Is Apple’s subscription plan subpar for publishers?

Feb 16, 2011
Finance

Apple (AAPL) CEO and co-founder Steve Jobs announced a new subscription service Tuesday available to all publishers of content-based apps on the App Store, including magazines, newspapers, video and music. “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 […]

Apple (AAPL) CEO and co-founder Steve Jobs announced a new subscription service Tuesday available to all publishers of content-based apps on the App Store, including magazines, newspapers, video and music.

“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,” Jobs said. “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.”

This is the same deal Jobs and Rupert Murdoch, media magnate, announced for News Corps’ (NWS) The Daily app.

Anything to help the world of newspapers and magazines seems to worth doing, right? Maybe. Some alarms are being sounded about the possibility of the arrangement backfiring.

Frederic Lardinois in NewsGrange asks if Apple is being too greedy. He notes that Wired is offered at Amazon (AMZN) for $10 a year and National Geographic for $15 per year and wonders if they, and other publishers, will be forced by the Apple deal to raise their prices.

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“It is, of course, a good thing that Apple is making it easier for consumers to buy subscriptions and helps publishers acquire new subscribers,” he said. “Having to pay a 30 percent fee for these services does seem quite steep, though, especially given that Apple now owns the customer and not the publishers.”

Over at TechCrunch, MG Siegler said the deal makes perfect sense—for Apple.

“(A) lot of third-party developers both large and small are going to be very, very pissed off by this move. Why? Because it totally changes the game. Companies with subscription elements of their content had been accustomed to leveraging Apple’s platform for free. Now there will be a fee. And it will be a significant fee,” Siegler said.

The arrangement doesn’t just affect newspaper and magazine publishers but companies involved with music and video, such as Hulu and Netflix (NFLX).

“Essentially, Netflix would be paying Apple a 30 percent finder’s fee for new customers. Is that worth it to them? Maybe at first, but not over the entire life of the customer,” Siegler said.

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Howard Wolinsky

Howard Wolinsky is a Chicago freelance writer specializing in health and tech topics. He covered those beats for the Chicago Sun-Times.

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