Publisher reactions to Apple subs plan
Jinfo Blog

By Nancy Davis Kho

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Apple's long-awaited subscription plan for magazines, newspapers, videos and music was announced yesterday, and the reaction from publishers ranged from aghast to insulted. The plan, detailed here, enables  content publishers to sell subscription access through the Apple Store, setting their own price and duration; Apple processes the payments and keeps 30% of the revenue.

In the announcement, Apple CEO Steve Jobs says,  “Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30% share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing…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."

Few publishers are going to be thrilled with the 30% cut going to Apple, but one can argue that the long-term attractiveness of the iPad as a consumption channel for subscription content can get them past that obstacle. There are a few other sticking  points, however. One is Apple's requirement that pricing for a subscription sold via the Apple store must be the same or better as offered elsewhere - i.e. direct mail, the publisher's website, or newsstands. That compromises the ability of publishers to employ differential pricing by sales channel.

Apple also makes it clear that links from within the publisher apps leading to alternative payment methods - for instance via a link to a publisher website where a subscriber could pay by credit card - will not be allowed in subscription apps going forward.

Another fly in the ointment is the fact that subscribers are able, but are not required, to provide personal information that will be passed along to publishers via Apple. That information, of course, represents important revenue streams to publishers in the form of mailing lists and the ability to target interactive advertisements. The title of Forbes Magazine's response, "Steve Jobs to pubs: Our way or highway" neatly summarises the response to what Forbes calls "draconian" terms.

But for another perspective, check out the ContentMatters blog post "Urban Myths of Magazine Economics" by Barry Graubart, which compares the current kerfluffle with the reaction of publishers to the web when it began to impact their business models, and encourages publishers to think creatively about how content consumption is changing. Apple's new plan may be the stimulus needed to jump-start that process.

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