Apple launches media subscription service

Even though digital publishing on the iPad has not set the world on fire as the publishing industry hoped it would, Apple is moving in to take a piece of the action.

The new subscription service is available to all publishers of content-based apps on the App Store, including magazines, newspapers, video, music, etc. This is the samedigital subscription billing service that Apple recently launched with News Corp.’s “The Daily” app although The Daily has not yet started to charge for subscriptions but in fact has extended the free period to the end of February.

In an unusually verbose statement Apple CEO Steve Jobs, currently on sick leave seems to sense that some publishers will not react well to Apple taking a 30% cut of their revenue.

“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.”

Apple also said publishers will no longer be allowed to provide links in their applications to outside websites “which allow the customer to purchase content or subscriptions outside of the app.” As well, customers who purchase a subscription through the App Store will be given the option of providing publishers 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.

That is the 800 pound gorilla in the room for the publishing industry. Publishers have long had the benefit of access to customer data with no restrictions..under the Apple scheme they will only get the data if the customer agrees..Are you likely to agree to give your private data? Therein lies the rub.

On the other hand the carrot Apple is offering for its cut is access to the hundred plus million users of the app store and their credit cards offering sales potential that the publishers by themselves have not been able to realize. Not to mentioned the simplified effect one-click..will bring in more sales.

Still the Publishing Industry is likely to kick and scream at the loss of subscriber data..a point Apple will not will they deal with this dilema? What about Apple, it it doing the right thing..could it blow in its face?

I think MG Seigler of Tech Crunch puts  it best.

“So while you read all the stories about how Apple is destroying their ecosystem and killing innocent bystanders today, think about the very gray big picture:

  • This new subscription system is great for Apple as they’ll make a lot of money and create a new, better experience for their customers (and maybe publishers too). But if it backfires, they could lose a significant part of their ecosystem support. And if some companies pull their apps, consumers may start to leave.
  • The new system is awesome for customers as Apple has enabled a way for them to easily get new content on their devices at a fair price. But if companies back out of the App Store as a result, they will be shafted.
  • This new system sucks for companies that provider subscription services, as they’ll now be forced into Apple’s way of doing things and must pay them 30 percent for it. But if it leads to a massive amount of new customers, it could actually be a very good thing.

This is a big time power play by Apple in the name of better user experience. The maneuver is brilliant, brazen, and perhaps bat-shit crazy. Now it’s time for everyone to show their cards.”

The bottom line..the question really boils down to this..Will this gambit by Apple make digital publishing is not today..I wish I knew the answer. What do you think?

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