Fast Company

Apple's App Store Is Now Offering Subscriptions

Apple App Store subscriptions

After an extended period when we knew they were coming but had no insight into how they'd work, subscription powers have hit Apple's App Store, ready to support digital magazines and newspapers. E-publishing may never be the same.

The driving force behind the change to a long-standing App Store no-subscriptions policy is exposed in Apple's press release: Noting that subscriptions are for publishers of "content-based apps on the App Store" like "magazines, newspapers, video, music" and so on, the text highlights that "this is the same innovative digital subscription billing service that Apple recently launched with News Corp.'s 'The Daily' app."

The system works like this: When you buy a subscription-supported app, it'll work exactly the same way as when you buy a "normal" app--everything gets routed through the solid, reliable (if inflexible) iTunes account protocols. From a user point of view, there's just one extra step--with "one click" you have to choose the length of subscription. Publishers get to control the pricing and the subscription options--from weekly, to monthly, bi-monthly, quarterly, bi-yearly and yearly. Once consumers have made their choice, they're "automatically charged based on their chosen length of commitment" in a one-off payment. During your subscription period you can cancel automatic updates of the subscription, which will effectively end your connection to a particular publication once your current paid period expires.

Apple notes it processes "all the payments" and keeps the "same 30 percent share" that it does for all apps and in-app purchases on the App Store at the moment.

But there's a big, and very important concession revealed by Steve Jobs in the press release. "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."

And with that Jobs revealed the first big change to the App Store payment structure and revenue-sharing philosophy. When Apple's in the loop of getting a subscriber to an app, they get a share--if the publisher does it alone, then Apple earns nothing.

This incentivizes publishers to push digital subscriptions by other means than Apple's App Store, and we imagine TV and print campaigns that direct users to company websites to acquire their app subscriptions. It at once relieves the burden of promotion of digital periodicals from Apple (which is facing an increasingly complex task of managing the blossoming App Store) and encourages publishers to engage in PR that may, ultimately end up in Apple's benefit if it persuades people to buy iPhones and iPads. Apple's smart enough to insist that if publisher-only subscription offers are made, then "the same (or better)" offer must be contained inside the app itself.

Sensitive to the fact that it's exposing itself to risk with personal user data, Apple also makes a big thing about privacy. Protecting privacy is a "key feature" of all App Store deals, but when you buy a subscription you'll have the opportunity to give extra data to the publisher--things like your name, email, and zip code. This data falls under the purview of the publishing company's privacy policy, rather than Apple's but Apple's insisting this fact be made clear inside subscription apps.

Why's this so important? Because the iPad--and its entourage of clone, wanna-be and also-ran tablets on Android and Windows OSs--really does seem pivotal in deciding the future of professional magazine and newspaper publications in the digital era. Subscriptions have always supported this industry because they provide a more reliable, measurable, predictable revenue stream than relying on fluctuating daily or weekly sales. By allowing subscriptions inside apps, Apple's letting these publications move their business model more smoothly into a digital mode, and is providing consumers with a system they're already familiar with--as well as enabling powerful new e-text apps that automatically update with fresh content. Subscriptions could also change how game apps work (think World of Warcraft, and you'll see what we mean) as well as music and video-serving apps.

That sound you just heard is print dying a little more.

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