Company X comes out with a subscription service and provides an API.

Company Y develops an iPhone app using said API. Company Y doesn't charge anything after the price of the app.

Sounds like it's strictly following the rules, though if that app were to be accepted in the appstore, then companies could just publish an API and pay some developer to develop and release the app on their own. Looks like a loop hole doesn't it?

Key word: "yet."

Honestly, I don't think blocking paying customers from installing applications and using root permissions effectively is a sound business strategy for the desktop / laptop / OS X market. A macbook pro is fundamentally different from an iphone.

Many of the issues they also explain as problems can be resolved in their case. For instance while Apple will have the registration data, they could set up a way for customers to allow access to other devices.

What we're more likely seeing that they have 3 reviews since their version 2 release in December, is that TinyGrab just is not that popular on the iPhone. They could make the changes, but it wouldn't be worth the trouble. So, whether intentionally or not, they've made a blog press release that will get a good deal of attention and probably be more valuable to them then doing nothing and staying on the app store as is.

Are you saying their analysis is wrong and the new terms of the Apple store will permit their app?

This is an honest question, I totally don't understand Apple's development and distribution model.

What I mean by not the real deal though is that TinyGrab doesn't appear to have much of a presence on iOS devices. Apple could have possibly said, "We need 200 hours of additional programming work from you or we'll reject your app in the future" and they may have bailed. One indicator of this is their complaints of the $99 developer fee. I think most successful companies would welcome a small yearly fee simply because it would reduce the number of low quality competing apps entering their market place. A small yearly fee helps ensure to some degree that the app developer has some serious intentions to create something meaningful.

A lot of the complaining is fully justified. There are other cases like Rhapsody where the company has over 700k subscribers in the US and the CEO has admitted most of these users listen to Rhapsody through an iOS device. That has real implications for them as a subscriber service with small margins. In TinyGrab's case though, they could work around the terms of service and still provide access to their user base. They might have to take a large cut in their subscription fee, or increase their prices, but for a basic screenshot/share service they have options.

The fact they are not pursuing those options, or at least publicly saying they won't be, indicates to me they either have a smart PR team that realized the opportunity here or they just are not successful enough on iOS to justify continuing anyways.

And what if they are small? How many companies had a large user-base from the beginning? Also, while small companies may not be of much interest to the readers of HN, they make up a decent chunk of the world's economy.

Honestly, it feels like they are trying to add to the pressure on Apple to drop this ridiculous cash-grab. If in the process they get some free publicity, all the better for them.

In terms of them being small, thats fine too. I'm just stating things as I see it. The company is not stopping production because they can't come up with a solution, its that it likely is not worth their time because they are not all that successful on iOS.

In terms of pressure, this really does nothing to Apple. Rhapsody, Netflix, and Kindle are much bigger deals. It will be the big service providers that push the pressure on Apple.

A lot of tech people seem to be in love with the iPhone and the press made it seem like the only smartphone in town for a few years there. But realistically I don't think it's ever had more than a minority market share of high end phones.

Apple has historically been very comfortable with a minority share of the market, but I doubt their stockholders will have infinite patience to sit and watch Android eat up its market share _and_ developer mindshare _and_ all the top-brand content provider deals.

For apps where it genuinely makes sense to have an in-app subscription option, developers will most likely add it in anyway. The increased conversion rate will make it worth it in many cases.

Not good enough? Start using app store exposure as a stick & carrot.

Don't want people to load an app and immediately be told to go sign up online? Ban apps that rely on subscriptions.

This actually sounds very likely if Apple kicks those four companies out of the app store, as it seems likely they will.

iOS users will find an alternative.

iOS + mac users will leave Tinygrab for a system that still works in iOS

The user loses 5 minutes of sign up time. Tinygrab loses income.

Shame there's no way of sending all users to the Tinygrab site for sign up as that'd negate the 30%. but then apple would moan it's a feature that should be available in the app and you're back to square 1

Well, Apple's explicitly disallowed this in their rules. You have to provide in-app subscription, and you can't send users to the website to sign up regardless.

I thought that the version of in-app purchases that's dependent on a back-end server hasn't yet been hacked.

Not that I put it past Apple to reject it anyway. Just wondering how far that line could be pushed.

11.14 -- Apps that link to external mechanisms for purchasing content to be used in the app, such as a “buy" button that goes to a web site to purchase a digital book, will be rejected

I'd say it's safe to assume they'd reject you for even asking users to sign up through Safari, instead.

We love Apple, we really do. Let’s face it, without them TinyGrab just wouldn’t exist and none of us would be reading this right now; for this we’re incredibly indebted to them. The homebrew and independent app development community for OS X is wonderful and vibrant. It’s profitable and turns out amazingly good apps. Until iOS was on the scene I think it’s safe to say that the OS X development community was top dog. OS X users are also the most supportive when it comes to independent apps, unlike their Windows counterparts, they’re actually used to paying for software that doesn’t come in a box.

Right now we’re in a spot of bother. TinyGrab’s the strongest we’ve ever been. We have an incredibly tight and talented team and we’re getting ready to kick ass again, but we’ve just hit a major setback in the form of Apple’s new guidelines for subscriptions in iOS and OS X apps. As many of you know TinyGrab is actually a free app, our revenue model comes from selling premium accounts through our site. TinyGrab was one of the first apps around where you had to have an account in order to use the software. We prefer this method of buying software compared to pesky license keys for a couple of reasons. First of all it reduces piracy, you don’t get many people sharing their login details to an online service. The second reason being that you can take your TinyGrab account with you anywhere. Install the app on as many machines as you want, on as many platforms, all without additional cost. It’s fair on our users and also allows us to introduce a nifty little web based account system.

Apple would now like a slice of our pie, which is fair enough. We’re more than willing to give Apple a cut of the sales that they assist in, but we can’t. They simply won’t let us. Never mind the fact that 30% is a ridiculous amount to ask us to fork over, considering that we already pay $99 a year for the privilege to develop apps for the Mac App Store and a further $99 a year to develop apps for the iOS store. Never mind that Apple also get a cut of any revenue that we generate from selling our apps through their stores, they now want in on our account and subscription service. However by doing this they’ve just prevented and locked us out of ever being able to introduce the TinyGrab app into the Mac App Store, as well as not being able to ship updates to the TinyGrab iPhone app. Here’s why…

Remember that account system we sell via TinyGrab.com? Well if you’re a paying customer it actually unlocks features in the app which are closed off to free users. These are features like FTP uploads. Infringement Number 1: “Apps that unlock or enable additional features or functionality with mechanisms other than the App Store, except as approved in section 11.13, will be rejected” We currently sell our accounts from TinyGrab.com through PayPal. We can’t actually use Apple’s In App Purchasing system because they won’t pass on a user’s data to us, they also prevent you from purchasing goods that exist outside of the app and the app store. So, for example, it prevents you from actually buying a TinyGrab account because the account is a real world purchase and doesn’t lay within the jurisdiction of Apple. Infringement Numbers 2 & 3. “Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected”

“Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected” The move to TinyGrab 2.0 will see accounts that expire after a limited time if you don’t renew your subscription. Infringement Number 4.

“Apps containing “rental” content or services that expire after a limited time will be rejected” And the final infringements are, of course, about the IAP revenue split.

“Apps that link to external mechanisms for purchasing content to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected”

“Apps offering subscriptions must do so using IAP, Apple will share the same 70/30 revenue split with developers for these purchases, as set forth in the Developer Program License Agreement.”

You might think that these are simple issues to fix, but we can’t actually fix them all. We can’t provide a free TinyGrab version in the app store and then sell a version on our site, because you still require an account to login. Apple wants a slice of that pie and we can’t give it to them; in other words they’ve locked us out.

We really want to be part of the app revolution on OS X and iOS but it looks as though that may no longer be able to happen, until Apple fix these issues and welcome us in again. I’m sad to say that as of today we can no longer provide development support to iOS, officially, through the app store. Until Apple loosen up on their restrictions we’re ceasing all active development on TinyGrab for iPhone. Please don’t see this as a punishment, we hate to have to do this to our users, but we’ve been fenced out. Today I’m also having to announce that TinyGrab also won’t be seen in the Mac App Store. Unfortunately we can’t be a part of this wonderful purchasing platform for the same reasons that we can no longer officially support TinyGrab for iPhone.

Luckily for TinyGrab for Mac users we still have TinyGrab.com and Apple haven’t, yet, prevented anyone from downloading apps from the world wide web and installing them on their Macs without the Mac App Store. So we aren’t going anywhere just yet. In fact we’re even trying to get a stable version of TinyGrab 2.0 for Mac out this week. Apple’s new stance on subscriptions and accounts in applications is incredibly disappointing. At the moment we’re working incredibly closely with Intel to get TinyGrab for Windows onto their AppUp store. Intel have been incredibly friendly and helpful, they currently don’t have a subscription model in place but still allow us to have our app on their store and sell TinyGrab accounts through our own site. When they introduce a subscription service we’ll more than happily switch our payment system over in order to give Intel their fair share of any sales we make. I’m incredibly happy to be working with a company that is actively encouraging and working closely with developers in order to get it right. Apple’s new greedy model doesn’t just affect the developers of applications, it also has a horrible adverse effect on end users.

We love all of our supporters and all of our users. Thank you for continuing to use TinyGrab and for being the best community we could ever hope for. We promise to keep developing the best simple and social screenshot sharing service for Mac, Windows and whatever new platforms tickle our fancy.

Chris Leydon

TinyGrab Project Manager.

From what I read it sounds like you are only supposed to do that when you allow people to actually register / sign up for the service from the iOS app.

If you already have an account and you simply login to use the iOS app as a 'companion' app, there is no Apple greed involved.

No?

A lot of companies just can't afford to have a group of users who cost the same as everyone else but only bring in 70% as much revenue.

True, but it now seems like those who can are going to be the companies who succeed on iOS. It's sad to say it, but this is another situation where companies will need to adapt or die.

Frankly, the latter is a hell of a lot more likely looking from where I'm sitting.

IMHO, they could have pulled this off a year or 2 ago because developers had nowhere else credible to turn. Now, they do.

That's why I think this strategy is suicide for Apple. They can reach more users on Android without having to pay a 30% toll.

To make what I'm saying more concrete: For a physical object, it's not uncommon for the cost of the item to be 90% of its price. So the seller makes 10%, and a "reasonable" 3% commission on sales price = 30% of the profit.

Whereas for a totally virtual service there's a large fixed cost to set it up (programming, servers, etc) but relatively little "per user" cost. Cost per unit approaches zero, marginal profit approaches 100% of price, and 30% of price is approximately 30% of the marginal profit from selling an extra unit.

This makes a lot of assumptions about the business model of developers. For a BaseCamp-like product, it is mostly true, support costs notwithstanding. But a video- or music-streaming service that pays out to content providers on a per-item basis has much more in common with a brick-and-mortar retailer when it comes to profit margins.

It's also not entirely impossible that Apple realizes that the music/book/video streaming services are one of the few virtual products with material per-user costs, and adding this kind of surcharge will drive more users to their iTunes services.

You could do the same here, since it doesn't say "at the same price or less including all fees".

But then again Apple would properly just alter the rules.

What Apple is doing could easily be compared to a tax. I don't see how anyone could expect to not see a significant number of apps and developers leaving the app store when presented with a 30% loss of revenue from the customers it generates.

If you make 30% less per customer selling on the iPhone, but you sell more than 50% more copies versus whatever else you'd do with that effort (Android, W7, RIM), it doesn't make sense to leave from a revenue standpoint. Android is great but I don't get the sense that many paid apps are doing volume there comparable to the Apple store.

If a company is operating on a 30% profit margin, then apple is not taking away 30% of what that company is making off of that user, they are taking away 100% of what that company is making off of that user. At that point, the company is better off moving their developer resources towards creating additional functionality for other platforms to up sell current customers on.

You already have great services jumping ship like pandora and last.fm. I use pandora everyday, and if I can't get pandora on an iPhone, that is a purchase killer for me. These content providers are typically operating on a 10% profit margin, so I think they would actually lose money by servicing iphone users.

I do think development for the iPhone will continue for many of these companies for the time being, since as I understand it you can still install apps on the iPhone from outside the app store. But if this changes, I think many of them will cease to develop for it, since it would be economic suicide.

Please forgive me if I misused any eco terms above. After all Jim, I'm a programmer not an economist!

But they're allowed to set the rules for playing in their app store, just like schools are allowed to set rules about wearing your uniform correctly all the way home, parents can ground their children for complaining about their shitty parenting at another person's home, a company can make a contract which allows them to fire you if you get drunk and disorderly in public, and any other situation where an arrogant entity assumes it's own interests are FAR in advance of yours AND has the ability to take rights from you.

EDIT 201102221305 GMT+10 I should learn never to comment when anyone is discussing Apple. It's too tempting for people to downvote when their pet company is criticized, even if you're answering a question at the same time.

They can set whatever rules they like, but can they enforce them? I don't know if the school can enforce the uniform rule, though I imagine it would depend on whether it is a private or a public school.

Apple is attempting to leverage its position in one market (hardware) to coerce another market (mobile applications). Under the historical antitrust analysis, this would have been a per se antitrust violation to even attempt this.

Now, however, antitrust laws are no longer enforce. During the Bush administration,the DOJ's antitrust department was effectively gutted, and antitrust was moved close to the bottom of the DOJ's list of priorities.

Obama hasn't changed the DOJ's antitrust priorities since he took office, so any enforcement of antitrust laws will have to come from the states. Basically, that means New York's Attorney General, since California's not going to kill one of its tax cash cows.

Many App developers are being forced to change their practices, and find the new rules too burdensome to continue.

Which is the best solution to this problem. Please let this be the first use of the remote kill functionality. I have an iPad. While I would be a little sad to see big players like Netflix and Amazon pull their apps, I will be delighted with the uproar when the general public finds out about this. Unless the companies cave to Apple, this will make the Objective-C debacle look like small change.

Steve Jobs Says: February 21st, 2011 at 7:53 pm Hey Guys Work your numbers a little bit and then tell me what you think you are actually losing out on. 30% or 70% towards your bottom-line.

Seems there's a bit of a pattern in these threads of downvoting based on disagreement with the ESP-perceived viewpoint of the poster. Not cool.

(Disclaimer: I upvoted your original post to 1, while downvoting the post in which you complained about being downvoted to 0, as complaining about being downvoted is explicitly against the guidelines - and you could have edited your original post, instead of responding to yourself.)