Apple Subscription Plan Launched

Apple unveiled a new subscription plan for its App Store that is modeled off the one used with the 99-cent-per-week iPad app, The Daily. The plan is designed to streamline in-app purchases, and while it gives publishers and developers license to market their goods outside the App Store, it imposes some restrictions that may deter some big-name companies like Netflix and Amazon from participating.

Here’s a look at the App Store subscription policies:

Price and Length of Subscription: Publishers can set their subscriptions to be weekly, monthly, bimonthly, quarterly, bi-yearly or yearly. Just like subscribing to a regular magazine, the customer pays upfront for the length of the subscription. Subscriptions are managed through the user’s iTunes account.

Privacy

Apple leaves the burden of privacy protection to the publisher. Any information provided through the App Store is sent directly to the publisher and governed by the publisher’s privacy policy, not Apple’s. Apple demands that customers are given a “clear choice” about information sharing and that they need to be made aware that “any additional information will be handled under the publisher’s privacy policy rather than Apple’s.”

Billing

The same billing system used for apps and in-app purchases will be used for the subscription service. In most cases, Apple will take 30 percent of the profits. However, publishers can market and sell their app subscriptions outside of the App Store – on company websites, for instance – and they can also waive fees for existing subscribers. When this occurs, there is no exchange of customer information and “… the publisher keeps 100 percent [of the profits] and Apple earns nothing,” Steve Jobs wrote in the press release. Out-of-app subscriptions must be offered within the app as well, for the same price or less.

Here’s where it gets tricky: Apple nixed the publisher’s ability to send users outside of the app to purchase content or subscriptions, and made it clear that newspapers and magazines aren’t the only mediums targeted – video and music services are as well. Amazon’s Kindle app sends users to the mobile version of the Kindle Store website to make purchases – a strategy that will have to change if Amazon plans on doing future business with Apple. It also may mean that other services, like Rhapsody, Spotify, Netflix and Hulu Plus, will either have to lose 30 percent of in-app sales or deflect.

Deflecting to another platform, such as Android, doesn’t seem like a sustainable economic decision, though, since Apple still dominates the ever-growing tablet market. Jesus Diaz at Gizmodo posited that some may feel the urge to charge iOS users more to make up for the 30 percent loss – which would obviously anger consumers.

Another question: will this same plan come to the Mac OSX App Store?