How Apple’s push to subscriptions could save the App Store and cost you money

You may think you own that application you just downloaded, but chances are good you merely license it. If Apple has anything to say about it, that fact may soon have a much bigger impact on your wallet.

Recently, Business Insider reported on a “secret” meeting last year between Apple and some iOS app developers. Apple apparently encouraged the developers to switch from one-time, standalone purchases to a subscription-based model.

The move is reportedly intended to give developers a more stable source of recurring revenue. It would also, of course, provide that recurring revenue to Apple as well, which takes a 30 percent cut on the first year of subscriptions, and 15 percent thereafter.

Services have become a big part of Apple’s revenue stream. In the company’s last earnings call, it reported a record quarter for its services business, which includes the App Store and now accounts for almost 18 percent of the company’s overall income—far more than sales of its Macintosh computers.

A move to a subscription model has been gaining popularity among some developers for several years now, with many moving away from the traditional model of one-time pricing with paid upgrades. Some say the stabilty of revenue from subscriptions keep them afloat and counters the downward pricing pressure and “freemium” models that have been pervasive in the App Store. They also say it gives them the incentive to maintain and keep improving their apps.

Nice app you have there. Be a shame if anything happened to it

Critics point to the fact that subscriptions can increase the cost to customers for apps, sometimes dramatically so. They counter that without the need to improve their apps to attract new users and convice existing users to upgrade, developers will instead get complacent, coasting on revenue they don’t have to earn and relying on “good enough” apps with no incentive to make them better. A user can be held hostage when an app they paid for can simply stop working for no other reason than they stopped paying a fee to continue to use it.

No one argues that being a developer is easy or a surefire way to get rich. Getting discovered in the App Store has been an increasingly difficult proposition, even for quality apps, and the limits that Apple has long put on developers that prohibited them from offering free trial periods or upgrade pricing haven’t helped. The App Store is littered with abandoned apps that both illustrate the difficulty of running a viable business selling them and make it harder for other apps to be found in the clutter.

Several popular Mac and iOS developers have made the move to a subscription model, and not always to the delight of their customers. Adobe and Microsoft have both moved their application suites to a subscription model, and several smaller developers have made the switch as well.