The Orange View (on hiatus) Because Apple is great but it isn't perfect

16Feb/11Off

Once more with gusto: Apple’s subscription rules are bad for users

Now that Google has come out with a very different financial model for digital subscriptions, MG Siegler over at Techcrunch is drinking deep from the Gruber Kool-aid and claiming that Apple's system is better for users. The only reason offered is that Google requires consumers to opt out of sharing a few bits of information with publishers (name, zip code, email address) while Apple requires consumers to opt in to allow such sharing. I could make a top 1,000 list about why this is nuts, but I'll limit myself to four.

1. Information sharing policies are only one small component of the two competing systems. Apple requires a much bigger revenue cut from publishers, commands that iOS apps must include in-app subscription purchase if a publisher sells subs elsewhere on the web and demands that the iOS price be equal to or less than the price everywhere else. This eliminates whole classes of business from offering economically viable iOS apps, including streaming music and video services and ebooks. This is not beneficial to users. It is is hideously anti-competitive and anti-user.

2. If a user is concerned about the privacy of their address, they will not have their information shared under either program. Frankly, I think the value of keeping publishers in the dark about your address is close to nil -- in our house, we subscribe to more than a dozen print magazines and a bunch of web sites, too.  We get some junk mail as a result. We also get some email spam which Gmail easily strips away. The "harm" is non-existent. But if you care about that sort of thing, it will be a click to opt out of information sharing under the Google program. There is no privacy difference to users who care.

3. Apple wants 30% of a publisher's revenue and Google wants 10%. Siegler, Gruber and others seem to think this is some sort of irrelevant matter that only affects publishers and developers. That's just ludicrous. If revenue is taken away, the end-users will have to pay more or receive less. And because of Apple's price matching policy, all users will end up paying more, not just iOS subscribers. Just like when Apple forced ebook agency pricing down its customers' throats, we the customers pay more.

4. Siegler says the opt-in/opt-out difference is being overlooked while it's actually being cited by every pro-Apple pundit I've seen. What's being overlooked is the clause in Apple's program that requires that a publisher's iOS app must have in-app purchase for subscriptions or other digital goods using Apple's payment terms if the publisher sells those items anywhere else. That is what kills Rhapsody, Hulu, Kindle, Nook and the like. In theory, since they cannot hand over 30% of their revenue to Apple and stay in business, they could just eliminate any iOS app links to purchase services on the web. But Apple has banned that approach. They must offer in-app purchase and give Apple 30% or they cannot be in the app store at all.

Posted by Aaron Pressman

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