Chip Shots by Chip Griffin
Business | Technology

There’s Nothing Wrong with Apple’s 30 Percent

Readability Open Letter

Much electronic ink has already been spilled over Apple’s decision to make in-app subscription purchasing available — at a 30% fee. I’m about to spill some more.

Today’s open letter from Readability re-stokes the controversy as it claims that Software-as-a-Service providers are now ensnared in the new policy, not just media publishers and content providers. MG Siegler at TechCrunch raises the prospect of Salesforce and other major SaaS companies getting caught by the 30% fee.

There’s a lot getting overlooked here.

The 30% applies only to new sales, not to all users of iOS apps — at least as I understand it. If someone has already paid outside of the app, Apple gets nothing. So Apple is effectively looking not for a “processing fee” as some allege, but effectively a “commission.” By that standard, 30% isn’t quite as outlandish.

The in-app subscription process does not exclude other payment options. SaaS providers are free to sell their products from their web sites and then grant access to the iOS app, as long as someone can subscribe in the iOS app also.

High-end enterprise subscriptions won’t be sold inside the iOS app. Do you really think a Salesforce prospect is going to go into an iOS app and signup from in there? Not likely. That’s a big purchase and isn’t usually an impulse decision — which is where in-app subscriptions should excel.

New subscribers are valuable — and worth paying for. Even if Apple’s approach isn’t perfect, there’s something to be said for bringing new paying subscribers to the table — whether you are a content creator or a SaaS provider. Think about what you pay to get new customers through traditional means and ask yourself how those costs stack up over time.

You can incentivize people to give up personal information. If you’re a SaaS provider, chances are someone may want to access your app via the web in addition to the iOS tool. They will likely willingly give up email address info to you to create that login. Publishers can offer similar benefits or even contests and such to build up the email list of subscribers.

Improved customer renewal efforts could curb in-app costs. I have not done a deep dive on the rules, but if companies mount aggressive renewal campaigns outside of iOS, they can even get out of the 30% for customers who originally signed up in-app. As long as the pricing is the same as in-app, why not send emails with “click to renew” links that go straight into a web purchase option.

Bottom line: let’s stop spend so much time fretting over Apple’s new in-app subscription policies until we see how they work out in reality. In the meantime, let’s inject some reason into the discussion and start thinking about creative ways to benefit from the new approach rather than trying to bury it — efforts that aren’t likely to be successful anyway.

UPDATE: A reported email from Steve Jobs suggests that SaaS applications may not be subject to Apple’s new policies. If that means these applications can’t use the in-app subscription option, the SaaS providers may be leaving money on the table, however.

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