The Basics Behind Apple’s New Subscription Payments System

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Apple has officially opened its new subscription payment service up to publishers today. Here’s how everything shakes out.

How does this affect you?

Unless you’re a publisher that wants to sell “content-based apps” in Apple’s App Store, it doesn’t affect you all that much. You’ll probably start to notice more newspapers and magazines available as apps and when you initiate the purchase of one of them, you’ll be presented with several different payment options: weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly.

You may have the option of providing personal information such as your name, e-mail address and zip code when you subscribe to a particular publication, though “the use of such information will be governed by the publisher’s privacy policy rather than Apple’s.”

You’ll also be able to manage and cancel your subscriptions from your personal account page inside the App Store.

How does this affect publishers?

Interestingly, it’s not quite as onerous as it previously appeared. A group of European publishers, especially, raised concerns about Apple’s apparent requirement that subscriptions be sold through the App Store with a 30% cut of every sale going to Apple.

Apple’s 30% cut is still a factor, but publishers won’t be required to sell subscriptions solely through the App Store after all. The company’s press release contains the following quote from Steve Jobs, himself:

“Our philosophy is simple—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.”

It sounds like anyone who stumbles across a content-based app while browsing around in the App Store would be considered as referred by Apple, whereas a direct link to the app from the publisher’s web page or similar property would be considered as referred by the publisher.

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