Apple & iPad magazine subscriptions

[Update: Despite what I write below, one facet of the announcement didn’t sink in when I read it earlier — and it’s outrageous: “publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.” Apple is saying, “You can sell stuff on your site, as long as you don’t link to it.” I can think of some easy work-arounds, but it’s nuts to even consider it. More in the following post.]

From an Apple press release:

“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,” said Steve Jobs, Apple’s CEO. “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.”

First off, my corner of the magazine and media world is not one that depends primarily on the subscription / advertising business model. So, to be honest, I have no dog in this hunt — except as a reader of and subscriber to magazines with a professional obsession with several developments that intersect with the issues that led to this press release.

I’ll hold off to hear what the major publishers have to say about the announcement (and whether or not it’s based on something they’ve agreed to) until I declare a winner — or, more precisely, to declare if the publishers choose to be losers. However, on first glance, it seems to be as close as Apple ever gets to being “fair” — although that’s a relative term, when it comes to a monopolist. And it seems in line with what was announced last week around the launch of The Daily.

Whether or not I declare a winner, I do think this: Publishers should declare victory and go home: They now have a subscription model so they won’t be forced to sell magazines in a newsstand fashion — one-issue at a time (frankly, they don’t have to now, but the each-issue-as-a-separate-app model is a strategy some of the big publishers are pursuing). The subscription model would seem to do away with the 30% per issue concern — the acquisition costs for a magazine to acquire a subscription is far more than 30% of the first-year revenues of that subscription, so most publishers will only be crying crocodile tears if they continue to complain on this point. (Predicted next battlefront: How to get subscribers to renew subscriptions outside the app.)

The other contentious issue, access to subscriber data, seems to be a fair compromise, as well.

From the release:

“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 such 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.”

If publishers want to balk at that — and ignore 15 million iPad owners to prove their point — they should do research on the whole “Apple, closed, control-obsessed, it’s our ball so we’ll determine how to play” thing. Also, if you’re so afraid readers won’t give you information about themselves, download the game AngryBirds and see how they provide incentives to get users to sign up for newsletters and puff-toys — outside the app.

When it comes to iPads, magazine apps — especially the bloated type of magazine apps we’ve seen so far — are a tiny tail trying to wag a mighty dog.

If you refuse Apple’s offer, they will still sell the same number of iPads.

Besides, you have a much bigger challenge anyway: Convincing people to actually pay for your app.

Observation: Key “tea leaves” point in the press release: All of the quotes come from Steve Jobs. In other words, this press release is the last word Apple will be having on this topic.

Later: Links to lots of interesting points of view on this announcement at Techmeme like this one from MG Siegler that includes this common sense:

Apple’s aim here is not only to make money, but to enable everyone to make money with a system that actually works. How are they going to do that? By doing something that all companies say they do, but few actually really do: focus on the consumer.

I think when it comes to making money, Apple knows a little more than the outraged media companies (that I’m not sure are so outraged).

  • I think, like when Apple added podcasting to the iTunes ecosystem, this actually will open the door for some brand new light-weight publishers to take off. A business and distribution model (magazine subscriptions) that once depended on or required massive scale now is workable for anyone with a great idea. A year’s supply of the Pressman Press for $10, anybody?nnThe question of whether the 70/30 split works for existing major publishers is interesting, but as you allude to above, I don’t think they get the content/app format people actually want yet, so the split may be irrelevent.

  • I’ll pay for that Pressman pub — but only for $9.99. If more than that, I will start a Facebook group protesting you.

  • Like “free” podcasting, this misguided debate ignores the fact that a vast number of magazines are *free* — they support another business model, they aren’t a business model. Business to business magazines, alumni magazines, magazines from all types of foundations and non-profits — and those customer magazines that I’m associated with. You can subscribe to these magazines for free — in app, or out.

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  • Siegler hit it on the head. Apple is forcing publishers to put up or shut up. Lots of businesses (large and small) have finally gotten the message that their customers haven’t changed, the environment has. The media companies that are crying need to read about the Kakapo Parrot and learn why the very tactics that used to work are actually speeding up their demise. But they’re probably too busy doing more important things like suing high school cheerleaders for millions of dollars for downloading a few songs.