APPLE’S SUBSCRIPTION ANNOUNCEMENT PULLS MIXED REACTIONS

The reaction to Apple’s recent announcement on their new subscription service has been extremely varied across the web. Gizmodo labeled Apple’s move as “evil”, PCWorld warns that non-magazine subscription services have the high potential of getting screwed over, Tech Crunch feels the move is “fair”, and Mashable seems to be pretty sold that 30% kickbacks aren’t all that bad after all.

We feel it’s a little too early to jump to any conclusions right now, but here are some thoughts that did come up after reading through the announcement.

• The ability to sell subscriptions outside of the App Store looks to be the only way to bypass the 30% revenue cut, but then again, short term subscribers may be tempted to forgo the entire “long winded / difficult” process of renewing their subscription out of the app since the price of subscription in-app MUST be equal or lower to the price out of the app.
• Margins are already thin in publishing and turning to e-publishing is a move that aims at saving money. This 30% cut in income is a bigger dent to the publisher than people may think. Although this revenue cut won’t affect the users directly, it will most definitely affect the quality / quantity of services given.
• For e-publications, this could lead to several outcomes – the birth of web-based alternative UIs (to bypass the 30%), an increase in subscription price (to absorb the 30%), a totally different subscription model (free to use but pay per content?), or no change at all.
• Non-e-publications that use the subscription model (Amazon Kindle, Rhapsody, Netflix) are the most likely to bail from dedicated iPad apps if margins are pushed too low.
• This move could also radically change the plans of many companies who have invested heavily in developing iPad specific subscription apps but have not yet hit the market. Already, there are reports that several development houses are considering closing shop as a 30% revenue cut would mean little to no profit left.

Apple’s full announcement can be found here: http://bit.ly/eaTupz