Apple is offering a new subscription service available to all publishers of content-based apps on the App Store, the company announced yesterday. As anticipated, it is the same billing service launched for The Daily, News Corp's tablet-only newspaper.
Before, it was only possible to make single purchases for in-app content through the app store, or to subscribe directly via the publisher. Now, customers can pick the length of time that they want to subscribe through iTunes' one-click system and are automatically charged based on the length of their commitment. Publishers set the price and length of the subscription, specified a press release.
Clearly, the advantage for publishers of going through Apple is that it is very easy for the consumer to sign up and start paying, as they already have all their details stored by iTunes: the 'one-click' method. One significant disadvantage, however, is that Apple takes a 30% share of the subscription price, as it does with other in-app purchases.
And it seems that publishers will be obliged to offer in-apps subscription options and will not be able to offer discounts to those who subscribe directly via their websites or elsewhere. If publishers do wish to offer subscriptions outside the app, then Apple requires that "the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app," said CEO Steve Jobs in the press release.
Publishers are also not allowed to provide a link in an app that directs consumers to an external website where they can buy a subscription, The New York Times noted. And as Alan Mutter said "the reality is that most people will continue buying subscriptions through the app."
Another downside to publishers going through Apple is that they do not necessarily receive the subscriber information that they are used to getting from their readers and using for marketing and offers. 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 release explained.
The new payment system has already attracted doubts and criticism. Forbes' Jeff Bercovici quoted Pam Horan of the Online Publishers Association who said that the association's members are worried that the new regime is not flexible enough, not allowing users to go from the app direct to the publisher's website if they want to buy a print-online subscription, for example.
The New York Times quoted Time Inc. spokesman Keith Cocozza who said that, "it seems like Apple is taking a step toward our position on subscription offerings... But the announcement also raises many questions around consumer data that we would need to work through and agree on."
Clearly, publishers are concerned that users will not bother or want to 'opt-in' with their information. Mutter raised a further concern that this lack of data will make it difficult for publishers to detail their reach to advertisers.
Nieman Lab's Joshua Benton suggested that Apple could and should have taken this opportunity to "offer a smaller cut in an attempt get as many news orgs headed to iPads as possible." He also noted that "if a rival OS could pitch a great deal to news orgs, the field is still fresh enough that some of them might be willing to promote the hell out of it as their preferred tablet choice."
Will this new payment possibility up subscription rates sufficiently for publishers to be satisfied with Apple's terms? Or indeed, will a rival be able to offer a more appealing solution?