Apples has dropped a bombshell regarding in-app subscription purchases. The new subscription model potentially affects every dating site currently or planning on offering a mobile version of their service.
Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.
Quick recap from TechCrunch’s Apple’s Big Subscription Bet: Brilliant, Brazen, Or Batsh*t Crazy?:
Apple has built a new backend system that any of these apps can take advantage of. And when they do, it will give them within one-click access to some 100 million-plus credit cards.
Any service offering an app with any sort of subscription component must now offer it within the app using the new in-app subscription options. Those companies are welcome to offer subscriptions outside of the app as well, but they must also have to option to do it in-app and it must be for the same price (or cheaper) than the out-of-app option. If a subscriber signs up in-app, Apple keeps 30 percent of those revenues. If they sign up outside of the app (still granting them accesses to the app), the company keeps 100 percent of the revenues.
Brendan O’Kane is the CEO of messmo, which provides mobile solutions to a number of leading dating sites. He has some great comments about the Apple’s new subscription model. I’ve taken the liberty of posting some of his thoughts.
This may have significant implications for the dating industry and their relationship with Apple and iOS Apps. Apple appears to be saying that a site may not offer off App subscription billing, for example via a mobile web page and a third party like Paypal, unless you also make the identical subscription offers available via in App purchasing. On the face of it the implications are huge and daunting – Apple would like you to believe that higher conversions through one click frictionless App payment, offsets the loss of 30 cents on the dollar from any App related monetising of an existing audience. They are of course ignoring that the site has paid to acquire the audience! We are very focused on this issue and strategies to minimise its impact.
- Apple’s changes are very deliberate – it is not an accident.
- Apple now properly supports auto renewal within Apps, hence enabling real subscription billing
- However you MUST offer iTunes subscription billing from within the App, IF from within the App the user/member is able to enter into a subscription billing arrangement, say via a PayPal mobile web page.
- This is part of the Terms/Conditions, hence when publishing you will be asserting that you are either not offering an alternative payment mechanism, OR are offering both (including in App/iTunes).
- The iTunes offer cannot be at a higher price point.
- It is designed for publishers who may be building an audience through the App stores.
- It severely impacts those publishers who are bringing an audience to an Apple iOSdevice.
- Clearly there will be an enforcement issue – how will Apple know ? I expect they will monitor consumer feedback, and if a consumer says “I want to pay via iTunes” then the App will be ejected from the App store.
- The Terms and Conditions will try to cover off “coupons” or “offers”, but there may be opportunities to have say a monthly fee of $40, and always offer the web payer a $10 discount coupon. It is painful to alter business models just to get around Apple.
- Many sites treat a subscription as a once off payment – 6 months for $120, at $20/month. It is not clear if once off payments are also going to get caught in the net – we are looking at this.
So we expect this to evolve, but it is not an accident. It is a deliberate statement that low friction billing like iTunes will provide increased conversions compared to other on mobile billing options, backed up by an assertion that the 100m+ iOS devices provide increased audience acquisition. However for the dating community the latter is unlikely to be true.
Thanks to Brendan for bringing this to our attention. To the comments!