Apple has just unveiled its brand-new App Store subscription service which offers recurring billing through the subscribers' iTunes Store account. This new feature will be stapled to all publishers of content-based apps such as newspapers and magazines, as seen in the debut of News Corp.'s The Daily app.
Expected to debut as one of the key features in iOS 4.3, the new digital billing service will be similar to In-App Purchases, as currently used in most apps in the App Store.
Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.
With regards to whether content may also be offered outside of this new billing mechanism, Apple CEO points out that publishers are free to offer content outside of the app. But if so, the same or better offer has to be given to subscribers of the app.
"Our philosophy is simple – when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Steve Jobs, Apple's CEO. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."
Besides providing customers an easy way to keep track of their subsription and ease of activation and billing, Apple is pushing this new App Store Subscriptions as 30% of the content providers' revnue will go to Apple.
But for the ease of potential customers and the vast distribution power of the App Store, I'm sure many content providers will submit to Apple's demand in exchange for a potential 160 million iOS users around the globe.