Apple Quarterly Earnings Lower Than Expected
Apple Quarterly Earnings Lower Than Expected

Remember those new app rules Apple implemented a few months back that freaked out every subscription music service with an iPhone app?

Well, looks like Apple has backed down. According to MacRumors, the company has "quietly changed its guidelines" and will no longer demand that developers offer the same subscription terms from in-app sales as sales outside the app, nor are they required to offer in-app subscriptions at all.

When Apple introduced the ability to sign up subscribers using a "buy" button from within the app, it proposed that any resulting subscriptions be shared 30% with Apple. The kicker was that it also demanded that developers offering subscriptions had to add an in-app option, and offer the same terms regardless of whether subscriptions come from within the app or external to it.

That means developers would be able to just add a 30% markup to in-app subscription rates to cover Apple's cut, or not offer an in-app component at all. For music subscription services, sharing 30% of their revenue is just a non starter, as their margins are already razor thin thanks to the amount of revenue that must be shared with the music industry for licensing costs.

Changing that rule is big relief to music subscription services like Rhapsody and MOG, which see a large portion of their new subscriber sign ups come via their mobile app.

When the terms first came out, executives from these music services said that either the record labels would have to absorb the extra cost, or Apple would have to back off its rules, otherwise they'd just shutter their mobile apps.

However the only way to comply with the rule is to not offer any in-app "buy" links to the subscription service. That means Rhapsody can't include a button to their app that links users to the Rhapsody website to subscribe. It can only say something along the lines of "visit www.rhapsody.com to subscribe." Or, they can offer in in-app subscription at a 30% markup.

Questions? Comments? Let us know: @billboardbiz

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