The gotchas in Apple’s app-subscription plan
Realistically, however, publishers are more likely to continue forking over 30% of most of their sales to the House that Jobs Built. Accordingly, the House in most cases will continue to win.
This entirely unsurprising prospect results from a close reading of the brief announcement that Apple is offering a new subscription service at the iTunes Store to publishers of newspapers, magazines, audio and video.
For content producers eager to get paid for producing new iPhone and iPad apps, this announcement may be enough to encourage them to take the plunge. But the brief press release describing the program contains some significant drawbacks for publishers.
From the press release, what we know is this:
1. The service will let publishers set the price and the length of a subscription (from a week to a year).
2. Registered customers can buy a subscription through their iTunes account with one click.
3. Apple gets 30% of the revenues for every subscription bought at iTunes but publishers can keep 100% of the revenue for any subscription they sell on their own sites.
4. The publisher gets to know the name and email address of the customer only if said customer elects through the app to provide it to the publisher.
From the point of view of Apple and the customer, this admittedly works pretty well. But there are some pretty serious gotchas for publishers:
:: While Apple will let publishers keep 100% of revenues if customers buy subscriptions on the publisher’s website (see No. 3 above), the reality is that most people will continue buying subscriptions through the app. This means Apple will continue in most cases to get a 30% cut of most subscription revenues.
:: If consumers predominantly buy subscriptions at iTunes, publishers will learn the identity of only the consumers who voluntarily disclose their names (see No. 4 above). While it is bad practice for any business not to know and have a direct relationship with its customers, this represents big-time heartburn for newspapers and magazines who want to count those subs in their audited circulation numbers. Here is why:
Faced with years of sagging readership, Newspapers changed their circulation rules last year to make it possible for them to take credit for subscribers on every print and electronic platform. If publishers cannot identify their iApp customers, it will be difficult, if not impossible, to prove their cross-media reach to advertisers.
Though the new Apple system is capable of putting some welcome change into the piggybanks of participating content producers, the new system appears to leave publishers at a distinct disadvantage to the House. Which clearly is how the House likes it.