Apple’s Subscription Gamble

Apple announced their digital media subscription service for the iOS App Store today and reaction has been all over the place, though for certain classes of people it has been overwhelmingly negative. Developers and publishers especially are not happy with the service requirements.

For digital media like streaming video from Netflix, Hulu Plus; streaming music from Pandora; and ebooks from Amazon’s Kindle Store, customers currently purchase subscriptions and digital media on the providers’ websites. Then they are able to view the digital media using the providers’ free iOS apps. With this announcement, digital media providers can continue to offer media in this manner, but in addition they are now required to add an in-app subscription feature to their apps, one that will make use of iTunes own payment service. The customer has a choice: pay for the digital media inside the app or pay for it on the provider’s website. The digital media provider has a choice: pay Apple 30% if the customer pays for the digital media inside the app, or pay Apple 0% if the customer pays for it on the provider’s website.

Apple positioned their take as payment for bringing new customers to the digital media provider. “We have the platform,” Apple seems to be saying, “and we have the customers. How about 30% for bringing you a new paying customer?” It would have been strange if Apple had not wanted a cut of in-app subscriptions, because they have always taken a cut of in-app purchases. What Apple is really saying, a bit deviously perhaps, is go ahead and set your platform against our platform. Let’s see who brings in new paying customers.

Apple has taking a calculated risk, one which they cannot lose. If their assumptions about platforms, digital media, and customers are wrong, then a quick policy change will put the entire ugly affair behind them. If their assumptions are correct then Apple stands to gain both a financial windfall and a new level of customer satisfaction and loyalty.

Published by

Richard Leis

Richard Leis is a fiction writer and poet, with his first published poem forthcoming later in 2017 from Impossible Archetype. His essays about fairy tales and technology have been published on Tiny Donkey. Richard is also the Downlink Lead for the High Resolution Imaging Science Experiment (HiRISE) team at the University of Arizona. He monitors images of the Martian surface taken by the HiRISE camera located on board the Mars Reconnaissance Orbiter in orbit around Mars and helps ensure they process successfully and are validated for quick release to the science community and public. Once upon a time, Richard wrote and edited the science and technology news and commentary website Frontier Channel, hosted the RADIO Frontier Channel podcast, and organized transhumanist clubs. Follow Richard on his website (richardleis.com), on Goodreads (richardleis), his Micro.blog (@richardleis), Twitter (@richardleisjr), and Facebook (richardleisjr).

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