Apple recently released a new subscription function for app-makers to use, that enables publishers to offer readers a subscription to their content. However, Apple’s terms for the new function state that publishers must pay 30% of subscription sales to Apple, however, and that publishers cannot charge a different price for a subscription elsewhere (on their website, for example) unless they offer the same price in the app. By contrast, up until now publishers had been able to keep 100% of the money from subscriptions that occurred outside Apple’s App Store, and linked freely to their websites to offer purchases. This change will cost Amazon, for example, up to $160 million per year. In reply to an email, Steve Jobs (Apple’s CEO) today said that “We created subscriptions for publishing apps, not SaaS apps” (Jobs is referring to “Software as a Service,” or iPhone apps that offer services through apps, like GPS navigation where the app is free but the maps cost money).
But this leads naturally to the question “What exactly is a publishing app?” Erick Schoenfeld on TechCrunch speculates:
Obviously, apps that look like traditional print publications like The Daily, magazine apps, or the New York Times app once it goes to a subscription model all fall under the new rule. So too do apps like the recently-rejected Readability, which serves up repurposed content from across the Web without ads for a subscription. By that logic, any news reader apps that charge a subscription would fall under that rule as well.
But what is a news publishing app? They are clearly news-reading software. And what if Twitter or a Twitter client started charging subscriptions? Are those publishing apps or a communications apps? Just think about Flipboard or Pulse, which transform Twitter and other feeds into a dynamic, realtime, personalized publication. If those apps started charging subscriptions (both are currently free), I bet they would have to go through Apple’s subscription system just like Readability.
The move by Apple has been unpopular, but I don’t blame them for defending their relationships with their customers; I consider myself much more of an Apple customer than a customer of any particular app I buy. But it does feel strange that software makers pay less of a slice to Apple than publishers. Publishing is different than software/games in some fundamental ways; a publisher endorses and promotes new ideas and points of view, where software mostly has utility, game play, or a job to do. Publishing is a troubled business, with few parties making a great deal of money. Software and games as an industry, by contrast, eclipses even Hollywood in the money people spend on purchases. Since Amazon is such a dominant seller of e-books and competition is always healthy, creating an alternative channel to Amazon from which publishers can sell books would be good for everyone. I hope that some sort of better deal can be worked out for publishers. These are interesting times, to be sure.