New Apple subscription service making software-as-service unfeasible on iPhone, iPad?
Readability, the service that takes the cruft out of online articles and gives you pure, gloriously legible text, has been rejected from the iPhone and iPad App Store due to Apple's new subscription service and its policies. If you're not familiar with Readbility, think Instapaper or the Reader button in the latest version of Safari (which ironically uses Readability's technology!) However, this has far wider ramifications as it suggests all iOS software-as-a-service (SaaS) front ends might likewise be rejected. SalesForce anyone?
Readability, like the App Store's own business model, takes 30% of subscription fees to pay their bills and gives 70% to publishers in payment for the content read. (Because Readability strips out ads, this still allows publishers to make money off their content). Since Apple requires a 30% cut of subscription revenue... well, you do the math. Readability would have to reduce the publisher's cut to 40% or reduce their own cut to near zero. Neither is a workable solution for them.
To be clear, we believe you have every right to push forward such a policy. In our view, it’s your hardware and your channel and you can put forth any policy you like. But to impose this course on any web service or web application that delivers any value outside of iOS will only discourage smaller ventures like ours to invest in iOS apps for our services. As far as Readability is concerned, our response is fairly straight-forward: go the other way… towards the web.
Part of the problem here is that Apple, no doubt purposefully, hasn't clarified what's subject to in-app subscription policies and what's not. If everything is subject to them than Apple needs the rate to remain 30%, same as app and in-app purchases. If subscriptions are only 10%, for example, almost every app will simply become free and offer a low-share subscription option instead (subscription Smurfberries, as we discussed on the podcast last night).
What this shows, however, are that there are clearly flaws in the current system that either Apple has to address or the market will with more apps like Readability abandoning native iOS apps for the web or other platforms. (Unless a new business model emerges that better leverages iOS' distribution system). Bottom-line content creators, content distributors, and platforms all need to remain financially viable. Readability thinks Apple should split their own 30%, giving content creators 70% of that as well. (Sharing the pain, so to speak.)
What's your solution?
[Readability blog via TechCrunch]
Editor-in-Chief of iMore, Executive Producer at Mobile Nations, co-host of Iterate and ZEN and TECH, cook, grappler, photon wrangler.
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I just commented about this on the other article and you post this.
Apple should end this subscription service, it's turning away too many good apps. One of ios' strong points is quality of apps. If we keep losing great apps like this, people will stop submitting their apps.
No worries. For every well developed, useful app that is turned away, there will be ten $0.99 fart apps to take its place.
I believe Apple will have a re-think regarding this policy, it is quite a large cut of subscription income. Belly aching from publishers though is also expected, but the real risk is if they leave to competing platforms.
Well Readability could just raise the minimum subscription fee to $7 and make the percents 20%/50% so both they and the publishers get the same they do now for the minimum $5 subscriptions, when one subscribes in-app that is. Not an ideal solution in any way, but just saying it doesn't have to be all or nothing.
The would have raise their subscription fee to $8.50 in order to maintain their current cost structure. $7 would only get them half way there.
$5 and 70/30 split $3,5/$1,5. 7$ and 50/20/30 split $3,5/$1,4/$2,1. I did do small rounding, but your math is off.
Sorry. You are correct. +/- $0.15
Market will prevail. If they lose apps, then so be it. Apple has to decide how important they are. Personally, i think Apple is nuts to be screwing with or squeezing what i would consider partners. 3rd party apps enhance Apple's platform which results in more sales of devices.
The situation before in-app subscriptions didn't treat developers equally though. Before that those with subscription model could essentially sell their service in the app store for free, whereas others had to pay for it (in the form of the 30% cut). Apple can't charge less than 30% for subscriptions, because that would lead to subscription Smurfberries. This is really the only way for Apple to treat it's 3rd party developers equally.
Why does it have to be equal?
Sure, smaller developers would perhaps like to use the App store's cash transaction system - and Apple is 100% valid in wanting a cut of that.
But other developers already have an established transaction system where they handle purchases themselves. No traffic added to Apple's servers, no use of App store resources. So why should the Apple get a cut of that???
Let the developers use whatever system they prefer.
If you want to have a native app on the iPhone you have to use the app store and that's not going to change. I only think it's fair that every app in the app store pays Apple part of their profits. If you don't want to pay a cut to Apple you can always make a web app. It's another issue whether Apple should take a smaller cut or none at all, but I think the cut has to be the same for all developers.
eBay has to pay part of the revenue from his app?
I think that might be changing soon if Apple sticks to it's guns with this one. Remember what happened to Microsoft with IE and that was just a FREE browser.
Giving Apple a cut because its their app store. phone, os, whatever is more than fine, it should be expected! The problem is the fact that developers aren't allowed to (1) just mark-up the price to cover Apple's fee for the in-app, ultraconvenient purchase system (and leave the purchase price at a lower price point if bought from non-Apple sources), or (2)provide in-app links to external purchasing methods.
Sorry, I didn't catch the podcast so I don't have the full background on your subscription Smurfberry analogy. Regardless, I don't see how a lower cut subscription automatically translates to everyone moving to subscription. Apple has used vague wording and arbitrary rulings in past, what prevents them from rejecting apps that attempt to arbitrarily classify themselves as subscription based? They could have a process whereby the developer submits a request for a ruling on how they plan to deliver functionality and billing well in advance of submitting the app, to get a ruling on whether they truly qualify for subscription-based pricing or not. This would weed out the apps where a subscription model makes sense, as opposed to just being a way to keep more money.
Developers, users, everyone come on over to Android!!
Meh, Android. Time to get in on the ground floor of HP's re-launch of webOS!
Ah Erik, You don't know the power of the dark side........
Yeah, I gotta admit, those upcoming 4G LTE dual core processor Android phones with their free Google Navigation are looking pretty good right now. And if all the app developers start defecting to Android, I'm going with them...
The biggest loser here is the consumer. Thank, Apple.
Would much rather have them make every app from now on entered into the app store have to be able to multi-task instead of mandatory in app purchasing. I think if enough consumers know about this they will they will rise up and renew subscriptions outside of the app, better if on their website than through Apple.
subscription = only magazine subscription, leave things like NetFlix and Nook(B&N) and Kindle(Amazon) Broders Book/ Kobo and Sony Ereader app if it ever gets approved alone. Other things should be in-app purchases like the Smurfberrys. If the developer wants the convinces of using Apples's in-app purchases or subscription then by all means use it but if we are talking HULU NetFlix or Amazon or B&N or Broders or Sony they should not be forced to use in-app purchases or subscription, even if MS wants Zune on iOS then they to hould not be forced to use in-app purchases or subscription it should be an option. If I have to start paying Apple money to us my NetFlix then I "vote with my walt" and go Android with HTC 4G 3D and all the rage.
Instapaper, Remember the Milk,Pinboard, Flickr. Which will be the next?
Our company is developing content and we plan to deliver is on the Web, on iPad and on Android. That is: we planned it on iPad. I don't want to rely on the every changing Apple-conditions. This is not what you can build a company on. Better smaller and stable and (maybe) bigger and having your b*lls in the hands of Steve. Bye bye iPad.
monopoly. that is all
If Motorola's Xoom gets good reviews I'm switching over to that.
If they just made it so developers could use their own payment gateway, without having to use Apple's as well, and/or allow them to do different pricing for each payment method, then they wouldn't be having all these issues.
They could also lower their subscription cut, and create a clause that says "any app using subscription service that isn't a subscription, just to get around the standard 30% cut, will be removed from the app store".
The solutions here are fairly simple. Apple really needs to do something though because they're getting a lot of heat from this and they will lose customers.
This is all a storm in a teacup. Apple's rules state:
Where does it say all subscription apps must use their in-app API for taking subscriptions?
I'm sure the app will be accepted into the app store if Readability simply remove the link to their outside payment method. After all Jobs has said himself that if a dev brings a subscriber from outside he keeps 100%.
Doesn't it also say that if subscription services are offered outside of the app they must also provided inside the app though Apples subscription service as well? This effectively forces any app that has their own subscription service to also offer that same purchase through the App Store (thus also giving Apple a 30% cut).
That's really only if the subscription service is being offered inside the app. If the user is already subscribed to their service, then no IAP is required.
.. After all Jobs has said himself that if a dev brings a subscriber from outside he keeps 100%. .. That is until Jobs changes the rules and forces your App out of the Store. Not a good ground to build your company-apps on.
I still don't see why Apple is "entitled" to 30% just because I have an app on the phone. If the data is pushed from and money processing happens of outside of Apple's realm, what are they doing to earn 30%? I get it. They built the platform. But I shelled out money for the hardware because of the apps available. I also shelled out money for MobileMe because I bought into that cult. But I also pay for data services, Internet access at home, etc. I'm already paying to have the data delivered! Apple made their money when I bought the darn phone. They make more money when I purchase an app. Seriously, are they going to make up revenue from competition with other platforms by essentially levying a tax on my already heavily taxed and paid for consumption of data? Why don't they just speed up their planned innovations and release new features to compete. I'm sure if they build a product with more bells and whistles than the competition, they'll earn their revenue; not siphon it off the consumer. This is not a "win" for the consumer. Yes, it may be easier, but seriously, I already give up enough control to Apple. I don't need the cede more power to them.
It'll be interesting to see how Apple applies this to to high profile apps that make purchasing the apple products desirable. If Android has Netflix, Kindle, Nook, Dropbox, etc and IOS does not , then it could reduce the sales of Apple hardware. I hope they don't enforce this on book applications, because then I will have to abandon iOS and move elsewhere. (the book apps can't pay 30%, I know they don't have the margins, and iBooks is an inferior choice for books)
I find this story interesting and like a game of chess perhaps. For every solution that presents itself there is an adverse effect somewhere else.
Apple already makes 83% of all App Store Profits combined so if a couple small name developers leave it won't hurt them at all. especially if all they do is make newspaper-esque apps. Everyone knows the apps that rake in the real bucks are gaming apps such as Angry Birds and Infinity Blade.
My solution? Easy: Don't buy an iPad 2 and switch to Android once my iPhone contract runs out. Never mind the money invested in the iOS platform. If Kindle, Netflix, Napster and others aren't available anymore there's no reason to own an iOS device. It's up to Apple to clean up the mess they created ... or lose a lot of their users.
The answer? Not to overreact.
Or yea, lets just cancel subscriptions and stop innovating.
All Apple haters should avoid showing their ignorance in this.. they aren't capable of change and reject anything thats not free.
Best two quotes yet:
Maybe I’m missing something, but these guys claiming to be surprised and disappointed by Apple’s insistence on a 30 percent cut of subscriptions when their own business model is to take a 30 percent cut of subscriptions strikes me as rich. And how can they claim that Readability isn’t “serving up content”? That’s exactly what Readability does. What they’re pissed about is that Apple has the stronger hand. Readability needs Apple to publish an app in the App Store. Apple doesn’t need Readability. - Daring Fireball
But Apple isn’t the greediest are they — developers want 100% of this and 90% of that — yet they didn’t create the iPhone, the iPad, or iOS. They aren’t bringing 100 million credit cards to the table. That may seem mean and certainly not all developers feel this way — but if you are going to do business in the U.S. you need to pay Uncle Sam his cut — it sucks but that’s the way it is. If you want to do business in the App Store then you need to pay Apple its cut. - Brooks Review
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