[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:
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.
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).