A few initial thoughts on the new subscription model for apps

(These are early observations and first impressions. I may update this post in the next days as the ongoing debate develops.)


 

I assume you’ve all heard the big news, otherwise The New App Store: Subscription Pricing, Faster Approvals, and Search Ads by John Gruber, and Pre-WWDC App Store Changes by Michael Tsai are two good starting points. In short, the various Apple’s App Stores (iOS, OS X, tvOS) will soon undergo a few significant changes. Gruber:

These changes fundamentally change the App Store, for users and especially for developers.

A quick summary:

  • App Store review times are now much shorter. These changes are already in place, and have been widely noted in recent weeks. Apple is today confirming they’re not a fluke — they’re the result of systemic changes to how App Store review works.
  • Subscription-based pricing was heretofore limited to specific app categories. Now, subscription-based pricing will be an option for any sort of app, including productivity apps and games. This is an entirely new business model for app developers — one that I think will make indie app development far more sustainable.
  • Changes to app discovery, including a smarter “Featured” tab, the return of the “Categories” tab, and, yes, as rumored, paid search ads.

In this post, I want to focus only on the new subscription model for apps. It’s the change that is going to have the biggest impact on me as a user/customer.

I know it’s probably too early to comment on a landscape that hasn’t changed yet, but I believe that in this case the debate might help shape how such landscape changes down the road.

As soon as I learnt about subscription-based pricing, my first thought was I just hope not each and every app developer will merrily jump on the subscription bandwagon, because it’s not going to be sustainable for the users. Michael Tsai writes:

From the developer side, recurring revenue is key, but will customers be reluctant to sign up? Even as someone who likes to pay for apps, I think twice about subscriptions. In a competitive marketplace, will customers find a subscription product attractive next to a competing one that is a one-time purchase? How can a developer figure out a fair ongoing price up front, when it’s not known how the app’s launch will go or what path its future development will take?

Like Tsai, I’m not a cheapskate and I like to pay for software — but I like to pay a fair amount upfront and ‘own’ the software, as opposed to ‘rent’ it for an indeterminate time interval. I was never a fan of the freemium model, but in a few cases it has worked very well for me — the typical example is the free photo app with in-app purchases for filter packs and/or additional features. I’ve happily obliged in more than one occasion, because I felt it was a fair contribution to the app’s development and a thank-you to the developer for delivering a nice product. If the same app shifted to a subscription model, I don’t know if I would completely be okay with it. Another scenario where the freemium model has worked for me — the typical ‘free with ads’ app where you make an in-app purchase to remove the (usually annoying) ads. If the app is worth it, I usually oblige. If an app proposed me to start a subscription to remove the ads, it’s far more likely I would either keep using the app free with ads, or look elsewhere.

Tsai again:

I think the best thing that can be said for subscriptions is that they’re honest and mostly align everyone’s incentives properly. Customers will essentially vote with their wallets, on an ongoing basis. Developers who maintain and improve their apps will get recurring revenue. Apple will get more revenue when it steers customers to good apps. Over time, more of the money will flow to the apps that people actually like and use. My guess is that the average customer will end up spending more money on fewer paid apps. Some apps will become more sustainable, but others will be culled.

I hope developers won’t start abusing this new subscription model. This was another of my first concerns as soon as the news broke. I have 147 apps on my iPhone. I have 178 apps on my iPad. Even considering the overlap of universal apps I use on both devices, I probably have 25-30 apps that are unique to the iPad. If even a small subset of these apps — let’s say 35 — turned to a subscription-based pricing, I just wouldn’t be able to afford it. As James Thomson succinctly put it on Twitter, App subscriptions sound great until users realise they have 100s of apps. I don’t know how well it scales. Devs can’t all make more money.

I’m inclined to agree with what Tsai says above, but there’s something I want to add to that observation he and others have made, that “more of the money will flow to the apps that people actually like and use” and that “people won’t have hundreds of apps anymore, just the ones they actually love and care to support” (I’m paraphrasing in this second instance; it’s something I’ve read in passing on my Twitter timeline and I don’t remember the exact words).

Here’s the thing — Among the apps I’ve bought over the years, a lot of them are quality apps I love and enjoy using, but I don’t necessarily use them all the time. A classic example: photo apps and image editing apps. I have a lot of them, and I don’t really have a preference. I decide which to use mostly following the mood of the moment (in case of photo apps) or the specific function/effect I’m after (in case of editing apps and even photo apps as well).

With these kinds of apps, I like to have lots of options available, and I haven’t minded paying upfront for each of these apps; I haven’t minded paying the occasional extra for a paid update or for the in-app purchase that unlocked more photo filters or editing features. But in the extreme case that all app developers behind these apps moved to a subscription-based pricing, without offering alternatives, I would be forced into a position I really don’t like: having to decide which app stays on my devices and which one has to go. Will the App Store’s infamous ‘race to the bottom’ become the ‘race to stay in your device’s (home) screen’?

Same goes for text editors and drawing apps on the iPad. I would hate to be forced to choose between supporting 1Writer or IA Writer, between supporting Procreate or 53’s Paper or Autodesk’s Sketchbook Pro (in case all these embraced the subscription model, of course).

Let’s put this another way: personally, I very much prefer a scenario where I purchase two different apps each priced at $3.99 rather than investing $7.98 for sustaining a single app with a $0.99/month subscription for approximately 8 months.

But back to the point I was making above: there are a lot of good apps I love to use, but some of these I use less frequently than others. If all of them switched to a subscription model, this would cause a ‘survival of the fittest’ scenario on my iOS devices (and on the Mac as well), something I consider a bit unfair for all parties involved.

You see, I very much prefer having 25 different photo apps with maybe a couple of favourites and the other 23 available as alternatives — or as a complementary solutions — or as backup solutions when I don’t like the results I got from the two favourites — rather than a scenario where I end up whittling down my ‘Photography’ folder to three apps because that’s all the subscriptions I can afford. (Again, in the extreme case where most of the developers were to move to a subscription model.)

 

Then there’s the elephant in the room.

Nick Heer writes:

I’m not sure there’s an easy or ideal way to pull the App Store out of its nosedive into unsustainably low pricing, but subscriptions seem like a good option. They’re clearly imperfect, but they might be a key factor in keeping prices generally low for users as they amortize the cost of development over months-to-years and incentivize regular updates.

One of the main factors causing the App Store’s nosedive into unsustainably low pricing is people who don’t want to pay more than a ridiculously low sum for apps, or who don’t want to pay for apps at all.

As Michael Anderson observed in a tweet, how can people who currently refuse to pay $2.99 for an app suddenly be convinced to pay $12 a year? In this perspective, a subscription model for apps doesn’t exactly solve the App Store’s ‘race to the bottom’ systemic issue. It’s just another option, an option that may facilitate the sustainability of certain apps; an option which will probably facilitate the sustainability of apps made by certain prominent indie developers over other, lesser-known developers. And my early guess is that — if abused — it’s going to be an option that has the potential of driving customers away. Not necessarily cheapskates or people who don’t understand the costs of app development, but also people who (like me) usually pay for apps but are on a budget and can’t afford supporting every app they like. And people who simply can’t justify a recurring subscription for apps they love to use, but don’t use frequently enough.

I hope the spectre of unsustainability in case of a mass-migration towards a subscription-based pricing will be enough of a deterrent for developers so that they choose carefully what to do with their apps and what to offer from now on.

Category Software Tags ,

About Riccardo Mori

Writer. Translator. Mac consultant. Enthusiast photographer. • If you like what I write, please consider supporting my writing by purchasing my short stories, Minigrooves or by making a donation. Thank you!