Thursday, June 09, 2011

Apple changes in-app purchasing rules for publishers

Apple has changed a couple rules on how in-app purchases will work, which could have an effect on publishers selling subscriptions. AllthingsD has a good roundup of the changes, notably:
  • As long as publishers don't have an in-app button or external link within the app to purchase a new subscription on an external store, publishers can display subscribed content, and get around giving Apple a 30% cut of revenue.
  • Publishers can now markup subscription prices within apps to cover Apple's cut of the subscription price.
Neither situation was allowed previously. Publishers couldn't offer in-app subscription content without giving Apple its cut, unless that same content was available both inside & outside the app for purchase; and secondly, the in-app price for subscriptions had to be the same or less than publishers were offering on their outside store environment. Advantage: Apple.

Is this enough to bring the big publishers into Apple's fold? Perhaps. The door has certainly been opened. But the problem, as I see it, is that neither side is bringing everything to the table. Apple was quoted in the article as having billing relationships "with 225 million customers", which could be a huge boost to digital subscriptions.

That's great. But they also want a 30% rev-share without providing much more than audience access. Something publishers currently have in a non-digital format, in spades, along with a big chunk of audience loyalty. The price is simply too steep for publishers not to build their own distribution channels. If Apple wants to own 'the pipes', they need a better sales proposition.

It's like cable T.V. without the network programming -- good content sounds easy; until you try to fill 500 channels.

Good businesses should know when they're getting greedy. It seems that Apple's got their eyes open now; but whether they can become a utility-like company (in the gas, hydro and telephone company sense) will depend on their long term vision. Investing now, for becoming infrastructure-esque later... Unfortunately, as much as I like Apple, I think they've got the blinders on.

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