Apple backtracks on in-app subscriptions

Posted by Mike Luttrell

Apple has done the unthinkable and reversed a policy that would have forced companies to pay it a lot of money.

We're talking about apps that require user subscriptions. That encompasses everything from the iPhone version of the Wall Street Journal and Financial Times, to apps like Netflix and Hulu Plus.

The problem Apple has with these apps is that users have to pay to use them, usually via a monthly fee, but Apple didn't get any money. The apps themselves were free.

So the company planned to change its app terms and services so that developers would have to give users the option to sign up and pay for their subscriptions through an in-app portal.

In other words, Netflix would have to change its iPhone app so that in addition to the standard log-in screen for existing Netflix users, there would be a special sign-up button for people who didn't already have a Netflix account.

Anyone who signed up through those means would still pay the same monthly fee, but only 70% of it would go to Netflix. The other 30% would go to Apple.

As you can imagine, the companies behind these apps were not happy with this addendum, and something must have been broiling behind the scenes because Apple has now changed the new policy before it even went into effect.

The only restriction being added now is that no subscription-based app can have a link that directs users to an external website to purchase the subscription. In other words, the Netflix app can't have a link that says "Don't have a Netflix account? Click here to sign up," which leads users to Netflix.com.

So, basically, developers can now choose if they want to use Apple's in-app subscription service (and pay Apple 30% of all subscription revenue), or not. Our guess is most will not.