Will Apple's subscription plan spark a developer exodus?

February 21, 2011 10:25 PM
Matthew Lynley
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MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Early Bird Tickets on Sale

For developers, it was Apple’s way or the highway. It seems like that highway seems more appealing every day.

The team behind iPhone app Readability issued a biting public response to Apple after its application was rejected because it did not use Apple’s in-house in-app purchase service. Readability is one of a number of mobile applications on the iPhone operating system that used an external subscription for the app — which lets web surfers strip away ads and other content and view just the text.

There was a lot of unrest when Apple first announced its new subscription plan, which hit applications ranging from Readability to the incredibly popular Amazon Kindle app, which includes a link to buy books for Kindle. The uproar since died down, but Readability might be the first company that works this close with Apple (Readability appears in Safari) to publicly trash the new service.

Subscriptions represent a “sliver of a sliver” of revenue for Apple, said Richard Ziade, Readability’s creator. It’s true — most of Apple’s revenue comes from iPhone, iPod and iPad sales. Apple brought in $26.7 billion in revenue in the fourth quarter last year, and only $1.1 billion of that came from the iTunes store — which includes app sales and in-app purchases.

Meanwhile, Google continues to welcome developers with open arms. While the iPhone has the largest app store, Google recently overtook Nokia and other phone manufacturers with the largest mobile operating system market share. And despite a few hiccups with the application approval process, most apps make it onto the Android Marketplace without having to pass through anything like Apple’s black-box approval procedure. Google also launched a more publisher-friendly Google One Pass that will allow publishers to sell subscriptions with better terms than they can get with Apple. And Google is only taking a 10 pecent share of the revenues.

The new Apple policy feels like a greedy move by Apple to gobble up some additional revenue, Ziade said. He suggests that Apple still hand out 70 percent of the revenue it receives from its stake in the subscription share to publishers, as Readability does. But Apple rarely budges, even when developers or consumers throw up their hands in frustration and outrage over changes in the terms of service. When the company does make a change, it takes a long time and a needs a lot of convincing.

iPhone and iPad developers have put up with a lot from Apple, and it’s unclear if the new subscription plan will be the final straw for developers across the board. But for Ziade, and for Readability, it looks like enough is enough.

  • Paulakero

    “Google recently overtook Nokia and other phone manufacturers with the largest mobile operating system market share”this is not exactly correct. As many others you confuse PHONE stats with your own statement “mobile operating share”. From last financial reports Apple had 366,000 iOS activations (counting iPads, iPod touch) vs 300,000 Android a day (and this is before Verizon iPhone). A large chunk of the Android activations come from forked Android versions like Tapas and OMS. OMS which is use in China a very large android growth area does not run Google services or Apps (a Zero for U.S developers) but has a private app store of about 600 apps.IPhone took in 82.7% of the revenue for Paid Apps last year. Android 4.7%. Developers can run to Android if they want but Android users don't spend money. (this fact is substantiated from another stat : iPhone now takes 40-50% of the world cell phone profits (Cannacord and Asymco numbers). When you minus Nokia, Rim and Win Mo which take about another 40%, ALL android phones are left with about 10-15% SHOWING that many Android users buy CHEAP phones or get them BOGO, i.e they don't like spending money).

  • http://twitter.com/crenelle MichaelBrianBentley

    I think the smart ones will chill and see what happens.

  • equanimous

    Yup. This is a move to get rid of retailers and to establish a regular channel for digital content. The people reacting hysterically will lose.

  • sheacardinalli

    …and Boom!, you're gone.

  • http://twitter.com/SIRCRotary Stockholm Int Rotary

    They are doing this to stop less serious or amateur developers flooding the app store with even more junk/meaningless crap apps. By putting them off they should end up retaining the best of the app developer bunch and incentivising them to develop even more quality apps.

  • petedt

    One could just as easily say that Readability's offering is a greedy move to gobble up some additional revenue.This is Apple's app store. Please realize that it is not unreasonable for Apple to forbid others to set up app stores within Apple's app store.I can't make meals at home, go to a restaurant, get a table, and start selling my dishes to customers at other tables. It would be stupid of me to call the restaurant owner greedy.

  • http://twitter.com/iqjunior Ivan Quadras

    Not the same… I fail to see why fanboys just can't see beyond their noses… What Apple has done is not only take 30%, but also forbid out-of-app-store sale! Your analogy to be rephrased is this way – I open a small restaurant in a mall, the mall owner eats into my profits, I try to shut down and open a restaurant of my own, and the mall owner doesn't let me – point being, I'm screwed!

  • http://twitter.com/jeffjenn jeffjenn

    The problem with developers going elsewhere is that there IS no elsewhere. No one buys anything other than ipads. Android is great, but it attracts people who want things for free – there are very little PAID apps on android devices as of now. So in sum, the developers realize that the mainstream uses apple products and thus are going to stay put.

  • http://brianshall.com Brian S Hall

    70% of something is always bigger than 100% of nothing.

  • PeterA650

    How elastic is demand for iOS apps? I bet Apple knows already and my hunch is it's > 1

  • honjk

    ——–but also forbid out-of-app-store sale——–falsifying what is going on, just makes you look like an idiot… people like you give free speech a black eye.from Apple: Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple…

  • honjk

    let me get this straight, this article is defending “Readability” an app that tries to charge for what other apps provide for free? then says look, “readability” gives 70% to publishers? of what? what did readability provide? the publishers make their money on Ads, Readability actually strips the ads, (like many apps that you can buy) but unlike these other Apps, readability tries to charge for that? for other people's content?hello? Readability is a joke and wouldn't of had any downloads, when the same free service was offered by other apps….the bonus here is Apple is keeping crap like this out of the Apple store, but hey “readability” will look good in the Android market… :0) what ever.

  • http://twitter.com/johnbbyrne johnbbyrne

    Playscreen is certainly not exiting the Apple universe over this. We've had incredible success in the App store, and we are confident that any confusion with this new policy will be easily resolved. The App Store provides an opportunity unlike any other and we don't see that changing anytime soon.John ByrnePlayscreenPresident & CEO

  • Yacko

    Doesn't the whole thing take until June 30 to shake out? I'm sure we'll see more explanations and clarifications by then.

  • haromaster

    That makes no sense

  • joinpa

    One way to approach the issue, besides participating in all the controversary around this announcement, is to circumvent Apple all together. By creating an HTML5 app, publishers can sell directly to audiences without the constraints of the App Store and its policies. GENWI's (http://www.genwi.com/) mobile application creation and management platform enable publishers to create and manage their mobile presence from a singular platform. Publishers can circumvent Apple, by creating, publishing and managing their own apps, without hiring an expensive developer. Through “Instant Apps” enabled for iPhones, publishers can instantly distribute an app as soon as it is published, directly to Smartphones, free from the constraints governing acceptance to native app stores. Instant Apps are distributed through vanity URLs and do not require approvals. Media Company, Schurz Communications is building an app network with several of its media properties. They use DoubleClick to monetize the apps (GENWI does not take a cut in as revenue) and all their media properties can independently create and manage their appropriate apps. There has to be alternatives for publishers and small businesses, besides just the Apple store.

  • http://www.facebook.com/people/Craig-Anderson/1017643836 Craig Anderson

    It already has sparked a “developer exodus”. Everyone that knows crapple hates crApple. Anyone that is remotely technical sees that they don't really have their own product line, and the little that apple has is glitchy garbage clobbered together by non-engineers.-This message was sent from my Android-

  • petedt

    It does, if you consider parallel universes. In Ivan's universe anyone Apple forbids anyone from selling anything without giving Apple 30%

  • http://www.instani.com Web Designer

    Nice details…

  • http://venturebeat.com/2011/06/09/apple-backtracks-on-in-app-subscriptions/ Apple backtracks on restrictive in-app subscription rules | VentureBeat

    [...] previous rules, understandably, caused considerable upset among developers. The rules would have made them take a greater loss on in-app subscriptions after factoring in [...]

  • http://venturebeat.com/2011/02/22/apple-saas-subscription-plan/ Apple hints it wants to tax content, not software | VentureBeat

    [...] Readability, a mobile web reader that strips away advertising and other images from websites, recently abandoned their plans to work on Apple devices because of Apple’s new subscription ru…. That was a clear-cut case of an app serving as a content publisher rather than a service [...]

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