August 8, 2013 at 5:28 pm

Apple Takes 30 Percent of In-App Subscriptions; Some Developers Are Fine With That

club songza ios in-app purchaseIt’s common knowledge that Apple takes 30 percent of the revenue for any app sold in iTunes, which is, of course, the only place to get iOS apps for (un-jailbroken) iPhones, iPod Touches, and iPads. This is nothing new; Apple has done the same with the music in iTunes for years. It’s simply the cost of selling 1s and 0s via iTunes to people with iOS, and there’s nothing wrong with that. Apple can set whatever rules it wants, because it makes the devices and operates the store. If developers don’t like it, they’re free to sell their stuff somewhere else, to someone else.

Things get a little trickier when an app developer sells a subscription as an in-app purchase. Does Apple take 30 percent of that money each and every month, forever? Initial confusion surrounding the topic has cleared, and yes, Apple does get 30 percent of that subscription every month, which is why you can’t subscribe to Spotify from within Spotify’s iOS app, for instance. The same goes for most other music subscriptions. If you want to upgrade to premium, you have to do it outside of the app.
Some developers are fine with giving Apple 30 percent of their subscription revenue when the user converts within an iOS app, in perpetuity, for as long as that person remains a subscriber.

“Apple does indeed get 30 percent, each month someone subscribes,” confirmed Songza CEO Elias Roman, whose popular activity-oriented music app recently launched an ad-free version, which, as of today, is available as an in-app purchase within the iOS version. “We view it as the cost of benefiting from an incredibly simple and fast purchase process.”

“Yes, Apple takes 30 percent of the ‘in-app’ subscription fee monthly,” said OraStream CEO Frankie Tan, who also concurs that it’s worth it. “While it is a significant cut, Apple offers a broad geographical distribution reach, end-users’ payments management, and a development platform that offers good and stable quality of app performance on end-users’ devices. Given we are not widely known, it isn’t possible to distribute our apps independent of the [iTunes] App Store. So while 30 percent is a tad too high, it is nonetheless a cost of doing business; one that is borne by the content partner and developer.”

It’s hard to imagine people in any other business (mostly) cheerfully tithing 30 percent of recurring revenue to a store — yet another way in which Apple proves an exception to the rule.