Seemingly out of nowhere, Apple’s senior vice president of worldwide marketing, Phil Schiller, gave interviews to several news outlets about significant changes to certain App Store policies around subscriptions—notably letting all apps potentially offer automatically renewing subscriptions. The company followed up with a page on its developer site describing what’s coming.
This update might have far-reaching effects, or they might fizzle. For current owners of apps that implement changes and future buyers of apps with subscriptions, how does this affect you? We have answers to many questions, but we’re looking for more.
What changes are coming?
Any app can offer auto-renewing subscriptions, but Apple will evaluate whether it fits its guidelines. We don’t yet know the full shape of what Apple will allow.
Developers can price subscriptions at any of 200 different fixed price points, dramatically more options than before.
Developers can charge different rates in different territories.
Apps can offer not just different durations of subscriptions, but also different tiers, like standard, extra, and premium.
Apps can have multiple non-overlapping subscriptions for different features or services.
Subscription prices can change, and developers can choose to grandfather your existing price or inform you of an increase.
Q. Will all apps suddenly switch from an App Store purchase or using in-app purchases (IAPs) to subscriptions?
A. Goodness, we hope not! Apple notes that subscriptions will only fit certain business models, and we agree. Many apps already have consumable purchases: an item you buy that lasts for a certain period of time, but isn’t renewed, like a three-month VPN subscription. The app developer has to warn you of the expiration, you have to make a new purchase to continue using it, and neither you nor the maker gets the advantage of seamless, continuous access. We wager most of these will likely convert to IAP subscriptions.
Some developers may have avoided adding features to their apps that required ongoing expense on their part, whether for server use or storage or in development time, without being able to rely on a predictable, consistent income stream. This could give those apps an incentive to add new features or expand limited ones.
What kinds of apps will choose subscription models?
A. Anything that requires per-user commitment of cloud-based servers or storage seem likely. So a photo site that today would require you subscribe on its website to pay for storage and then log in via its iOS app could also allow a subscription directly within the app. Apple also suggests online multiplayer games, libraries of audio or video, and publications.
Apple’s Schiller gave the example of enterprise apps, which are continuously developed with new features rolling out. However, this conflicts with Apple’s subscription announcement. We’re looking for more details about that.
If an app is allowed to have no functionality without an active subscription, some apps might opt to switch to continuous development, releasing minor and major app upgrades under the same app name, instead of the pseudo-upgrade process used today of releasing major upgrades as effectively a new, separate app. This would allow you to pay on an ongoing basis for apps you use all the time, or pay on demand to use apps just when you need them, canceling the renewal when you’re done. It might provide a way for otherwise expensive apps to offer limited time usage, much as Adobe does with its Creative Cloud subscriptions, which can be for as little as one month.
If a developer raises the price for a subscription I have, does I automatically start paying more?
Developers can now opt to let existing users keep the price they are paying for as long as they keep the same tier of subscription. Or they can decide to raise the price for everyone.
If a developer grandfathers older pricing for existing users, you’ll pay that rate indefinitely unless you upgrade, downgrade, or crossgrade (to a different set of options). Then you’ll pay whatever new users pay.
However, if a developer raises the price for everyone, Apple will inform you. You can either turn down the price increase or perform a “pocket veto” by not responding at all, and the subscription ends at the completion of your current period. If you accept the new price, your subscription continues and you are charged the new price at your next renewal.
If I stop paying for a subscription, does an app stop working?
Apple has given mixed signals about this. With current content-based subscriptions like Netflix, you can lose access when you stop paying. But some periodicals and other apps let you keep any content that was released during your subscription period and still use the app to read it, listen to it, or view it later, like with The New Yorker.
We wonder about other scenarios. How will that play out if you purchase a subscription that includes cloud storage associated with an app? Will it be deleted at the end of a subscription, rendered read-only, or available indefinitely but no new items can be created? What if you create locally stored documents using features in an app that were enabled only with a subscription? Will those documents be unreadable? We hope to find out!
How will multiple subscription options be managed?
Apple will now let developers have multiple subscriptions in one app. We could imagine an app that offers lessons to students that might have different levels and different subjects. So you could subscribe to math for grade 2, science for grade 5, and music theory for grade 12.
Apple tells developers they can set up subscription groups so that someone can’t accidentally pay for a piece (like grade 2 math) and a larger encompassing subscription (like all subjects for grade 2).
What happens to apps I’ve purchased if they switch to a subscription model?
Your guess is as good as ours. We expect Apple will enforce some kind of parity-with-what-you-paid-for policy. A developer might stop putting new features into an existing app, and release a new app that’s rejiggered around subscriptions, and you’ll ostensibly have no recourse.
Can subscriptions have a trial period?
A. Yes. Apple lets developers optionally offer a free trial for in-app purchase (IAP) subscriptions, which range from 7 days for a one-month recurring subscription to one month for a one-year term. However, that free trial applies only to features offered as part of the subscription, whether content or app functions, and developers aren’t required to offer them.
Is Apple allowing demo versions of apps?
A. Maybe! We can’t quite tell with the currently information available. If apps have to have some useful functionality, as they currently do outside of periodical and streaming software, then the free-trial periods will only apply to specific subscriptions, not the app as a whole. However, if apps can be effectively empty without a subscription, a free-trial period would essentially offer a demo version of the app.
Does this provide an upgrade path for developers?
A. This depends on the resolution of basic app functionality, as we note several times above. If app makers can put all functionality into a subscription, then some could switch to subscriptions effectively covering upgrade costs—you just buy in at any time.
If apps have to be useful apart from subscriptions, then developers can still only give away an app or charge once in the App Store apart from subscriptions.
Apple is charging a smaller fee to developers after I subscribe for a year. Will I see lower prices?
It’s very unlikely. While existing apps with subscriptions will see the benefit of the drop from 30 percent charged for subscribers during their first year to 15 percent thereafter, apps that switch to this model have a full year from whenever they start down that path until they get the additional revenue.
With people subscribing at all different times and canceling and restarting subscriptions, it would be hard for a developer to count on future app revenue averaging far above 70 percent of the purchase price until they had real time under their belt. (If you re-subscribe within 60 days of canceling after you’ve subscribed for a year, the developer will receive the 15 percent rate for your revived subscription.)
And many of the likeliest products to switch to subscriptions often offer a subscription on their own sites or via native desktop apps, for which they pay as little as 3 or 4 percent for credit-card processing, instead of the full Apple commisssion.
This story, "FAQ: How Apple’s new App Store subscriptions affect you" was originally published by Macworld.