Apple Video Makes It Clear: It Wants Subscriptions Over Paid Apps

Forget microtransactions and the freemium business model. The next in-app purchase debate will be about recurring subscriptions. Last month, Apple reportedly held secret meetings with developers to push for an app subscription model. And while this is no admission of that, Apple has now published a video for developers designed to convince them that the subscription fee model is the way to go.

On the surface, it's not that hard to see the logic for that. Recurring revenue does sound juicier than a one-time fee. Apple's reasons for pushing the business model, however, may be seen to be more self-serving than favorable to developers.

Apple gets a 30% cut for any and all purchases done through the App Store, whether for the app itself or for IAPs. With app subscriptions, the revenue sharing takes a different form. Apple takes 30% of the first year subscription and then 15 for every year after. In other words, it allows Apple to gain more for an app compared to a one-off purchase that's done and gone forever.

To help convince other developers of the benefits of that approach, Apple has enlisted the likes of Dropbox, Calm, and Elevate to preach that message. The spiel is that it allows developers to continue providing value through continued payments. Naturally, Apple offers tools to help developers switch to that model.

Few developers will perhaps argue against the perks of a subscription model. They will, however, contest the cut that Apple, really most commercial app stores, take from those. That is why Spotify has long stopped letting users subscribe through the iOS app. Netflix seems to be moving in that direction as well. As seen in Epic Games' Fortnite for Android, big developers are no longer happy with the status quo and are waging war not on IAPs or subscriptions themselves but on the cuts platform makers take from them.