Peter Kafka

Recent Posts by Peter Kafka

Steve Jobs Blinks! Apple Backs Down on App Subscription Rules.

Apple appears to have backed down on a major component of its new in-app subscription rules, which should provide a big boost to content companies: It has scrapped a rule requiring apps that play content like music, movies, and books to also sell the same content within the app itself, and share the revenue with Apple.

Now, apps can offer access to content purchased outside of Apple’s walls, as long as the app doesn’t have a “buy” button that connects consumers directly to an external store. That is: Apple won’t make it easy for users to buy in-app content without going through Apple’s store, but it won’t outlaw it, either.

The changes to Apple’s App Store Review Guidelines, published today and first noted by MacRumor’s Jordan Golson, don’t address Apple’s control of credit card information.

Which means that some print publishers, including the Financial Times and The Wall Street Journal, may still not be willing to adopt Apple’s subscription rules, which kick in at the end of the month. (The Wall Street Journal is owned by News Corp., as is this Web site). But if those publishers are willing to forgo selling subscriptions through Apple, which just announced it has billing relationships with 225 million customers, it shouldn’t be a problem.

And for many other content companies, including Netflix and music services like Rhapsody, the bigger issue has always been the 30 percent revenue cut that Apple was going to extract every month for all in-app subscriptions.

Many of them appeared ready to accept Apple’s rules anyway, and simply try to persuade most customers to sign up outside of Apple’s walls, so they could keep 100 percent of their revenue. Now, as long as they’re willing to give up access to Apple’s marketing might, they don’t have to worry about it.

And as PaidContent notes, Apple also appears to be offering developers another option — raise prices on content they sell through iTunes so that Apple’s 30 percent cut doesn’t eat into their revenue.

Apple previously required developers who sold content within its apps to do so “at the same price or less than it is offered outside the app” — that is, the Apple price couldn’t be higher than anywhere else. Now that language has disappeared from Apple’s rules.

But Apple’s rules still appear to pose a problem for book sellers like Amazon. You can’t purchase books directly from Amazon’s Kindle app, but the software does have a “Kindle Store” button that takes buyers to Amazon’s Web store. But Apple’s new rules look designed to ban exactly that sort of thing.

Here is the language governing subscriptions that Apple introduced back in February:

11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions.

And here are the new rules:

11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected.
11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app.

It will be interesting to see now if some companies that had said they’d start selling subscriptions via iTunes change course. Conde Nast and Hearst have recently begun selling monthly and yearly subscriptions to some of their magazines via iTunes.

And the New York Times has made a point of saying it would “comply” with Apple’s rules once they kicked in, but so far the publisher has only been selling digital subscriptions from its Web site.

It will also be interesting to see what happens to app companies that don’t adopt Apple’s rules but continue to offer their stuff through iTunes anyway: Will Apple forcibly remove them from the store, and/or disable their apps? Or will the company take less drastic measures, like refusing to approve new updates to their apps? We may see within a few weeks.


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