What’s the problem? At first glance, the rules seem fair enough. Apple takes a 30 percent cut of subscriptions sold through the App Store, but publishers are free to offer subscriptions elsewhere, for example through their website. (There’s something kind of hilarious about the fact that Apple says explicitly, “Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple.” Uh, thanks?)
But here’s the catch: If developers offer subscriptions elsewhere, they have to offer them inside their iPhone and iPad apps too, and at the same price. Developers are also forbidden from including links inside their app to purchase content or subscriptions outside the app. That even affects products like Amazon’s Kindle app, which includes a link to buy books for Kindle.
TechCrunch’s MG Siegler does a good job of laying out Apple’s likely rationale. The company has created what is likely to be the most user-friendly subscription service anywhere. In order to make it work, however, publishers can’t just increase the prices within their apps to incorporate Apple’s 30 percent cut while leaving subscriptions lower elsewhere. Otherwise, users will be torn between the superior experience and the lower price.
That may be true, but it’s not sitting well with everyone. Rhapsody, for example, says that its subscription model won’t work if Apple takes a 30 percent cut, and that it will be “collaborating with our market peers in determining an appropriate legal and business response to this latest development.” At the Think Vitamin “web practioner’s blog”, Ryan Carson argues that this should be the spur developers need to finally embrace mobile websites using technology like HTML5, rather than building native apps that are subject to Apple’s rules.
Of course, the App Store has faced to developer criticism from the beginning, yet the number of apps keeps growing. While I’ve seen a few startups who focus exclusively on mobile Web or Android, they’re pretty rare.
So I’m very curious to see to most developers will continue to play ball with Apple, or if this will be the restriction that pushes them over the edge. My guess: As is often the case, this will come down to money. If companies can still make a profit through Apple’s new model, most of them will learn to live with it.
VB's research team is studying mobile user acquisition... Chime in here, and we’ll share the results.