Apple's App Subscription Model Could Lead to Publisher Grumbling

 
 
By Nicholas Kolakowski  |  Posted 2011-02-15
 
 
 

In a widely expected move, Apple is rolling out a subscription service for content-based apps such as magazines, videos, music and newspapers. The service is already present in News Corp's The Daily, a publication tailored specially for the iPad.

Publishers will have the ability to set a subscription's price and duration, while customers can select the length of their subscription. Beyond that, Apple has set a few more rules for the new service.

"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," Apple CEO Steve Jobs wrote in a Feb. 15 statement. "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."

Apple's subscription service appears at a transitional moment for digital periodicals. On Feb. 2, Apple and News Corp launched The Daily, a tablet-only newspaper, in New York City. Priced at 99 cents per week (and $39.99 per year), the publication offers built-in games, weather updates, a customizable sports dashboard, interactive video and photos, and stories read aloud. Whether or not The Daily succeeds, its model-combining text with interactive content, formatted to a 7-inch or 10-inch screen-will be one almost certainly followed by rivals in the near- and long-term.

From that perspective, the integration of an app subscription service seems a logical move. But Apple's newfound insistence on in-app purchasing has the potential to complicate life for app creators, as the company's relationship with e-book publishers has already demonstrated.

Earlier in February, Apple started ratcheting up its policy enforcement for e-book apps, stating that app-makers such as Sony and Amazon needed to offer in-app purchasing through Apple's online storefront if they wanted to make e-books purchased on other devices available through the iPhone, iPad and other Apple products.

"We have not changed our developer terms or guidelines," Trudy Muller, a spokesperson for Apple, wrote in a statement posted on Bloomberg and other media outlets Feb. 1. "We are now requiring that if an app offers customers the ability to purchase books outside of the app, that same option is also available to customers ... with in-app purchase."

Presumably, should those companies refuse to offer the ability to purchase e-books via the in-app option-which has the potential to earn Apple up to 30 percent of the sales price-they could face the possibility that e-books purchased via a Website might be unavailable on an Apple device. A disagreement over terms between Apple and Sony apparently led to the banning of Sony's e-reader app from the App Store.

"Unfortunately, with little notice, Apple changed the way it enforces its rules, and this will prevent the current version of the Reader for iPhone from being available in the app store," read a note on Sony's online Reader Store. "We opened a dialog with Apple to see if we can come up with an equitable resolution but reached an impasse at this time."

As the Sony example suggests, periodical publishers will have to agree to Apple's terms if they want to play the subscription game-but a few of them might grumble about it.

Rocket Fuel