Apple sets sights on publisher profits

Publishers, in essence, pay a 30% fee for the marketing and technology capability that Apple uses to draw in new customers. But is Apple being overly restrictive?

Wired magazine on Apple iPad
Wired magazine on Apple iPad
Wired magazine on Apple iPad
Wired magazine on Apple iPad

30%. That’s the price for selling your subscriptions through the Apple iTunes app store.

Announced today, the new billing model is aimed at allowing consumers to easily subscribe to digital content, be it magazines, newspapers, video, music, etc. Under the arrangement, publishers will retain 70% of the revenue for subscriptions initiated by the App store, and 100% for existing subscribers (and obviously current revenue outside of the Apple store).

But one key stipulation as part of the deal: prices for subscriptions sold outside the app must be made available to Apple for the same price or less.

“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,” said Apple CEO Steve Jobs who is still on medical leave.

The move does not come as a surprise. Just a few weeks Rupert Murdoch launched “The Daily”, an iPad-only digital newspaper, as part of a $30 million publishing experiment. At the New York announcement, acting Apple CEO Tim Cook joined Murdoch on stage. It’s widely believed that the delay in the launch was related to Apple’s completion of the new subscription model.

So is it a good deal or not?

Publishers, in essence, pay a 30% fee for the marketing and technology capability that Apple uses to draw in new customers.

Is Apple being overly restrictive?

For example: “In addition, 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.”

Our lives are unfolding increasingly inside one giant Apple app. And so are the profits from the music industry… the television industry… the movie industry… and, now … the publishing industry.

Apple Launches Subscriptions on the App Store

CUPERTINO, California—February 15, 2011—Apple® today announced a new subscription service available to all publishers of content-based apps on the App Store℠, including magazines, newspapers, video, music, etc. This is the same innovative digital subscription billing service that Apple recently launched with News Corp.’s “The Daily” app.

Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.

“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.”

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, 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.

Protecting customer privacy is a key feature of all App Store transactions. 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.

The revolutionary App Store offers more than 350,000 apps to consumers in 90 countries, with more than 60,000 native iPad™ apps. Customers of the more than 160 million iOS devices around the world can choose from an incredible range of apps in 20 categories, including games, business, news, sports, health, reference and travel.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

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