Apple officially rolls out App Store subscription service for publishers

By Chris Hogg

Apple confirmed Tuesday a new subscription service is now available to all publishers who have content-based apps on the App Store. The subscription service will allow newspapers, magazines, video and music publishers to charge a recurring fee.

The subscription model was first announced when Apple and News Corp. announced the iPad-only publication called The Daily. Then, Eddy Cue, vice president of Internet Services for Apple, said the subscription service was being launched with The Daily but other publishers would be able to use the feature eventually. Today, Apple confirmed the availability of the subscription service for all publishers. Apple said the service will use the same App Store billing system used for in-app purchases and publishers will be able to set the price and length of subscription.

Subscriptions can be offered on a weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly basis. When users download an app using the new subscription service, they will be prompted to pick the length of subscription and are billed accordingly. Subscriptions can be reviewed an managed from an account page, including the ability to cancel a subscription that is set to auto-renew.

As for revenue-split, Apple says it will process all payments and keep a 30 percent share of revenue, which is the same percentage the company takes for other in-app purchases.

“Our philosophy is simple,” said Apple CEO Steve Jobs in a news release. “When Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing. All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app.”

Apple says publishers can offer subscriptions via their website and choose their own pricing and because Apple does not manage these transactions, the company will not take a revenue share and no customer information is shared with Apple. In this case, Apple says a publisher will need to authenticate a user using their own process.

However, Apple’s publisher guidelines say a publisher who sells a digital subscription outside of an app will have to offer the same subscription at the same price or less within apps. Apple’s terms also say a publisher cannot include links within an app to encourage users to purchase subscriptions outside of the app.

“We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers,” Jobs said.

While Apple’s launch of a subscription model is being widely discussed in media circles for its potential to generate a new revenue stream, it remains to be seen if readers are willing to fork over cash to access content in apps when a lot of content is available freely on the Internet.

“[This year] is the year of media subscriptions,” said Larry Dignan with ZDNet. “The rub is we don’t know whether consumers will go along for the ride. It’s quite possible that 2011 will merely be the year of trying to do media subscriptions.”

Apple says customer privacy will be protected and users will be prompted with an option to share their name, email and zip code with a publisher when they subscribe. When a user shares information, personal info will be governed by a publisher’s privacy policy and not Apple’s, the company says.

Apple has sold more than 15 million iPads the company says iPad customers are huge consumers of news, downloading more than 200 million news apps to date.