Apple's new iTunes subscription billing will work

Apple’s new subscription billing via the iTunes/App Store ecosystem will increase the number of users willing to pay for subscription content, IHS Screen Digest has said.

The comments from the company follow an update to Apple’s App Store developer guidelines to offer in-app, auto-renewable subscription billing for content-based applications.

This is a change in the way previous payments were conducted as before they had been limited to paid downloads and in-app purchases where additional content or access could be purchased from within an app.

IHS Screen Digest Mobile Media research says that prior to the launch of Apple’s App Store, the proportion of consumers in Western markets willing to pay for mobile content such as games struggled to rise beyond five percent. However, with the iPhone and App Store, consumers have proved far more willing to pay for content.

The changes, which allow app publishers to choose the price and subscription durations of weekly, monthly, bi-monthly, quarterly, bi-annually or annually, will give customers the opportunity to subscribe with one click, review and manage subscriptions from a personal account page, and cancel automatic renewal of subscriptions.

Apple of course will make some serious dough by processing all the payments. For the “hardship” it’ll take a 30 percent share, which it already does for all transactions made via its App Store.

Apple’s developer guidelines also says that apps using a separate billing platform must also offer subscriptions at the same price – or cheaper – within the app via iTunes.

Clever Apple has also prohibited direct linking from within the app to external paid subscription services.

Subscription billing has been one of the most requested features by iOS app publishers and developers. However, the company’s stubbornness that publishers allow consumers to pay via its subscription service and part with the same 30 percent of revenues has led to a mixed response from developers.

Apple claims it has a right to this cut because it introduces customers to the content. It also boasts that it processes the payments in a simple and trusted fashion, and in some cases, is responsible for delivering content, within the app, to the consumer.

And IHS Screen Digest is on the company’s side, claiming that if it were to take anything less than the same 30 percent cut it takes for other forms of payment, it could lead to developers choosing to abandon those payment options and opt for the service that offers the best revenue share.

But it has to watch its back – as Google is also onto the same big idea. It too has launched its own content subscription service, which goes by the name of One Pass, and lets users pay for online content via a variety of options, including subscription.

However, the company, at surface, isn’t as greedy as Apple, opting for a 10 percent revenue share instead.