Update: This article has been updated to reflect clarification from Apple that apps approved to use subscriptions can require a subscription to use the app at all. On June 13, the article was updated to incorporate changes to Apple’s App Store Review Guidelines. On June 20, a quote from Phil Schiller was added to clarify the legal requirements Apple considers associated with subscriptions.
While any app has the potential to offer subscriptions under Apple’s new guidelines, most apps can’t take real advantage.
Apple’s news that any iOS app can offer subscriptions as an in-app purchase, not just news and streaming media apps, offers less than it seems at first glance—unless there’s more to come at WWDC. Apple’s Phil Schiller, senior vice president of worldwide marketing, indicated to The Verge that this was it for now.
While any app can offer a subscription, this doesn’t mean that every app can suddenly shift from a flat-fee price to a subscription model. For a subscription approach to work, an app has to have a large library of associated stuff, constantly updated material, regularly released new features, or a cloud-based service that offers enough value for the recurring fee. There’s also a possibility of using it for patronage, which some apps rely on one-time IAPs for, but it still has to offer something to qualify.
What the new policy changes
Among other rules, Apple’s App Store Review Guidelines until June 13 noted, “If your App doesn’t do something useful, unique or provide some form of lasting entertainment, or if your app is plain creepy, it may not be accepted.” And: “Apps that are demo, trial, or test versions will be rejected.” Its What’s New page that describes the new subscription policies match up. But both seemed in contradiction to Schiller’s statements in several interviews.
We’ve confirmed with Apple that Schiller’s expansive vision is an accurate one: any developer can submit an app that relies entirely on a subscription to perform a task. Apple also updated its App Store Review Guidlines on June 13 following the WWDC keynote. An app can be effectively a login screen, like with Netflix and Hulu, rather than conform to the broader policy Apple has enforced on most apps that weren’t periodicals and streaming media libraries to date. Schiller’s examples included enterprise apps, which are effectively in continuous development. In fact, many enterprise apps are already sold on a subscription basis, but typically couldn’t charge a subscription fee directly within iOS. The revised guidelines also list productivity, professional creative, cloud storage, video, audio, voice, and photo sharing as possible category examples.
But Apple also stressed that not just every business model will pass its muster. Unlike with periodicals and streaming media apps, which are allowed to have no content or use without a subscription, apps in other categories will need to “make sense.” As Apple notes on the What’s New page, “the experience must provide ongoing value worth the recurring payment for an auto-renewable subscription to make sense.”
In an appearance at WWDC on John Gruber‘s "The Talk Show," Schiller noted more specifically, “There are certain states and governments where there are laws about creating subscription revenue streams without a clear promise to users of what they’re paying for down the road.” He said Apple’s legal team is working to define guidelines so that developers don’t make a promise that could put them at odds with the law.
We don’t yet know precisely how Apple will evaluate that, and uncertainty is bad for developers. Schiller also promised much faster app review turnaround for developers, but speed doesn’t matter if an app doesn’t meet Apple’s test, and Apple doesn’t yet offer formal advance review of app features or business model. (We have heard of developers discussing features more broadly, but informally, with developer relations staff.)
We’re almost positive that you won’t be able to purchase or download an alternative keyboard only to discover that if you want the letters A, E, I, O, and U (and sometimes Y), you have to buy a subscription for that continuous functionality. But between uncertainty and Apple’s strictures, it’s likely that the “ongoing value” will make the impact more limited than early response hoped for.
Subscriptions can have free trial periods that are set by Apple as a fraction of the subscription period, like 7 days for a one-month subscription, although a free trial can’t extend to an app’s full function, only the IAP portion. Still, whether an app requires a subscription to be useful at all or only limits certain features, this will make it much easier for developers who fit into this approach to offer potential buyers something substantive.
Developers may opt to restructure apps and release entirely new versions that reduce the purchase price and stick features behind a subscription wall, or eliminate one-time IAPs in favor of recurring subscriptions. But given how Smile’s shift of TextExpander from flat-fee to subscription with version 6 was greeted by users, developers will need to be wary even if they have a motivation to change.
What value lies in a subscription?
I used to run a subscription-based app, so I have firsthand insight into the limits and benefits of Apple’s ecosystem. The Magazine, developed by Marco Arment and sold to me several months into its operation, was a Newsstand app that started with monthly subscriptions and added yearly ones about 10 months in. I shuttered it in December 2014. Looking back, I would loved the new arrangement of Apple taking just 15 percent of subscriptions that last more than a year instead of 30 percent.
As a periodical, we weren’t fully subject to the “something useful, unique, or…lasting entertainment” guideline: we had an Issue #0 baked in to the app to explain what we were and exhort people to subscribe. Likewise, many video streaming apps don’t have a free tier, just a login/subscribe screen.
Apple’s introductory explanation makes clear “this business model is not appropriate for every app.” Examples cited by Apple include cloud-based services, massive multiplayer online games (MMOGs), libraries of content (think Lynda.com or Newspapers.com), or cloud storage.
Apps that work on a freemium basis today with in-app purchases are largely unlikely to make it palatable to users to switch to a recurring subscription, because in even modestly successful apps, IAPs and prices have to already be a reasonable deal. If a drawing app offers a $2.99 IAP to unlock an extensive set of brushes and colored pencils, how can it switch to, say, a $0.99 a month subscription fee even for a larger, fixed set of drawing options?
Most apps don’t offer a benefit to either continuously paid or brief periods of on-demand access to a relatively modest amount of new stuff. Thus, developers would have to license or create libraries of sufficient size to seem valuable, build new services, or switch to a continuous development mode for features offered only to subscribers.
Early reactions from developers
I talked to James Thomson, the developer of PCalc, an app available on every Apple OS, about how he could see subscriptions playing into a utility app like his. While he’d love to have recurring revenue, instead of funds just from new purchasers or infrequent releases of new major versions, he can’t see a path for PCalc, but he’s eager to get more detail at WWDC.
An app like PCalc could extend itself into the cloud, offering subscribers access to high-performance GPU-based server computation of algorithms, but that’s not the core of Thomson’s program, and would appeal to a different audience.
Game developers might find subscriptions particularly welcome, though, because it’s a much easier switch from buying packages of permanent IAP upgrades, like unlocking levels, to a set of all levels, which are accessible only while subscribed, while the developers continually release new ones. Apple’s options for multiple tiers of simultaneous subscriptions would also let game devs differentiate what set of material players can access, or in a MMOG or other online game, what sort of tools, weapons, and powers someone starts with.
The makers of Monument Valley, ustwo, faced bad reviews and a fair amount of criticism when they released new levels for their gorgeous game from customers who apparently expected to receive free additional content forever. (The negative effect didn’t seem to last.) A subscription offering might have reduced that criticism substantially, and given the company an incentive to release more levels at regular intervals, funded by predictable income.
Companies with existing libraries of content that they can make available to subscribers will have an easier time, because this lets them extend what they likely already offer via desktop and Web apps. Adobe already allows what are effectively on-demand subscriptions to its Creative Cloud suite of software, cloud storage, and cloud services, and subscriptions would fit in perfectly for its iOS apps.
It’s also possible recurring subscriptions could make it easier for developers to handle patronage. Arment, The Magazine’s creator, rolled out one-time IAP purchases in Overcast 2, asking people to support the app by purchasing one. The app reminds users when the period is up. Originally, Overcast 2 offered no benefit for the IAP; version 2.5 added a dark theme and cloud-based uploads of user audio files.
It wasn’t clear at the time whether Apple specifically allowed IAP-based patronage, but it didn’t reject the app nor subsequent developers who pursued the same course. IAP subscriptions might set a higher bar for requiring utility, but it also can legitimize this as a way to allow patronage.
The drawbacks of recurring revenue
Developers who commit to subscriptions may suffer under the requirements one has to meet. My commitment with The Magazine was to produce an issue every two weeks forever; regular production of new content is kind of a given with a newspaper or magazine subscription! An app maker who offers a monthly subscription might not be prepared for cancellation rates and negative reviews if they can’t keep up with customers’ expectations of new material, even if those are unreasonable.
If Apple handles these subscriptions as they do for current apps, developers may also be surprised at complaints from customers at receiving regular email from Apple in advance of each recurring charge. I routinely had subscribers ask me to have Apple stop emailing them monthly a few days before the charge went through, but there’s no way for a developer to stop that email. If a user starts racking up a number of monthly subscriptions, those incoming emails will bother some people a surprising amount—some cancelled their subscription when I told them I couldn’t stop these messages.
Even those who don’t object to the email will react to a reminder of how much money they’re spending, no matter how small—and, again, if lots of apps switch to subscriptions, there’s going to be a constant drumbeat of such reminders. I wouldn’t argue Apple should stop emailing these reminders altogether, but I hope it will consolidate the remainders and give subscribers an option for how frequently and in what form to receive ongoing billing notices. (The print magazine business still relies heavily on evergreen renewals, where people sign up to renew forever, and only hear from a publication when a credit card is going to expire.)
Apple opening up subscriptions to all apps isn’t a negative: it’s a welcome move that provides more opportunities for developers to chart a sustainable, consistent road forward for their work. However, it doesn’t appear to have the broad impact that the first flush of discussion suggested.