Apple announces iPhone, iPad subscriptions for all

Apple announces iPhone, iPad subscriptions for all

While The Daily was first it certainly won't be last, not with Apple announcing their new subscription service is now available to all publishers.

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

This obviously raises a lot of questions. Will Netflix have to -- and can they afford to -- give Apple 30% of the subscriber revenue? Sure existing subscribers are exempt but if someone downloaded the Netflix app, Apple no longer allows external linking to websites for subscriptions so would Netflix have to offer the same $8 streaming package in-app and split the revenue with Apple? Or is this service meant to be magazine/newspaper specific and not carry over to

Will Apple push this same philosophy to all in-app purchases? They might, given it sounds like that's what caused Sony -- and could cause everyone from Amazon to Hulu -- some consternation. In-app purchases will be lower friction (since outside linking is no longer allowed) for users and with Apple requiring the same or better offers in-app, high-volume goods like eBooks could see their entire profit margin get shifted to Apple. (i.e. Amazon makes 30% on eBooks, Apple wants 30% on in-app purchases. That's not tenable.)

Full press release with all the details after the break, and let us know what you think in comments!

[Apple PR]

CUPERTINO, California—February 15, 2011—Apple® today announced a new subscription service available to all publishers of content-based apps on the App Store℠, including magazines, newspapers, video, music, etc. This is the same innovative digital subscription billing service that Apple recently launched with News Corp.’s “The Daily” app.

Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

Protecting customer privacy is a key feature of all App Store transactions. Customers purchasing a subscription through the App Store will be given the option of providing the publisher with their name, email address and zip code when they subscribe. The use of such information will be governed by the publisher’s privacy policy rather than Apple’s. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher’s privacy policy rather than Apple’s.

The revolutionary App Store offers more than 350,000 apps to consumers in 90 countries, with more than 60,000 native iPad™ apps. Customers of the more than 160 million iOS devices around the world can choose from an incredible range of apps in 20 categories, including games, business, news, sports, health, reference and travel.

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

More Posts



← Previously

Kindle for iPhone, iPad updated with more reader-friendly features

Next up →

Why iBooks doesn't play nicely with Jailbreak

Reader comments

Apple announces iPhone, iPad subscriptions for all


Well, at least the press release only talks about subscriptions. So Kindle books (not a subscription) could be fine for now.

Oh my, this doesnt look good to for us Nook and Netflix users.
I hope Apple doesn't stop Barnes and Noble, I love having the option to read on my Ink Ereader and iPad. As a consumer, we should have that option to read across platforms.

I never bought a Kindle since I didn't want to lug yet another device around with me, so the Kindle app for iPhone is a God sent. Yesterday's update to make it more feature rich makes me hopeful that it won't get pulled.

I would consider an Ink reader if you enjoy reading. I find the experience much better than reading on an iDevice. I read much faster and my eyes don't tire. But I do find it to be a convenience to read on both platforms.

Thank you :) but one of the main reasons why I decided to get an iPhone was that I wanted to be able to do as much as possible with one device, thus not having to carry two or more with me (and potentially forget them). I travel a lot (plane, train and foot, not car) so the lighter my briefcase the better.

For reading @home, I use my books :-) LOL I'm an ex-english major cum IT guy so the iPhone/Ipad/Kindle app is my escape when I can't get back to the library at home...

I am a big fan of periodicals but not a fan of the mass of magazines in my bookshelf and having to search through volumes to find an article I want to reread. I have been waiting for this to come to the iPad. Mainly for music magazines with sheet music

Well, I would think that Apple would have to make this going forward. For instance, those of us that have already been subscribers would go all to Netflix. This would only be for those who sign up (which the app would have to allow) through the app itself.

It seems at least somewhat implied by the press release that non-digital subscriptions that include free digital content do not require an in-app version. Thus, for example, Netflix's digital-only subscription must be offered in-app through Apple, but their DVD-shipping subscriptions would not be under that requirement, even though they include "Watch Instantly". The result of this could be that Netflix revokes iOS access to their digital-only subscription, or charges extra for iOS access.
Also, Apple's 30% would replace other costs associated with managing the subscriptions, including credit card processing fees and such, so it's not a full 30% hit. Maybe 25%?
I think the only problem I have with this is Apple's requirement that the in-app offer be no worse then an external offer. I think the requirement not to link to the external method, along with perhaps a ban on even advertising the external method in the app, should be sufficient. Otherwise, this sets up the situation where a provider has to choose between supporting iOS or competing (on price) with other non-iOS services. All or nothing.

The tracking costs are largely fixed, so the percentage depends on the size of the operation. For a small outfit, it might be greater than 5% - for a large one, it will be far, far less.
But that is besides the point, for periodicals, the subscriber data is their lifeblood; they tailor their content on it, and, yes, they make their money marketing on it and selling it. Apple is denying much of this information, even basic demographics, from publishers.
So, regardless of the measurement of the cost for any given publisher, Apple is withholding from them crucial information, giving them much less than they have now, and forcing them to pay for the privelege, due to control over a market chokepoint.
I'd be shocked if these sort of decisions don't land Apple in court a few years down the road.

Well, if Apple has "only" less than 50% market share in a few years then I don't see how or why they would get into serious trouble about this.

See the other notes on Essential Facilities doctrine -- monopoly power is not necessary, just unfair use of an essential chokepoint required for access to a market. Apple certainly has control over such a chokepoint in the App Store, so the questions are:

  • Is the market in question (most narrowly defined as application and content sales to iOS devices) big enough for the government to wade in and swing the heavy club of regulation?
  • Does what Apple is doing constitute unfair use of that essential chokepoint?

I am not a lawyer, so I cannot presume to answer those questions. If you define the market more broadly, as app/content sales to all mobile devices, then you may be right, that Android and other devices will provide enough of a counterweight that the Feds/EU never think that question #1 is worthwhile. Apple's own numbers on App Store sales vs sales on all competing store sales would tend to refute that argument today, but, in a year or two, it is possible. Either way, Apple's actions certainly are doing nothing to decrease the likelihood somebody of somebody in power checking around.

"The same (or better) offer inside the app" suggests Apple will not allow, say, Amazon, to charge any more for in-app purchases than out of app purchases in order to offset the 30% cut Apple would be taking. Amazon would have to choose either a) to raise prices outside iTunes to achieve parity, b) take a loss on all sales via iTunes, or c) pull out of iOS. All three choices are awful for consumers. Ive said it before, but this is Apple's first naked power play without even a whiff of pro-consumer justification even from them. It is a sad policy, a sad day for Apple fans, and I can't see this ending well.

Apple's hubris is going to catch up with them. I actually see a lot of parallels between current day Apple and Nintendo back in the late 80's and early 90's. Apple has created some legitimately great hardware, yes, but it's the developers, not Apple, that have led to the runaway success of iOS. You take those third-party developers and their apps out of the equation, and you're not left with much. Nintendo insisted on trying to suck every last penny out of developers (via use of cartridges controlled by and sold to developers by Nintendo, thus assuring a cut of every game sold), and thus, they only ended up pushing developers toward other platforms (in this case, the Playstation, which went from an experiment from Sony to the strongest brand in gaming in a very short period of time).
As much as writers on this site like to pretend like the entire universe loves Apple and Android is only preferred by nerds, there's no denying that Android has taken massive leaps and is a legitimate contender. If Apple continues alienating developers and arrogantly attempting to cut in on their profits, things over in Google-land are going to begin to look even more enticing for these developers.
Apple has been treading in dangerous territory for some time now. I hope they realize that nobody is on top forever, and that things can change very quickly.

This is not dangerous territory. If Netflix who says they don't see a Mobile platform as a great market then why will this affect them? Companies like Netflix do not have to offer the ability for users to subscribe through the app.
And that is what apple is saying. If the company doesn't want in on Apple's subscription service then apple gets a cut of profit. Let me ask you this.. What store sells anything that does not make a some form of profit for them? If you sell your services in a store you are going to owe that store a cut of your profits because you are using that store to do your business. What apple is doing has no effect on developers so to claim otherwise is a BS statement.
Most if not all of the "developers" offering subscriptions are multi-million to multibillion dollar companies. Let me ask you this. You do realize that when a publisher sells a magazine in the store that the Store gets a cut of the profit on that magazine? Why should a publisher be allowed to make an externality of Apple when it is Apple providing them access to their App Store?
As for the google land comment.... Yeah lets jump to google and its user base that wants to buy nothing... Much of the user base of Android wants things to be free.. I am sure they will want to buy subscrition based services when the user base wasn't even willing to pay .99 cents for angry birds.

CORRECTION to this line. add doesn't.
"If the company doesn’t want in on Apple’s subscription service then apple doesn't gets a cut of profit."

Assuming this applies to things like Netflix:
You honestly believe that, simply because I download a Netflix App from the app store, that Apple has the right to a 30% cut of the profits, in perpetuity? Even though they have done nothing besides deliver the app to my mobile device? And even though Netflix, not Apple, is the one streaming the content to my iPad? That is ridiculous, and -- as I mentioned previous -- arrogant.
Though the percentage seems a little high, I'm fine with Apple taking a cut in the event that they host and deliver the content, but not if their only involvement is pushing the app. Requiring in-app subscription options instead of allowing app developers to link offsite seems nothing more than a transparent way to trick consumers into subscribing in app and, thus, guaranteeing Apple a 30% cut.
On the Android app front, yes, it underperforms, but I blame that less on individual Android users and more on the Market experience. I have full faith that if Google really beefed up the app store, curated it even minimally, continued to refine the payment system, and made the whole experience a bit more user friendly, I don't think they'd have any problems.

Apple only takes the % if the user SUBSCRIBES via the app. In other words, since I subscribed to netflix via a link from a podcast, Apple will not be getting 30% of my monthly fee, and I will continue to be able to use the app. Actually, I bet that, in some manner, that podcast got "paid" by my subscription. Either through some incentive, or in continued advertising on that podcast by netflix.

Sure, but apple knows you'll opt to subscribe in-app. It's much easier to do. And devs must provide that option is what apple is saying. Not many will take the time to go subscribe outside of the app. Apple knows this and this is why they don't care if dev's allow users other means to subscribe. The user will almost always pick the in-app method.

Your (mis)understanding of economics is depressing enough, but let's just focus on your store analogy.
Your analogy fails to note that the rules change when you are the only store in town. Actually, to forestall the inevitable "but Apple is not a monopoly" response, the rules change even if you are not a monopoly if you control a significant chokepoint in a market, which Apple certainly does. Yes, that law applies even for companies that built the chokepoint - the Essential Facilities doctrine has been tested and upheld numerous times both in the US and the EU.

Again, people, they are not saying they are the only way, just that if you want subscriptions in your app, you need to, [b]in addition to what ever other methods you currently utilize[/], offer an in app option.

And again, if people have the option to purchase in-app, and at the same price, then that is what they'll do. They won't bother leaving the app to go subscribe elsewhere because Apple also won't let them charge less elsewhere. All that is a smokescreen. In essence, Apple wins and the user will subscribe inside the app.

Your analogy is actually really not accurate at all between Apple and Nintendo. Look up some of the history that went on at the time between Nintendo and Sony to find out what really was happening then. Not the consumer or marketing stuff but the legal stuff that was more in the background.
But your message about Apple trying to squeeze blood from a turn-up is certainly right.

I think this is a BIG issue that could upset Apples nice little power base from both ends... consumers and developers.
They need to address this (fast) and make it all plain, clear, and as easy as possible for all involved to get what they deserve.

To Rene:
The article over on Engadget did say that
" Love it or lump it, anything currently available in the company's online marketplace, including magazines, newspapers, video, and music, can now be offered on the subscription model. "
I don't see this going well. Either devs will be upset by being forced to give over a percentage of subscription fees, that were normally only for them. Or consumers will get shafted as these businesses up their prices in order to compensate for this cut.
Apple is doing too much. Getting too greedy. I can see this coming back to bite them in the ass in a few.

I don't see how this could be anything but a loss for the consumer. The only way to make up the 30% hit Apple insists on taking is to raise prices. Not good for consumers. If developers/publishers/etc. do not want to raise prices to compensate, then they will probably pull out of iOS. Not good for consumers. Or if they try to placate Apple and not raise prices while still offering goods/services on iOS, then they have to hope that it will eventually bear fruit in terms of revenue/profit or they will cease to exist. Again, not good for consumers.
I do like my iPhone (and my iPhone before that), but I can't see this as anything other than Apple being overly greedy. I bought the phone; they have their money. I buy things from the App Store; they have more of my money. I pay for MobileMe; more money to them. I buy music from iTunes; even more money. Now they want to either (as an end result) pay more for my eBooks/subscriptions just so they can get more money or make my device less useful when developers pull out of the iOS market? I think they're a little too full of themselves here. We all paid good money for the phone, and the vast majority probably have contributed more in terms of buying apps/music/services. I think we should be able to use an app even if its data comes from a different source. It's not like Apple is paying for bandwidth when I jump out of Kindle to a website to buy an eBook (I pay for that service as well). I really don't want to jump ship, and I'm sure I won't be any time soon, but I still don't see how this is not going to either 1) cost me more money or 2) make my device less useful in the long run.

How in the world does Apple deserve a 30% cut of a service's subscription fee for, essentially, managing nothing but payment of that subscription? I could see if it was a one-time 'commission' fee based on their platform driving the user to that service. But an ongoing thirty f-in percent cut? Really? Even the credit card companies don't come remotely close to that level of merchant gouging with the fees they impose for processing payments.

Has anyone thought about the fact that providing digital content is much cheaper for a company then say paper newspapers. Also like someone said companies don't have to provide subscriptions through the app store if they don't want to. Apple charging if they get the benefit of increasing their subscriber base by offering their product on iOS devices. I don't see how this is much different then Apple selling content through iTunes.

Did you miss the bit that said "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app"? That would suggest that that they do in fact need to provide subscriptions through the app store. Unless they are saying that you can have your own in-app purchase mechanism that bypasses the app-store, and I don't think that's the case.
If my read on it is right, then the arrogance displayed by Apple in believing they are entitled to 30% of the profits from any content accessable within an app on an iDevice is frankly breathtaking!

If Apple loses these vendors because of a 30% fee, Apple will also lose customers. I already get all my movies from other than itunes because they have such a limited selection. If Sony leaves I'll still buy their music just not from Apple. If ebooks leave I'll just buy a Kindle. At some point Apple will cut off their nose to spite their face.

I don't see this as anything good at all. I really think developers are going to run away from iOS as to not get...well pardon my french...screwed.

It would seem that publishing companies and devs will increasingly move to an app system that requires an external sign up and then a login within the app to avoid apple getting a cut. Apple has a book store, so it makes seems for them to want a cut of any ebooks purchased.
I think that it is important to remember that we will likely see more idevice only subscriptions like the daily.
I personally would never purchase a magazine subscription with idevice only accessibility If there is a paper version available too. I'd rather just login with my subscription code and have access to the e version too.

Great! If an app tries to send me elsewhere to subscribe with my credit card, I delete the app. This will be an absolute boom for publishers, for those that adopt it! I don't want to have a dozen different accounts for my iPad content

I usually think that Apple makes good decisions about their devices, but this one looks disastrous from this distance. As we approach it, there could be fallout.
Things like Kindle for iPhone may just disappear. In the real world of profit margins, 30% profit is rare indeed. Cam Amazon push down the profit margin that the writers (esp. measly) and publishers (less so) are willing to give up for volume? Then there is Sony, and others like them, that provide other content. What if these folks decide not to play and iOS devices start to look less like paradise and more like a desert?
But lets say that publishers play the game and provide content chasing volume, assuming that certain things can generate volume at all. Then you talk about best sellers and you once again trash the niche markets, the way a change in the tax code a few decades ago got rid of the back list. (When books could be warehoused without take ramification between tax years, you could always buy books previously published by an author. Now a days, eBooks help there, but this could endanger the diversity of the ecosystem once again.) The lock on not being able to charge more on iOS for the convenience of buying on your iDevice is this issue, here. It’s killer.
I can see Android and other tablets being subsidized by publishers just to create an environment where they can control their profit margins on their goods.
This was not well thought out, Apple! Yeah, you can squeeze 30% out of apps, but not out of everything. You playing into the bad PR your competition is creating and are particularly looking greedy.

Good for apple they thought outside the box. They came up with another way to generate profits, which is the same thing all business' strive for.
Everybody involved wants control which is normal in business. In this case apple holds the cards.
I may be cunfused but is Apple forcing developers to offer subscriptions in there apps or is it a choice?
I think the developers should work hard on driving potential customers to there website to register for subscriptions. That way they can have there control and Apple doesn't get a dime.
Now if Apple is forcing them to offer subscriptions within there apps I can see there gripe .
All in all Apple is doing what every business does and that is find ways to increase profits.

There's a difference between coming up with "another way to generate profits" and price gouging because they think they can get away with it. One is ethical. One is not. Obviously, it's a subjective distinction. But one that most people clearly think falls on the "unethical" side. And when you're a company like Apple that thrives on having a die hard fan base who believes they can do no wrong, you're eventually going to start to suffer when you keep making the evil choice.

Well, this doesn't seem to be getting any positive feedback as now speculation is rising as to what Netflix, Hulu, and other services are going to do come July 1st. Honestly, I think Apple has made a bad case in ethics here and it might hit the court room if deemed illegal. I mean, how are you going to all of a sudden take earnings from other services that have been in the App catalog already. It's like they just made up their own reason to collect more money - and did so. Now, don't get me wrong. A move like Last.FM is probably where Apple see's an issue with how businesses will start to choose to charge for subscriptions (who once didn't) and Apple is ready to take their piece of the pie. However, this is the wrong way to implement this.
I won't go as far to say that the charge should have been extended to the consumer (because let's face it - that would have P'd off a lot of people) but how do you charge the folks that deliver more content to your platform? That is only promoting more people to come your way. You would think Apple isn't satisfied with the continuous flow of new customers they are receiving on a daily basis; which can be attributed to the amount of content on the platform that attracts all those new customers in the first place. Apple, at this point - you are definitely being overly greedy and right now I can just hope that this doesn't diminish the iOS experience down the line. If anything, this is just one more in the growing number of reasons people will choose to go with Android instead of iOS. This is not the time to give Android in more major advantages Apple; I say this not as a biased individual but just someone simply concerned about the platform they are locked into for the next 18 months.

Saying that devs must provide in-app subscription (if they have subscriptions) is too controlling. On top of that, they then say the dev cannot charge less elsewhere, even its own website. That's telling another company how to do business.
I can tell you that Apple wouldn't want to be on the other end of this.
What if Microsoft said, ok Apple, you must use our windows app store to distribute itunes and what's more you must provide itunes users with in-app purchasing..we'll only take 30%? You cannot charge less anywhere else. What if Microsoft said Apple couldn't ask for more than name, address, and zip?

How does this effect the Sports Illustrated digital subscription package they have begun to offer? I was shocked to see the SI digital subscription came out and was supported by Andriod and not iphone. It seems everything typically comes tot he iphone first.
Any insight on the progress with the Apple/Sports Illustrated relationship?

If anyone that is complaining about their Netflix. Read the whole press release before getting worked up. If you have an existing Netflix account and download the app. Apple WILL NOT charge 30%. But if a customer through apples "introduction" decides to get Netflix because they have never had an account and saw the app in the app store and activate it IN APP. Then apple requires 30% because in true opinion they brought the customer to YOU. One thing people fail to understand is that this is Apple's marketplace just like if I sale something on Guess what amazon gets a % of the sale! Why ate people going crazy when all apple is saying is that " if you are using our system to GAIN NEW clients, then we would
Like to get a cut. And all those saying google is better, think again. Google gets money from ads. Each add impression that a customer clicks on whether they buy anything or not. Google gets a cut. Google doesn't broadcast how it earns money from android. But trust me they do. They know for each free android OS they give away is more people aware of various google services that have what....? Ads and who gets cash from those adds..... You guessed it Google!
It is all about who is more transparent in their business and I believe Apple is preparing itself for when last quarter's cash cow (ipad sales)slows down. The app store gives them steady cash. They have finally figured out ( as google already knows) there is money in offering services and just not dealing in goods. In closing is 30% too high? Maybe. But I believe apple has a right just like amazon does on their website to charge a fee for services sold in their marketplace

Not desperate to come over a google apologist - I own both Android and iDevices - but you can't compare Google making money off ads with Apple attempting to take 30% of the profits on ANY content viewed on an iDevice. The fair comparison their would be iAds.
You know, I'm minded of a comment I once saw which pointed out that Apple is the only company whose consumers would actually applaud it for charging them more and reducing their choice of content...

Again, if you actually read what i have written i am not saying Go apple go. I still question whether it is too much or not. As for comparing IAds to the bulk of Google's money making strategy is nuts. Mobile is but once section of google's income.IAds's =Admob
IAd doesn't even come close to the business model Google has in internet ad impressions. That is where they make bulk of their money.

Hmm Well I was just searching on yahoo and just came across your site, in general I just only visit sites and retrieve my needed info but this time the useful info that you posted in this post urged me to post here and appreciate your diligent work. I just bookmarked your site. Thank you again.