A new set of negotiations could potentially set a precedent for a change to Apple’s (AAPL) in-app subscription rules.
Not everyone is happily complying with Apple’s subscription policy for the iTunes App Store. Several content providers have complained, and a few have even pulled or threatened to pull their apps from the store (although many have happily gone forward under the new regulations). But so far, many providers have mostly adopted a “wait and see” approach, and some apps, like Amazon’s (AMZN) Kindle, have even received content updates that have cleared Apple without seemingly acquiescing to all the changes.
Some content providers are trying to figure out a way to continue to do business in the App Store while working to make Apple bend or change the rules a bit. The Financial Times is among them -- it’s currently negotiating with Apple to get the company to change the way it deals with subscriber information for in-app subscription purchases.
Apple’s subscription rules, which it pushed in February with the release of Rupert Murdoch’s iPad-only publication The Daily, require that all content sold for use in apps that’s sold outside of the App Store be sold by in-app purchases, as well -- of which Apple gets a 30-percent slice. That means that if the Financial Times wants to sell subscriptions to content that’s accessible in it’s iOS apps on its website, it has to include an option to sell those subscriptions in the app, too, and the in-app purchase price needs to be the same, or cheaper, than the subscription outside it.
The trouble the Financial Times is having with this model, it says, is that Apple won’t share subscriber data with content providers. Apple makes a habit of keeping much of its user data away from the eyes of app developers in the App Store -- partially to protect user privacy, and likely because it allows Apple control over that data for advertising purposes.
But now, publications are getting lumped in with other app developers, and that’s a big stumbling block for those publications. Subscriber data is heavily used by publications for advertising purposes; demonstrating subscription numbers and demographics to the people who would buy advertising in their pages (or in this case, on their screens). The Financial Times says that without subscriber data, it can’t go in for Apple’s subscription rules. Here’s a quote from Reuters’ story on the negotiations:
“‘We don't want to lose our direct relationship with our subscribers. It's at the core of our business model,’ Rob Grimshaw told Reuters in an interview on Monday.”
According to the Reuters story, the Financial Times’ business is expanding heavily in the direction of mobile, and the publication has increased its paying subscribers to 590,000 with the use of its FT.com website, over the 440,000 subscribers reading only the print edition. Digital sales make up around 40 percent of the FT Group’s revenue.
But while the Financial Times seems to have a lot at stake in making nice with Apple over the subscription rules, it also isn’t above leaving the App Store entirely, Grimshaw told Reuters.
“If it turns out that one or another channel doesn’t mix with the way we want to do business, there’s a large number of other channels available to us.”
That sounds like a pretty distant last resort for the publication, however. Grimshaw is optimistic about the negotiations in the interview. But if Apple does give up subscriber information, it’ll likely have a big ripple effect for other publications with more asking for or demanding the same privilege. How Apple handles that fallout, and whether non-publication app developers get uppity if certain publications get special privileges, remains to be seen.