A Blog by Jonathan Low


Jun 12, 2016

Will Charging Subscriptions For Apple's Store Apps Sustain Them - Or Kill Them?

Once people have become accustomed to getting something for free, they are going to be reluctant to pay. And most are really not all that sympathetic to the notion that app developers need to make a living. Not with images of techies raking in millions etched in their minds.

The airlines have made this work, but an underlying theme was that the existence air travel as an industry - and as a public good - was threatened. With oil prices down and public resentment rising, legislative changes may be mandated. In tech, the imposition of fees may lead to another classic response: disruption from a model less expensive to users. JL

Jason Snell reports in Macworld:

How many people will be willing to pay a few hundred dollars a year for the apps that mean the most to them? Allowing all apps to charge subscriptions–and reap a larger portion of the proceeds after the first year–will inspire a shift to a subscription model. This is the difference between empowered consumers who own products and make decisions about whether they want to pay more for the next versions, and renters who must keep paying to have access.
The arrival of the App Store in 2008 didn’t suddenly make developers concerned about making money from software. It has been a problematic business from the start. Software piracy has been with us since the early days of the personal computer. But even for those committed to doing the right thing and paying for the software they use, it’s often been a frustrating experience.
With the changes to the App Store announced by Apple on Wednesday, the way we pay for software on iOS is about to change. The frustration will probably continue indefinitely, however.

Like buying a table

Software is a product that feels non-consumable to the people who buy it. When I buy a table or a screwdriver or a bicycle, I might not expect it to last forever, but I can expect that I can probably use it for a very long time before it wears out or I decide to get rid of it. Software really does feel like that, in a way: You pay $200 for Logic Pro X and you feel like you own that app. (It really felt that way back when you’d get a big cardboard box and a bunch of disks with your purchase.)
But software doesn’t wear out through use. Instead, it becomes incompatible as it ages. New operating systems and hardware and internet services arrive. True, you don’t have to upgrade if you don’t want to–George R.R. Martin famously still writes everything in the command-line word processor WordStar–but most of us end up falling for the allure of the new OS update with some snazzy new feature, or we buy a shiny new piece of hardware.
Keeping an app compatible with new hardware and software is not an easy job. It requires continued work on the part of the software developer. And in addition, any app developer worth their salt is always pushing, adding new features that didn’t make it into the last version, trying to make their software better and keep up with the competition. Developers need to eat and pay the rent, too. After a while, they’re bound to ask their users for more money.
This seems reasonable. In the pre-App Store world, the most common approach was for developers to release major new versions and require users to upgrade for a fee, usually less than the cost of buying a brand-new copy. The App Store has never provided a way for developers to offer paid upgrades, so many developers have responded by just releasing entirely new versions of their apps every few years, requiring a new payment. (They are usually insulted and threatened for doing this.)
photoshop mix
My Creative Cloud Photography Plan subscription includes regularly updated desktop versions of Photoshop and Lightroom—and Adobe keeps tossing in extra mobile apps, like Photoshop Mix, shown here. 
But even before the App Store, some companies were experimenting with a different approach: software subscriptions. With the announcement Wednesday, Apple is bringing this approach to the App Store, too. It’s an approach with a whole lot going for it–but some users absolutely hate it, for understandable reasons.
With a software subscription, you pay a regular price, and as long as you keep paying, you get to keep using the software. New updates come every so often–sometimes in smaller bursts a few times a year, instead of all at once every year or two. The subscription prices are usually quite a bit less than the old cost of buying the software outright, though when you consider how long you could use an old version of software without paying for an upgrade, the math gets a bit more tricky.
I pay Adobe $100 a year for Photoshop and Lightroom. I think that’s a pretty good deal–I’ve been using Photoshop for a couple of decades, and I use it many times a week. I’m also paying $100 for Office 365, including all the Microsoft Office apps and a bunch of cloud storage. In the old days, I might have blanched at the high prices of these products–but if I had paid the price, I would have been able to use the software unencumbered for as long as it would run.
And sometimes it will run a long time. I still have my old copy of Adobe Creative Suite 5, which still runs on my iMac running El Capitan. It doesn’t run reliably–when I quit apps, they tend to crash–and it doesn’t support my iMac’s Retina resolution. But the three times a year I need to open Illustrator, it’ll open.

Stepping off the carousel

This, to me, seems to be the problem people have with the idea of software subscriptions. While the old method of buying software was arguably a subscription–every so often you would have to pay to get a new version–the power of choosing to pay was in the hands of the customer. If an upgrade wasn’t compelling, or if the current version of the software was still working fine and you weren’t planning on upgrading your stuff anytime soon, you could step off of the carousel and keep using “your” software without paying a cent.
With subscription software, you can never leave the carousel. If Adobe or Microsoft’s road map for their product upgrades doesn’t interest you, it doesn’t really matter–you’re still going to pay them to use their tools.
Psychologically, this is the difference between empowered consumers who own products and get to make informed decisions about whether they want to pay more for the next versions, and renters who must keep paying to have access to the stuff that’s important to them. Who would want to give up that power?
A lot of that power is illusory, of course. Time marches on. There’s probably someone out there writing novels on an old Mac IIci running Word 5.1a and System 7, but most of us buy new hardware and upgrade our software because we want access to the latest and greatest new features. You can choose to not upgrade for a while, but eventually you will need to pay, even if it’s just for compatibility reasons.
So what does this all mean for the App Store? Allowing all apps to charge subscriptions–and reap a larger portion of the proceeds after the first year–will probably inspire a whole class of apps to shift to a subscription model. You’ll be able to pay a few dollars a month or year for an app and then rest easy in the knowledge that it’ll be updated and the developer will be paid for their effort. App developers will be able to offer trials, too, so you can see if it’s an app you want to commit too.
textexpander 6 mac icon
Smile got so much backlash about TextExpander's switch to subscriptions that it revisited pricing for existing users. 
This is great news for developers who are trying to make a living writing software on the App Store. The flip side of developers making a living, though, is that users will be asked to pay–and keep paying–for software they rely on. It will be interesting to see what apps are worth subscribing to, and which ones simply aren’t worth the trouble.
My guess is that some of the apps I use regularly will easily pass the test, while others will prompt me to search for cheaper or free replacements. Developers who charge subscriptions for their apps will probably lose some customers–but the ones they keep will be in a long-term, committed relationship.
It’s too early to tell how this change will affect the App Store in general. How many people will be willing to pay a few hundred dollars a year for the apps that mean the most to them? For the sake of developers, I hope it’s a lot–but I suspect that the same users who insult developers when they charge for an upgrade will refuse to pay for an app subscription. Maybe that’s a serious problem–or maybe it’s good riddance to a bunch of freeloaders. It all depends on your perspective.


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