App Subscriptions
Back in October one of my very favorite and most used apps, Overcast, did something a little different. It’s developed by just one guy (Marco Arment) and he decided to make the app completely free. Previously the app had been free but some features required an in-app purchase. Marco’s whole explanation of his decision is worth reading but it basically boiled down to that most people were not paying for the in-app purchase and thus getting a worse app than he had intended them to use.
In lieu of in-app purchases Marco set up a Patreon system where whoever enjoyed the app could pay for it just as a way of saying thanks, sort of like a tip jar. The way it was worded made it feel like, generally, you should probably tip $1 per month, if you felt it was worth it.
Surprisingly, I actually liked the system. It wasn’t obnoxious and I do love Overcast so I was happy to compensate Marco for his hard work. After all, this is an app that I use pretty much every single day. I get good use out of it and Marco should be able to profit from his work on it. Both sides are happy.
Before Tuesday, developers like Marco were trying to figure out how to play different games inside of the same App Store rules that Apple had given them for years (with very few changes). One of the sticking points had been upgrades and making money. Once you purchased an app any update to that specific app was free. This is fine for small little updates but it gets hard to justify developers spending weeks and months on an update to their app with no way to earn more money from it. This is why we see things in the App Store like Tweetbot 2, Tweetbot 3 and so on. App developers have to create new “apps” of their apps and sell those new versions in order to get paid again.
Then Tuesday happened. Apple announced big changes in options for developers. Apps in all categories will soon be able to charge via subscription, similar to what Netfilx does. This isn’t a whole lot different than what Marco set up with Overcast. A developer could say a subscription to their app costs $1 monthly or even $10 yearly (Among other options). This gives developers a way to continually bring in money past the initial payment of the app and support further updates down the line. It also alleviates clutter from having several versions of an app in the App Store. Rather than having Tweetbot 1, 2, 3, 4 it could just exist as plain “Tweetbot” and keep getting updates and money from subscriptions. No more having to create a “new” app to make users pay and download again to make money.
It’s a great deal for developers. Certainly the opportunity of having a consistent, monthly cash flow will help cover costs. I’m interested in what kind of a deal it ends up being for consumers. Looking back at my tip box “subscription” to the Overcast app, I will pay $12 to use Overcast this year. Just speaking for this year’s subscription price, Overcast will be one of the most expensive apps that I have. Now imagine I use Overcast for 3 years. That’s $36.
Let’s take it one step further. Right now Overcast’s model is only voluntary. If I decided to stop donating I’d still have the app and it would still be usable. Suppose though that Overcast switched to Apple’s new subscription model. As soon as I decide I no longer want to subscribe to Overcast the developer could make it so that the app was no longer usable, no matter how long I had subscribed. So if I had subscribed for 3 years and paid $36 and canceled what do I have to show for it in the end? Possibly nothing. Just whatever services were rendered.
This is not different from how Netflix, Apple Music, New York Times, or other such subscription services work currently. You get the content while you pay, nothing when you don’t. It’s basically renting. This is the sort of model that has partially worked out for movies with Netflix and Music with Spotify and Apple Music. It seems to be a model that consumers are warming up to and it will be interesting to see how it works out in the form of apps.
I am slightly skeptical. Then again, I am a subscriber to Apple Music yet still will purchase CDs from my favorite bands. There is certain content that is important to me that I want to own, not rent. Call me old fashioned but I don’t like the idea of all my music disappearing if I decide I want leave Apple Music. I don’t want my apps to stop working either.
My main concern is the probability of a future where there is a lack of options, where apps can only be rented, never purchased. Unlike the current music market where I still can go and purchase a physical copy if I chose, or rent a copy from Spotify, software is not the same. Sure, one could argue that in the near future record labels might not sell CDs, but right now they do. You never could buy a physical copy of an iOS app. Should a developer decide to go subscription only the consumer’s options are limited.
Perhaps renting is the new future. Consider that many of us don’t even own our own iPhones anymore. Last year Apple introduced their iPhone Upgrade Program which is, again, basically renting your iPhone for a year before turning it in for a new rental the next year. It’s a nice and easy way to stay up to date with the current generation iPhone. But a different way of looking at the plan is to take that $30-$40 monthly payment and accept it as a monthly iPhone usage fee. If you always trade in your iPhone for the newest generation, that payment never goes away and you never actually own an iPhone. Just like a subscription app, as long as you keep paying, you have the newest, coolest iPhone. Maybe that is not a bad thing. Maybe it’s the best thing. I don’t know.
It is important to remember that there actually are still choices. You don’t have to turn in your iPhone and you can pay it off, own it if you want. Likewise, you don’t have to sign up for apps that require subscriptions and even more importantly, developers don’t have to do subscription only models. It is just a new option for developers if it makes sense. My hope is that smart developers use this wisely, charge reasonable amounts for what they provide and only implement it when prudent.
It will be interesting to see where developers take this new option and how consumers react. Historically, even when people are willing to pay for apps, they don’t like it. A small monthly or yearly subscription actually could make that easier, to a point. For a few apps I can see people happily signing up. However, there’s a point where too many small transactions add up to too much overall for the average person.