Some publishers believe that Apple may hold the key to a profitable
future. Thanks to the success of the company’s iPad, for instance,
there’s a lot of excitement amongst traditional publishers who have seen
their revenue from ‘old’ channels like print plummet. Some publishing
moguls, such as Rupert Murdoch, are so excited that they’re investing
tens of millions of dollars in iPad publishing.
But previously, there was a huge barrier: a lack of an
Apple-sanctioned solution for selling subscriptions from within Apps.
That solution came yesterday, and it offers some things publishers will probably love, but a few things publishers will likely hate too.
Apple is finally offering a solution for publishers who want to sell subscriptions and, like them or not, it has put in place clear terms governing how publishers can sell subscriptions outside of the App Store and how Apple is compensated.
For publishers who have been waiting in limbo, Apple’s official launch of a subscription solution removes a lot of uncertainty and provides publishers with a clear path forward to extend their subscription business models to the App Store without fear that they will unknowingly do something that causes Apple to shut them down.
Given the level of trust Apple has fostered with consumers who are comfortable purchasing digital content from the App Store, publishers may find that the subscriptions are an easy sell.
Although some publishers seem to want to charge more for their iPad subscriptions, Apple is probably doing publishers a favor by requiring that the subscriptions they sell be priced no higher than the same subscription is sold for outside of the App Store.
Not surprisingly, many publishers aren’t going to be pleased with sharing 30% of their App Store-originated subscription revenue with Apple.
Giving up 30% on a single purchase may be tolerable, but making Apple a 30% revenue share ‘partner‘ for recurring subscriptions is a bit tougher to swallow.
Perhaps more important: the fact that Apple will essentially sit between the publisher and the customer.
Whereas a publisher can structure its relationship with customers any way it wants outside of the App Store, Apple is firmly entrenched as a middleman in App Store transactions, and here that middleman position will give it partial ‘ownership‘ of the customer, which includes shared ownership of customer information, one of a publisher’s most important assets.
While it’s nice that Apple is allowing publishers who sell subscriptions outside of the App Store to keep 100% of that revenue, the ongoing 30% cut of App Store-originated subscription revenue seems like little more than a nightmare affiliate deal few would ever agree to outside of this market.
If you’re Amazon Associate, for instance, and you sell a magazine subscription through a link on your website, Amazon isn’t going to give you a piece of the action with every renewal for the life of the subscriber, yet that’s essentially what Apple is demanding for subscriptions that derive from in-app subscription links.
If Apple made the process competitive (eg. it required that publishers provide an App Store subscription link in their apps but also allowed them to present their own subscription links too) the situation might be more palpable.
After all, in that scenario, Apple would only be compensated when customers chose to subscribe via the App Store; it wouldn’t be forcing them to simply because they made their purchasing decision from within an iPhone or iPad app.
Photo credit: smays via Flickr.