Apple’s recently announced subscription model and the attendant terms for in-app purchases have been the subject of much debate in the last few weeks. To the list of critics, add Arc90, whose new Readability iOS app has been rejected from the App Store. In response, the company has published an open letter to Apple, voicing its disagreement with the rules.
The problem’s root lies in the the paid subscription model Arc90 announced a few weeks back for its Readability Web service. The idea, aimed at enabling content creators to make money from their readers, is simple: users agree to a monthly fee of their own choosing, and Arc90 gives 70 percent of the proceeds to the publishers whose content users are reading via Readability.
According to the company’s open letter, the submitted Readability app violated section 11.2 of the App Store Review Guidelines: “Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected.”
Boiled down to its most important parts, Apple’s in-app subscription rule is that if developers offer external subscriptions outside their app, they must also offer in-app subscriptions within the app—and the in-app price must be equal to or lower than the external price. Of course, Apple also takes 30 percent of any in-app subscription payment.
With those terms spelled out, Readability’s rejection from the App Store couldn’t have come as much of a surprise. The Readability Website offers customers a way to purchase subscriptions, but apparently the Readability app, as initially submitted, does not.
Expected or not, Arc90 isn’t happy with its rejection:
We’re obviously disappointed by this decision, and surprised by the broad language. By including “functionality, or services,” it’s clear that you [Apple] intend to pursue any subscription-based apps, not merely those of services serving up content.
Whether Arc90 is splitting hairs here may be moot at this point, but it’s worth considering whether an app and service whose sole functionality is to provide readers easy access to published content can’t be described as “serving up content.”
Regardless of whether Readability is a content app or not, it offers only an external way to purchase subscriptions—that’s seemingly the crux of its rejection from the App Store.
The open letter continues:
Readability’s model is unique in that 70% of our service fees go directly to writers and publishers. If we implemented In App purchasing, your 30% cut drastically undermines a key premise of how Readability works.
Arc90’s core complaint seems to be that Apple is requiring Readability follow the same rules that have been put into place for all apps offering subscriptions. In this particular case, it means that the funds Arc90 gets to divvy up between itself and its participating content providers will be reduced by 30 percent for subscriptions purchased from within the app. But complaining about Apple's 30 percent rings hollow, since Arc90 itself takes that same percentage before paying its publishers.
Arc90, for its part, hasn't spelled out why such a model can't survive Apple's 30 percent cut for subscriptions purchased within the app. Presumably, the company is worried it can’t turn a profit after Apple takes its share of the revenue. But in theory, Readability's business model is focused on helping content providers generate new revenue from readers who otherwise aren’t actively paying for that content. It seems likely that most of the potential users of a Readability app are those who have already subscribed to the service, so any additional users who sign up via the app are icing on the cake—new customers who otherwise wouldn’t be paying at all.
In concluding its open letter, Arc90 implies that this isn’t a matter of business, but of principle:
P.S. We’d be glad to deliver Readability for iOS – with in-app purchasing – if you’d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.
So, Arc90 wants Apple's fees to be adjustable, instead of its own. But, as Arc90 acknowledges, it’s clearly Apple who holds all the cards in this debate. It's Apple's store, and if Readability is going to appear there, Arc90 will be forced to play by Apple's rules.