Apple Launches Digital Subscription Service, Netflix Shares Fall

Apple has launched a subscription service via iTunes that makes the Apple Store more appealing to publishers. Under the new plan, Apple makes 30 percent of the profit for attracting a customer to a publisher’s app. If a publisher brings in a new or existing customer, Apple gets nothing. Netflix shares fell almost 3 percent after Apple’s announcement.

Under Apple’s new plan, application publishers such as The New York Times, video service Netflix or music service Rhapsody that already sell subscriptions on their own would be required to offer those same terms to anyone signing up through Apple.

The problem for services like Netflix is that Apple can now take a huge chunk out of their revenue. If a customer wants to sign up for Netflix, they can set up a subscription on the Netflix website and Netflix gets paid. If that same customer decides to sign up via the Netflix app, Apple takes a third of that revenue.

“Our philosophy is simple,” Steve Jobs wrote in a statement. “When Apple brings a new subscriber to the app, Apple earns a 30 percent share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.

“All we require,” Jobs continued, “is that if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app.”

This announcement comes just weeks Apple announced The Daily, the first subscription product available via iTunes.

via Yahoo! News, CNET

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