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Tuesday, February 15, 2011, 05:35 am PT (08:35 am ET)

Apple unveils subscriptions for iOS App Store, bans links to out-of-app purchases

Apple on Tuesday unveiled its new App Store subscription service, allowing publishers of content-based applications for iOS devices — like newspapers, magazines, video and music — to offer recurring billing, but preventing them from including links to external websites to purchase content or subscriptions.

The digital billing service is the same one Apple recently launched with News Corp.'s The Daily earlier this month. At the time, Apple's iTunes chief Eddy Cue said that Apple would offer more details on its subscription service in the near future — a promise delivered on Tuesday.

Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly).

With one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription.

Apple processes all payments through the new recurring billing option, keeping the same 30 percent share that it has for other In-App Purchases.

"Our philosophy is simple — 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," Apple Chief Executive Steve Jobs said. "All we require 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.

"We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."

Jobs' comments included in Tuesday's announcement are likely intended to calm some publishers who have indicated they feel "betrayed" by Apple's iOS application subscription service. Apple recently began enforcing a rule that applications offer the ability to purchase additional content from within that app, rather than solely through an external Web-based storefront.

Apple also revealed that publishers who use its subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their websites, or can choose to provide free access to existing subscribers.

Since Apple is not involved in those transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app.

However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a website, for example) which allow the customer to purchase content or subscriptions outside of the app.

Protecting customer privacy is a key feature of all App Store transactions, the company said. Customers purchasing a subscription through the App Store will be given the option of providing the publisher with their name, email address and zip code when they subscribe.

The use of personal information will be governed by the publisher’s privacy policy rather than Apple's. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher’s privacy policy rather than Apple's.