Apple Launches App Store Subscription Service

As expected following the release of The Daily for iPad with its in-app subscription and automatic billing capability, Apple has officially announced a new subscription service for developers of content-based apps. Developers will be able to offer media and other content within apps on a subscription basis with purchases automatically billed to users’ iTunes accounts.

Developers can define the subscription length (daily, weekly, monthly, etc.) and price and will share 30% of the revenue from these subscriptions with Apple. Users will be able to manage subscriptions directly within iTunes in their account page.

If Apple is not involved in bringing in a subscription purchase, the 30%/70% revenue sharing model is not applied. Apple’s CEO, Steve Jobs, speaks to this in the announcement:

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,” said Steve Jobs, Apple’s CEO. “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. 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.

Developers must come up with their own way to offer digital subscriptions outside of their apps and then authenticate these outside purchases within the app to avoid sharing 30% of this revenue with Apple. Apple is also requiring that any subscriptions offered outside of an app must also be available for the same price or less within the app, preventing developers from offering a better deal for a subscription purchase made outside of an app.

All Things Digital reports that Apple has given a June 30 deadline to publishers to comply with the new subscription service.

Though not explicitly stated in Apple’s announcement, it is expected that the APIs needed for this new subscription service are contained within iOS 4.3, which has been rumored to be released this month. The Daily, which requires this subscription service API, was released with free access for the first two weeks courtesy of Verizon. This free access has now been extended, indicating that iOS 4.3 will be released later than initially planned.