What businesses can learn from changes at Apple and Google

1. What businesses can learn from changes at Apple and Google © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential. 1

2. What businesses can learn from changes at Apple and Google Recently, the two biggest companies in the mobile app world announced changes to their setups that better support publishers and allow them to monetize their apps. Businesses that generate revenue through subscription billing should make note of these changes and use them as a starting point to brainstorm how they can better provide value to their customers. "Apple plans to allow more businesses to use a subscription billing model." Apple and Google plan to change the way developers make money Apple is making some changes to its app store, New York Magazine's Select All reported. In addition to introducing sponsored search results, the company plans to allow more businesses to use a subscription billing model through Apple's service. In the past, only specific companies could charge subscriptions through Apple's mobile infrastructure. Such organizations included over-the-top content providers and media outlets. This change to allow all companies to operate on a subscription business model is no doubt welcome by organizations that have struggled with the issue of monetizing mobile apps without relying on intrusive ads or in-app purchases. 2 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

3. In addition, Apple will provide even greater incentive for companies to use its subscription capability. Instead of taking a 30 percent cut from all transactions as it had in the past, the company will only take 15 percent from subscriptions that last over a year. As a result, developers will likely find better ways to provide value for their customers in the hopes of attracting more annual subscribers. Google also plans to switch from taking 30 percent to 15 percent, ReCode reported. However, it's not using the same 12-month waiting period. Instead, companies will immediately take home 85 percent of revenue no matter how long the customer subscribes to the service. What does this news mean for businesses and developers? As Select All mentioned, while expanding subscription billing is the right step forward, it's only a fraction of what's needed for Apple to repair its relationship with various developers. However, the shift indicates that Apple and Google see the need for change in the world of mobile apps and subscription billing. Their new methods should encourage businesses to take a look at their own subscription billing practices and seek out pathways to improvement. Business models should never remain stagnant – rather, they should always adapt to market changes and the needs of consumers. 3 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

4. Changing online funding strategies There are many ways to fund online efforts – advertising, subscription billing, microtransactions and more. They key is to find the right method that attracts and retains the maximum amount of customers. Both Apple and Google believe that method to be subscription billing, and they have good reason. The success of content providers like DirecTV, Netflix and others prove that subscription billing is a sustainable funding source. Still, a simple billing method on its own isn't enough. Success via subscriptions comes from two other factors: providing valuable content consumers are willing to pay for and offering them flexibility and ease of use. "Businesses should use this time as an opportunity to evaluate their online funding strategies." Businesses should use this time as an opportunity to evaluate their online funding strategies and make sure their practices reflect what consumers want. Both Apple and Google realized developers weren't satisfied with their platforms and made changes to draw in more customers. In a similar vein, OTT content, subscription-as-a-service and Internet of Things providers should look at the needs of their customers and make sure they're doing all they can to meet them. 4 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

5. Always provide value As always, the predominate way to operate successfully on a subscription billing model is to consistently provide a valuable product to customers. Companies should always question whether their subscribers get the best bang for their buck. This doesn't mean offering services as cheaply as possible, but it requires making sure every aspect of the product sold is worth the cost. Such an idea includes often-overlooked elements like failed payments and providing a variety of payment options. Essentially, all aspects of the customer experience – setup, billing, support and more – should be worth what the customer pays. 5 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

6. About the Author: Bryta Schulz Bryta joined Vindicia in 2013 and serves as Senior Vice President of Marketing. She is responsible for building brand awareness, creating go-to-market strategy and promotion, and driving growth. With over a decade of executive level marketing, product management and PR experience, Bryta has led marketing teams in enterprise technology and SaaS companies. Her experience includes heading product marketing at GoGrid, PGP, RSA and Symantec and business development and product management positions at Xcert, Thales, and Persistence Software. Bryta holds a MA in Translation from the Johannes Gutenberg University Mainz and an MBA from the University of Reutlingen. Visit our Blog for more information. 6 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

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