The subscription model is today sustaining a number of businesses, including artists, creators, news publishers, game developers, entertainment providers and more. Now, top publishing platform WordPress.com is making it easier for any creator or web publisher to add a subscription feature to their own website, so they can begin to generate repeat contributions from their supporters, readers, fans or customers.
The feature is available to any of the millions of WordPress .com sites on a paid plan, as well as the millions of self-hosted WordPress sites using Jetpack, the company says. It’s also fairly flexible in nature.
Once enabled, WordPress.com website owners could charge for weekly newsletters, accept monthly donations, sell yearly access to exclusive content or charge for anything else where they want to be able to bill their supporters on a set schedule.
WordPress.com partnered with internet payment processor Stripe on the new feature, which means WordPress.com blog publishers will also need to set up a Stripe account of their own before using Recurring Payments. Then, they’ll head to the “Earn” page on WordPress.com and click on “Connect Stripe to Get Started” to be walked through the setup process.
Users are able to create as many different payment plans as they like — including those that support different currencies, payment frequencies and names — which enables them to offer different tiers or types of subscriptions to their customers, readers or fans.
They’ll also be able to put a Recurring Payments button on their website.
Subscribers, meanwhile, can cancel their subscriptions at any time from their WordPress.com account.
Being able to quickly and easily add subscriptions to any website could convince some creators to move their subscription plans off larger platforms, like Patreon, for example, in order to save on fees and revenue share. However, they would miss out on the other platform resources by doing so. Instead, many may choose to simply add WordPress.com as another channel where they collect subscription revenue.
The feature isn’t necessarily only for creators — it also could be put to use by clubs and organizations that have to collect their own recurring membership fees and dues or anyone else who needs to be able to collect money easily on a regular basis. WordPress.com notes that some people even collect rent through recurring payments, for example.
The launch could have a major impact on the prevalence of subscriptions across the web, given the size of WordPress.com’s footprint. The company today touts that more than 409 million people view 20 billion pages on its platform every month, and publishers produce around 70 million new posts per month.
We’ve seen our fair share of shocking headlines recently: tenuous IPOs, the “retailpocalypse” and a fickle market have reset the way we size up subscription businesses. Recurring revenue models have their pitfalls, and 2019 has certainly taught the industry a few lessons.
Next year, retention is set to be a top priority for companies looking to keep customers engaged and drive growth. From niche products to personalization, how companies deliver on and measure the success of their customer experience will separate successful subscription businesses from the next unflattering news story.
These seven trends will emerge to shape the way companies delight and retain customers in 2020.
We’ve all seen articles detailing the financial fall of many brick-and-mortar stores. The retail crunch predicted years ago is coming to fruition as we’ve watched household names like Sears, Toys R Us and Barney’s consider bankruptcy or go up for sale.
Consumers aren’t letting up in their preference for convenience; they want easier ways to buy, and that means stores must develop better online experiences and offer subscription options or risk losing revenue. We’ll see big brands like Nike and Ikea continue to experiment and expand innovative subscription offerings.
For struggling brick-and-mortar businesses, subscription services could very well be a lifeline to retain a dwindling customer base. The shifting retail industry presents an opportunity for traditional companies to fully embrace recurring revenue models next year — smart organizations will do so.
We’ve experienced a rapid period of subscription adoption, with more options launching everyday. And that’s led us to a point of max fragmentation where companies and consumers alike are subscribed to so many niche products and services, they can no longer manage or afford new offerings.
Because the proliferation of subscriptions are so vast, specialized products and services will need to do prove their worth or risk being replaced. B2B (project management, martech, ecommerce) and B2C (clothing, streaming, meal delivery) companies alike must offer far better experiences in 2020 than in years past. For B2B organizations, products must be integrated with larger systems to justify their existence. One-off point solutions that silo information and create broken customer experiences will no longer be accepted. And for B2C companies, pricing will have to be spot on as more competition vies for the budgets of consumers who haven’t budgeted for increased spending.
Ultimately, not every company will be able to compete in the age of subscription fatigue, so we’ll see more consolidation, partnerships and mergers occur in the coming year.
It’s impossible to ignore the IPO press around WeWork, Blue Apron, Uber, Peloton and others. If 2020’s tech and consumer unicorns have poor unit economics and aren’t turning a profit, they need to prepare to be the next ugly headline. Marketers can be a force for change by focusing on the long-term retention of the customers they acquire. And I believe they’ll do so happily. Why?
Cord-cutting basketball fans now have a new option for their non-stop hoops coverage. NBA TV is officially launching a direct-to-consumer subscription service today, making it the first linear TV sports league network to go over the top. The service, which will be available both on the web at NBA.com and through the NBA app, will include more than 100 exclusive, out-of-market live games, original programming and on-demand video for $6.99 per month.
You can also pay the annual price of $59.99 for a small discount.
The launch won’t impact customers with pay-TV subscriptions, as they’ll still be able to watch NBA TV by authenticating with their TV provider.
NBA Digital, which is managed jointly by the NBA and Turner Sports, recently announced a new franchise called “Center Court” where it will experiment with viewing enhancements, including new camera angles, live on-screen group chats with celeb influencers, in-depth analytics and statistical graphics, and more.
These games (a list is here) will also be featured on NBA TV through the main Center Court broadcast as well as on the web and mobile, where fans can find the enhanced “frontcourt” and “backcourt” streams. The “frontcourt” streams will incorporate the alternative audio options with rotating groups of NBA influencers, while the “backcourt” streams will feature the Second Spectrum technology, including the statistical overlays.
Center Court coverage will be available through the 2019-2020 season.
In addition to the enhanced games, NBA TV promises more than 100 nationally televised out-of-market games, plus other live games from the WNBA, NBA G League and NBA Summer League. The service also has original programming that includes studio shows and reporting, magazine-style shows like “Beyond the Point,” talent franchises like “Shaqtin’ a Fool,” a pre-game show, “The Warm Up” and nightly shows like “NBA Crunchtime” and “NBA Game Time.”
New shows that focus on social conversations, legends and current players include “The List,” “#Handles,” “Say What,” “High Tops” and “Basketball Stories.” And the service includes 24/7 access to classic games, the NBA Finals from 2000-2019 and other archival content.
NBA TV subscribers also will be able to buy an NBA League Pass, the premium subscription to all NBA games, from the same NBA app and website where they can buy or add on NBA TV, starting today.
Once subscribed, NBA TV can be watched via the web, mobile or through connected TV devices and game consoles.
“Innovation has always been at the core of our NBA Digital partnership and the launch of this direct to consumer product, paired with new content initiatives, will provide NBA fans even greater opportunities to engage with NBA TV and our collective portfolio of brands,” said Tina Shah, executive vice president and general manager, Turner Sports, in a statement. “As sports consumption continues to evolve, we will continue to develop new opportunities for fans to access and engage with premium NBA content.”
Access to live sports is one of the areas that stop fans from fully cutting the cord with traditional pay TV. But a variety of resources have cropped up over the years to make that transition easier, including those dedicated to particular sports — like the MLB’s over-the-top offering MLB.TV — or live-streamed games across social media and elsewhere, as with the NFL’s games on Amazon Prime Video. There are also entire services, like fuboTV that grew out of sports’ fans needs for a more comprehensive live sports offering.
But even with new ways to watch, blackout restrictions often keep fans tied to pay TV, perhaps using a friend’s account to log in and authenticate…or even turning to VPNs. NBA TV won’t solve this problem, either, but it can help fans view more games and NBA content.
It’s not quite an “Apple Prime” subscription, but it’s compelling. Apple on Wednesday introduced a new program that will allow Apple Card users to finance their iPhone purchases for 24 months, without paying interest. The program aims to appeal to consumers who frequently upgrade their iPhone to the latest model, but often turn to their carrier to finance those purchases.
With the Goldman Sachs Apple Card, those iPhone users will have another option — and one without the associated interest and fees of a traditional credit card purchase, Apple says. In addition, the Apple Card offers 3% back on purchases from Apple, which further sweetens the deal.
The program helps to lay the groundwork for what some believe may eventually become a larger subscription product for Apple, or a so-called “Apple Prime” — a name that references the Amazon Prime membership program that includes a variety of perks alongside its fast, free shipping.
An Apple hardware subscription could see users instead paying for the privilege of using the latest Apple hardware, while also bundling in other services, like AppleCare, similar to its existing iPhone Upgrade Program today, which similarly offers 0% APR but can charge fees. But a true “Apple Prime” would include other Apple subscriptions under the same roof, like iCloud, Apple Music, Apple TV+, Apple News+ and/or Apple Arcade, in some sort of bundle deal.
Already, Apple has begun to experiment with subscription bundles. This week, for example, it announced a bundle for students that includes Apple Music and Apple TV+ for the same price as a student Apple Music subscription alone ($5/mo). And in a sense, Apple is already bundling its new Apple TV+ streaming service with its hardware, as it’s giving the service away for free with a new device purchase in its first year.
Apple has been steadily moving toward a more robust iPhone subscription program for some time.
In recent years, it has promoted iPhone trade-ins as something of a no-brainer for bringing down the cost of a new iPhone purchase. At the company’s iPhone 11 event in September, for example, Apple put up a slide that emphasized the new iPhone 11’s low price, when viewed under this model. Instead of a starting price of $699, the iPhone 11 could be as little as $399 — or $17 per month, Apple said — when you traded in your iPhone 8. The iPhone 11 Pro was $25 per month with an X trade-in, and the Pro Max would be $29 per month with an X trade-in, Apple also said.
These sorts of promotions seem to be working, as more Apple customers are turning to trade-ins than in the past.
“We…continue to see great results from our trade-in program with more than five times the iPhone trade-in volume we had a year ago,” noted Apple CFO Luca Maestri on Apple’s earnings call.
The larger idea is to encourage Apple’s customer base to viewing the iPhone not as a big, expensive one-time purchase, but as just another monthly bill you have to pay. Tack on a few extras, like a warranty and some media and entertainment options, and Apple has the meat for a real iPhone-led subscription — its very own “Apple Prime,” so to speak. And thanks to the Goldman Sachs Apple Card, it has a way to incentive users to buy from Apple directly.
We know the world of startup funding is competitive. In fact, I’m speaking at TechCrunch Disrupt on this very topic alongside pre-seed investor Charles Hudson of Precursor Ventures, early-stage investor Annie Kadavy of Redpoint Ventures. I’ve also written extensively for TechCrunch and ExtraCrunch about how founders can optimize their pitch decks to make the most of the 3 minutes and 44 seconds the average VC will spend looking at their deck. We’ve also analyzed the best time of year founders can fundraise to get the most attention from potential investors.
But what can VCs do to make sure they’re getting the biggest piece of the most promising looking companies? We dug into how founders choose their lead investor to gain some insight into how a VC can become more competitive in a rapidly growing market.
The data included in this research came from companies that explicitly opted in to participate by responding to an automated email sent to them. We are incredibly appreciative to these founders for making this research possible. You can read more about our startup opt-in process and other aspects of our methodology here.
In this article, I’ll talk about how founders choose their VCs, both in oversubscribed rounds and non-oversubscribed rounds, and how investors can use that information to beat out their competitors.
Getting a startup funded is a massive hurdle. The good news is there’s actually far more money available now than just a few years ago. In fact, in the first half of 2019 there was $20.6 billion in new capital introduced into the startup market.
Larger funds typically known for investing in later stages have introduced seed funds so they can invest with promising businesses earlier. Kleiner Perkins announced a $600 million early-stage fund in January, GGV raised a second $460 million “Discovery Fund” last year, even Sequoia Capital operates a scout program with a $180 million fund.
This means smaller funds or those who only invest in earlier rounds might get overlooked when founders are looking for investors.
In addition to having to compete for the best deals, VCs don’t get it right every time. For every Uber, there are hundreds of Juiceros. The reason they only spend a few minutes looking at a pitch deck is because they’re constantly looking at pitches in hopes they’ll come across another unicorn.
But while it seems like the investors are holding all the cards, if founders optimize their pitch deck and book their meetings in a short window, they can actually create a sense of urgency for the VCs. We’ve seen this recently with the amount of founders reporting oversubscribed rounds.
When looking at how founders chose their lead investors, we discovered that there was a massive difference between those that raised oversubscribed rounds and those that didn’t.
Being the first to move means a lot, until it doesn’t
What was the number one factor in founders deciding on who to choose as their lead investor? We found that nearly 48% of founders chose their lead investor because they were the first one to make the offer.
Anecdotally this makes sense. When DocSend was raising we received a lot of “maybes” during our first few meetings. However, once we had a term sheet most of those “maybes” flipped to a firm “yes.” In fact, many investors that had originally promised a $25k or $50k investment if we found other backers were suddenly asking for $300k or $500k.
We had so many investors interested that our round was oversubscribed and we had to make some choices about who we wanted as an investor. That could have been avoided if any of those VCs had simply acted first.
But when you look at the data a different way, we found that moving first was significantly more important in oversubscribed rounds than those that weren’t. And the more oversubscribed they were, the more valuable moving first becomes.
For founders whose rounds were more than 20 percent oversubscribed, 60 percent of them chose their VC because they came in first with a term sheet. But that dropped to 50 percent for founders that were only slightly oversubscribed and all the way to 38 percent for those founders that weren’t oversubscribed at all.
While we would have thought name-brand VCs might move first, and that top tier interest may cause an oversubscribed round, we found that not to be the case. In both oversubscribed and non-oversubscribed rounds 28 percent of founders reported that a name brand factored into their decision. And for those who chose a name brand investor, only 33 percent of those founders reported that their lead VC moved first.
The more oversubscribed a round is, the more likely it is that some VCs aren’t going to make the cut. To avoid being the firm that didn’t get the deal it’s best to move quickly when you see a company you like.
Another surprising thing that came up in our research was the amount of time founders spent raising and how that affected their decision making. While we assumed oversubscribed rounds happened significantly faster than the average of 11-15 weeks, we found that oversubscribed rounds only came in slightly under, at 8.6 weeks. However, there was a lot of variability in that number.
We saw some oversubscribed rounds close in as little as 3 weeks and some take as long as 20. So there’s no way to tell whether a round will be oversubscribed based on the time spent fundraising. This means that even if you meet a founder who’s been raising for 10 weeks, it’s still smart to move quickly if you want to be the lead investor.
We would have also thought longer rounds would have benefited the first term sheet more, but there was virtually no difference in the impact of the first acting VC when looking at time. When looking at founders that spent less than 12 weeks raising and those that spent more than 12 weeks, there was virtually no difference in the percent that chose their lead investor based on the first term sheet (at 47 percent and 48 percent respectively).
When choosing your lead investor, you would think the terms would be a significant reason to choose one VC over another. But we found that it was barely a factor for most people. In fact, only 4 percent of founders who weren’t oversubscribed cited terms as a major factor.
They instead focused on VCs that had experience in their industry (at 42 percent). But for oversubscribed rounds the percentage of founders who chose their lead investor based on terms shot up to 38. Meaning when the round gets competitive, so do the terms. But they still gave an edge to that first term sheet they received.
Interestingly, a potential deciding factor in oversubscribed rounds could be how well the VC and the founder get along. In those rounds that were significantly oversubscribed, over 46% of respondents said how well they got along with their VC was a factor in choosing them to be the lead. Compare that to only 19% of founders in non-oversubscribed rounds who cited rapport as a key factor in choosing a lead investor.
For many smaller firms getting edged out by bigger players boasting multi-stage funds, it may be as simple as being decisive and personable when it comes to landing the most competitive investments.
Following the well-received launch of Apple Arcade, Google today is officially introducing its own take on subscription-based access to premium mobile games — or, Google’s case, premium mobile apps, too. The new Google Play Pass subscription, arriving this week, will offer over 350 apps and games that are completely unlocked, with no upfront fees, in-app purchases, or advertisements. And the initial price point is something of a no-brainer — it’s just $1.99 per month for the first year, Google says.
That price will increase to $4.99 per month after the first 12 months have passed, which is the same price as Apple Arcade at launch. This launch promotion is only available until October 10, 2019, however.
The two services are similar in concept, as both are providing a large library of premium content for a monthly subscription. But there are some differences between the two.
For starters, Apple Arcade is filled with exclusives — meaning its games will not be found on Andriod. The reverse is not true for Google Play Pass. Instead, the Play Pass catalog includes many cross-platform titles, including some that even found their fame first on iOS, like ustwo’s Monument Valley.
In addition, Play Pass’s launch titles aren’t all games. There are also ad-free versions of popular mobile apps, like AccuWeather, Facetune, and Pic Stitch, for example.
Notable launch titles include Stardew Valley, Risk, Terraria, Monument Valley, Star Wars: Knights of the Old Republic, Reigns: Game of Thrones, Titan Quest, and Wayward Souls. Some lesser-known additions include LIMBO, Lichtspeer, Mini Metro, and Old Man’s Journey. Others, like This War of Mine and Cytus, are coming soon. And for little kids, there are some preschooler-friendly titles like Toca Boca classics and the My Town series.
More titles are added on a monthly basis, Google says.
Because it’s not relying on exclusives, Google’s catalog is more than triple the size of Apple’s at launch. That being said, Apple’s Arcade library is filled with gorgeous, high-quality games while Play Pass is rounded out with a lot of more utilities, like weather apps and photo editors.
Like Apple Arcade, the new subscription gets its own tab in the Google Play app, where the games are organized by genre, popularity and other factors — just like a mini app store. However, unlike Apple Arcade, where games are only found in the Arcade tab or through search, Google Play Pass titles will appear directly in the Play Store. They’ll be designated with a Play Pass ticket badge, so you can easily identify them.
The Play Pass subscription also allows the games to be shared with the whole family. The family manager can share their Play Pass subscription with up to five other family members, who can each access the titles independently. This is comparable to Apple Arcade.
We already knew Google was working on an Apple Arcade competitor before today. The Play Pass subscription’s existence had been leaked, and Google later confirmed the service with a tweet. What we didn’t yet know was the launch date, lineup, or the official pricing.
Google Play Pass service is rolling out this week to Android devices in the U.S., with more countries coming soon. A 10-day subscription is available, before it converts to the $1.99 per month limited promotion, followed by the $4.99 per month price point when the promotion ends.
While neither Apple nor Google is discussing the terms of their deals with developers, Google says that the more people who download a Play Pass title, the more the revenue developers receive on a recurring basis. It also explained that Google itself is funding the initial launch offer, so developers can gain more subscriber interest without impacting their revenue.
Lookiero, the online personal shopping service for clothes and accessories, has closed a $19 million funding round led by London-based VC MMC Ventures with support from existing investor All Iron Ventures, and new investors Bonsai Partners, 10x and Santander Smart. The company will use the backing to expand in its main markets of Spain, France and the UK. In June last year it closed a funding round of €4 million led by All Iron Ventures.
The startup applies algorithms to a database of personal stylists and customer profiles to thus provide a personalized online shopping experience to its customers. It then delivers a selection of five pieces of clothing or accessories curated by a personal shopper to fit the customer’s individual size, style, and preferences. Customers then decide which items to keep or return (at no additional cost), allowing Lookiero to learn more about the customer’s tase before starting the whole process again.
By generating look-a-like profiles and analyzing previous customer interactions with each item, Lookiero says it can predict how likely a user is going to keep a certain item from a range of more than 150 European brands from a warehousing system that will ship more than 3 million items of clothing this year to seven European countries.
It’s not unlike the well—worn Birchbox model. Lookiero’s main competitor is Stitch Fix (US), which has upwards of $1.5bn in annual revenues and IPO’d November 2017.
Founded in 2015 by Spanish entrepreneur Oier Urrutia, the company says it now has over 1 million registered users and has grown revenue by over 200% from 2017 to 2018.
In a statement Urrutia said: “This investment round provides us with the necessary capital to further increase the accuracy of our technology, which is really exciting. It will allow us to offer the best possible experience for our users and to continue expanding across Europe.”
Simon Menashy, Partner, MMC Ventures, said: “The migration of fashion brands online has improved consumers’ access to clothing, and there is now an almost overwhelming amount of choice. At the same time, it can still be really hard to find exactly what is right for you, especially with high street retail stores in decline. Lookiero provides the best of both worlds, giving every customer a hand-picked selection from their personal stylist.”
Ander Michelena, co-founding partner of All Iron Ventures, said: “Even if what Oier and his team have achieved to date is remarkable, we believe that Lookiero still has great potential to continue expanding internationally and to become a player of reference in a market segment where there is still a lot to do in terms of innovation and user satisfaction”.
Netflix is today a company whose valuation hovers around $130 billion, but it was, of course, once a little startup, and in his new book “That Will Never Work,” Netflix’s cofounder and its first CEO Marc Randolph takes readers on a fun and surprisingly vivid journey through the streaming giant’s earliest days.
It’s also instructive, though this is more memoir than business book, and Randolph, who is the great nephew of Edward Bernays — a public relations pioneer — turns out to be a very compelling writer, explaining in sometimes humbling detail how and why the company eventually outgrew him, and the reason he doesn’t regret stepping away when he did.
In fact, rather than lament past decisions, Randolph seems to relish his longtime work as a startup advisor, one who often has no financial ties to the companies he helps. As he explains it, there is a “role for someone in a founder’s life who isn’t a board member or an investor or an employee. The role of a founder-CEO is extremely lonely. You can’t always be fully forthcoming with your board or investors or employees. And if you go to your peers and you bring them an issue, they don’t really understand. So it’s very valuable for a founder who doesn’t have an ulterior motive but also understands a problem well enough that they can give really good advice.”
We had a chance to catch up with Randolph earlier today to discuss the book and his current relationship with his Netflix cofounder Reed Hastings, who he met when the company that Hastings began running in 1991, Pure Atria, acquired Randolph’s company, Integrity QA Software, (They both found themselves searching out the next big thing when Pure Atria was itself acquired.)
Randolph also shared why it took him 16 years to tell his story about what has become one of the most impactful companies in the history of television.
TC: We’re still zipping through the book but there is a lot of great storytelling here, from scenes with you and Reed carpooling to the office together, to some of earlier startup ideas you ran past him and he didn’t think much of, including customized baseball bats. Did you write this alone?
MR: Of course, I had help, you can’t write about something as important as Netflix by yourself. Over the course of one-and-a-half years, I spent tons of time on the phone and [engaged in] email correspondence and in meetings with everyone I could track down, because I wanted to hear all those stories again. But this isn’t a ghostwritten book and it’s not a as-told-to book. I did write it with the help of a great editor. In fact, the book was originally conceived as more of a self-help book, but my editor came back and said, “You shouldn’t do this as a ‘you’ book. Make it a ‘me’ book. Make the lessons you’ve learn over your career implicit instead of explicit.”
But I’ve been writing all my life. I was a direct marketing guy [before founding Netflix]. I had to restrain myself from writing things like, “Frankly, I’m puzzled,” and “But wait! There’s more!”
TC: You left Netflix in 2003. Why not write a book sooner?
MR: I needed to wait all that time. Even though I needed to tell the story, I didn’t really understand the lessons. It has taken me working with other early-stage companies and mentoring them and investing in them to make these connections. Why did Netflix work? What were my failings? What could I have done better?
TC: You’re pretty candid in the book about not being punctual and not having great attention to detail, but these are minor offenses.
Apple is changing how subscriptions work on its App Store. Before, any lapse in payment could cut off the customer from being able to use the app’s subscription-based features — and make it more difficult for the developer to reacquire that customer’s business in the future. Now, Apple says developers will have the option to instead offer a “grace period” for auto-renewable subscriptions which gives Apple more time to collect payment on the developer’s behalf.
Lapsed payments can occur for many reasons — like expired credit cards, changes in addresses requiring an update of the billing zip, corporate cards getting shut off because your company’s expense program is ridiculous (ahem), credit cards that get disabled by the bank, and so on. This sort of involuntary churn means developers were losing out on revenue not because the customer had wanted to end their subscription, but because of a simple billing issue.
The new Grace Period — which is opt-in, not opt-out on the developer’s part — is enabled from App Store Connect, where developers manage their apps. Here, you can navigate to “My Apps,” then in the toolbar click Features –> In-App Purchases, and in the new Billing Grace Period section, click “Turn On.”
Of course, there’s a bit more to it than that when it comes to actually integrating support in the app itself but for many developers, it will be worth the extra effort to more easily retain their customers going forward.
Once enabled, Apple’s documentation says it will attempt to collect payment for either 6 or 16 days, depending on whether the subscription duration is weekly or monthly or longer, respectively. Meanwhile, the customer retains full access to the app’s paid content.
If the subscription is renewed within this period, there won’t be any interruption to the days of paid service or to the developer’s revenue.
In typical "new features for StoreKit" fashion, supporting Grace Periods isn't exactly trivial. The new grace period field lives in the "pending renewal info", and is only available via refreshing the StoreKit receipt.https://t.co/uv2fvvLeAx
— Jacob Eiting (@jeiting) September 13, 2019
If the user resubscribes after 60 days, the days of paid service will reset and the developer will receive 70% of the subscription price until one year of paid service passes. (After the first year, Apple cuts its revenue share, allowing developers to retain 85% of the subscription.)
Subscription revenue is critical to developers, as the App Store has shifted away from paid downloads towards recurring revenue streams. For developers, subscriptions mean a more sustainable business. And for Apple, subscriptions are a huge part of its growing “services” business which including App Store revenues, along with its own subscriptions like Apple Card, iCloud, Apple Music, Apple News+, Apple TV+, and its Apple Pay business.
In Q3, services revenue increased 13% to $11.46 billion from $10.17 billion a year earlier, and now accounts for a fifth of Apple’s revenue. As Apple now has a growing line of subscription products of its own, it makes sense that it would want to better design the overall subscription offering to make it easier to handle common billing problems, too.