pure rhetoric based on nothing other whatsoever.

    “That’s why it’s to false advertising charges that opponents of what Apple is doing need to turn and not to difficult-to-prove charges about anti-trust violations” — Huh?

  2. A month ago, these “publishing apps” were treated like any other. Now they’re subject to a hefty 30% of retail surcharge, something developers clearly weren’t expecting.

    For what? What does Apple do to earn this income? Are they hemorrhaging money supporting them? Hardly. Readability created the app and collects its own subscriber fees. It stores and dispatches the articles from its own servers using in-house software. Apple does nothing but approve the app along with tens of thousand of others that do little more than fart. Yet it wants almost a third of the income.

    Why has Apple suddenly moved against these “publishing apps”? Steve Jobs explained why. Because these apps compete, however distantly, with Apple’s own iBookstore and its plans to expand into magazine subscriptions. Apple wants the profit it thinks it would have made had it made the effort to create, market and provide that product or service.

    That’s why Readability must be squeezed, perhaps into oblivion. If Apple doesn’t act, any time that you and I might spend reading articles with it will be time we won’t spend reading something purchased through Apple. Only when no money exchanges hands does Apple not insist on their large bite of the apple, and that’s because it’s impossible to take something out of nothing.

    Does anyone really think this process will stop with publishing apps? Has Apple released a clearly written, bullet-proof, legally-binding contractual agreement that at no time in the future will it expand these charges into other areas?

    No. Steve Jobs’ revealing remark–“We created subscriptions for publishing apps, not SaaS apps”–implies the exact opposite. When Apple creates something for SaaS apps, fees will be applied to them. When it creates something for file sharing (probably soon), then DropBox and similar companies will probably come under these fees.

    Apple doesn’t even have to be doing exactly what your app is doing. Recall that it doesn’t have anything remotely resembling Readability. All it needs are plans to move into the same general area. And don’t forget that there are numerous services that are far more lucrative than Readability, which is almost a charity, particularly specialized business apps.

    Finally, keep in mind that from a legal perspective Amazon’s Kindle and Apple’s iDevices are in radically different situations.

    * Amazon’s lawyers and marketing department were smart. They have been careful to sell Kindles as a way to read ebooks purchased from them. They’ve said little about its other features and even termed what features it has as “experimental.” I can’t imagine anyone making a plausible claim that they bought a Kindle for anything other than reading ebooks bought from Amazon. That’d be like complaining that your new Ford pickup won’t fly.

    * In contrast, Apple has been foolish. It hasn’t coordinated its marketing blitz with what appear to be covert, long-term schemes for steadily expanding revenue sources. It has spent large sums of money telling the public about the many apps from others that run on iDevices. More than a few have bought iPads assuming that it’ll let them read Amazon books. Drive the Kindle app away and Apple has taken away the main reason they bought an iPad rather than a Kindle.

    Given that interpretation of events, what Apple is practicing seems to be a new twist on bait-and-switch. Seduced by Apple ads, people buy an iPad to read Amazon ebooks, but then discover (perhaps later this year) that the only source (or the only viable source) for ebooks on their iPad is the iBookstore.

    That’s why it’s to false advertising charges that opponents of what Apple is doing need to turn and not to difficult-to-prove charges about anti-trust violations. Someone doesn’t have to be monopoly-like, dominate, or even big to engage in false advertising. All they need do is offer one thing and deliver another.

    That’s also why we’re confused and angry. We were baited, now we’re being switched.

  3. “Readability works by allowing users to pay a monthly subscription”

    you do realize that “readability” does not work at all, there are several apps that do exactly the same thing for free, Readability was trying to charge for other people’s content, with a made up “profit” sharing that no one would ever take seriously when you could do the same exact thing for free…

    it was a worthless app… (but will look great along similar ilk in the Android market place)

    to tell people it was going to take 30% of other people’s content, and call Apple’s 30% greedy is beyond laughable…

    Apple didn’t reject it for the non in app subscription, (that is section 11.11)

    “Readability” themselves said that is was section 11.2, which is code for, hey you used none Apple API’s:

    Apple rejected it because they were only rebroadcasting web pages in a browser, something Apple does not allow, (basically worthless apps) worse these jokers were going to try and charge for it….

    there are a bunch of apps that do the same thing for free…

  4. This is assuming the email even came from Jobs!

    It is interesting how a few peoples complaints about Apple charging to use their ecosystem gets blown out of all proportion. If Apple is providing the technology to facilitate the subscription service, publishers should expect to pay an amount for that service.

    Whether Apple has the right to force them in to this model, rather than them model used by Kindle, Zinio, and others is questionable. Having said that, it can be a frustrating hassle to be bumped out of my App to a dubious website where I subscribe and do not always get bumped back. I would think that less savvy users will subscribe to more publications if it were one-click than if it were click and pray! This certainly seems true for the Apps in general.

    • The Readability people are the greedy ones: the want to use Apple’s ecosystem to add subscribers, and use their payment processing system for free!

      It’s almost comical that these guys think it’s OK to take 30% from people, yet Apple is somehow going too far by doing the same.