This week, the Erdee Media Group launched an update to the RD News app. With this new version, users can subscribe to digital subscriptions to RD through the app to gain access to all paid articles. You sign up for this subscription with RD itself. And that is, as crazy as it sounds, quite special. Because until recently, this was not allowed by Apple. How did that come about? Should we be happy with this new opportunity? And how will policy around in-app purchases evolve? Read about this and more in this article.
In-App Purchases
Ever since the introduction of iOS 3.0 (2009), Apple offers app developers the possibility to sell digital content accessible via apps. The payment of these ‘In-App Purchases’ (IAP) is entirely handled by Apple’s payment system. In effect, the consumer is thus paying Apple, which in turn pays the app developer.
The user experience for the consumer is, as we’ve come to expect from Apple, fantastic. With a few ‘taps’ and later via Touch ID and Face ID, one can easily and quickly make a purchase with an existing Apple ID (and in many cases an already linked credit card). Online payment has never been so simple; a real breakthrough in payment convenience.
Swallow or Choke: Apple dominates the entire ecosystem
This payment service, understandably, is not free for app developers. A whopping 30% (later 15% for smaller apps) of the purchase amount ends up in the bank account in Cupertino. This makes the business case for many apps difficult; the margin on the often small amounts of purchases is already not huge. Moreover: isn’t 30% too extreme for handling a transaction? But that turns out not to be the only objection. Because Apple, in the thick guidelines that apps must comply with, also enforces that the Apple checkout is the only checkout that may be used. So apps are not allowed to use their own payment method for the sale of their own digital content or services. It’s a case of swallow or choke if you want to sell something.
The power over the payment ecosystem within apps that Apple gains as a result, has been causing a lot of frustration for years among app developers who depend on their paid digital offering, such as gaming apps, streaming services, and paid news media. It also leads to a cat and mouse game, with app providers inventing all kinds of tricks to get around Apple’s rules. The user experience also suffers, as you see in many apps things in the trend of “You have to pay for this, unfortunately that can’t be done here, we find it annoying too”. And then the user has to find out where to get a subscription.
Apple under pressure
Yet it is not until 2019 that major apps start seriously resisting this. Then Spotify and Match Group (parent company of Tinder) file a complaint with the European Commission in which they argue that Apple’s App Store policy, including the mandatory use of Apple’s in-app purchase system and associated fees, is anti-competitive (Apple also has a music streaming service). This results in an investigation by the European Commission, which initially, via this statement, takes over the objections raised in general terms. Until February 28, 2023, when the Commission announces that it does not consider the mandatory use of the Apple payment system to be unlawful after all. However, the position remains that app developers must be able to communicate in apps about the possibility to also purchase products outside the app.
A Bit of Movement: Apple Introduces Policy for ‘Reader’ Apps
Simultaneously, a case by the Japan Fair Trade Commission (JFTC) against Apple is ongoing, also concerning the App Store policy around in-app purchases. To settle this case, Apple announced in March 2022 that so-called ‘Reader apps’ would be able to link to websites where users can register and make purchases – outside of Apple’s payment system, that is.
What are Reader apps?
In the definition used by Apple, these are apps that contain paid content in the form of digital magazines, newspapers, books, audio, music, video, access to professional databases, VoIP, cloud storage, or approved services such as classroom management apps. To be treated as a Reader app, you have to register an app. Apple checks whether you are entitled to do so.
Are there any other conditions?
It’s still Apple, right? So, yes. The most important:
- If you take advantage of the opportunity to sell yourself, the app may not contain in-app purchases (i.e., purchases made through Apple) – not even for other products;
- You may not provide price information in the app, but only on the webpage to which you link;
- The button leading to the webpage where you will make the purchase must contain the full URL of that particular page, and the link must also look like an HTML text link;
- After a user presses that button, there is a mandatory screen from Apple to display with the message: “You are about to leave the app and go to an external website”. You have no more transactions with Apple”. It sounds and looks (layout = mandatory to take over) like a warning, which will not directly help the conversion.
Should we be happy with the Reader app policy?
It’s certainly a small step in the right direction. It will be interesting to see how the conversion to paid subscriptions will proceed with RD in the coming period, compared to the period before, when users had to figure out where to get a subscription.
The solution from Apple is certainly not ideal yet. You could say: it’s kind of a teasing solution. Especially the mandatory URL in the button and the mandatory intermediate screen, stand in the way of an ideal user experience (and possibly also conversion).
But my guess is that it doesn’t stop here. Since last month, the EU’s The Digital Markets Act (DMA) is in force. The so-called ‘Gatekeeper Companies’ (read: Big Tech, including Apple) have a few months to adjust to this and must then comply with the new rules within six months. One of the resulting issues is that Apple is required to also allow external app stores on iOS. Very specifically, the DMA does not mention anything about in-app purchases, but from other, more global articles, you could infer that Apple’s monopoly in this area is indeed finite. Although I suspect that the last lawsuit has not yet been fought over it. We’ll keep an eye on it for you.
For now, kudos to the RD, which is open to trying this out; we look forward to the results!
