Apple vs. Publishers: It’s All About Control

Steve Jobs has spoken and publishers are pissed off. Apple’s announced deal for publishers who sell subscriptions through its App Store has given publishers a rotten taste in their mouths. Typical of today’s content wars, the issue isn’t just about economics. It’s about control.
At first glance, the deal looks decent for publishers: Apple let’s them keep 70% of their subscription price, which is the same cut that Amazon offers on subscriptions sold in its Kindle store. Furthermore, Apple let’s publishers set the price of their subscriptions. The trouble is in the not-so-fine print. Apple prohibits apps sold through its store from being used to purchase content from anywhere else, except on publishers’ own sites. Worse, while Apple does allow publishers to sell subscriptions through other sites, the terms must be the same or better than those offered to App Store subscribers. Many publishers see these restrictions as trampling on their commercial freedom, especially at a time when the market is exploding with non-Apple devices, such as Honeycomb tablets, Android phones, Blackberries, and PCs. A deal with Apple will restrict publishers’ options in creating different deals for versions on other devices. Another problem is that it’s not clear what information Apple is going to share with publishers about their subscribers. These are, after all, the publisher’s subscribers, even if they purchased through Apple, but Apple says it will share data only if subscribers consent.
Meanwhile, as if on cue, Google has announced its One Pass payment system, which it is positioning as a better alternative to Apple’s App subscription store. For starters, Google will keep just 10% of the subscription revenue as opposed to Apple’s 30% bite. One Pass is more flexible in letting publishers offer not just subscriptions, but sales of single copies, metered access, or freemium deals. One Pass also solves one of the most vexing problems: allowing consumers to access content they’ve purchased through a single sign-on with any device (PC, web, phone, tablet). Most importantly, Google isn’t restricting how publishers offer their content anywhere else.
But One Pass falls short for now in one key area: It doesn’t come with the established strength of Apple’s App Store and its 350,000 apps. Despite their grumbling, it will be hard for most publishers to resist the allure of Apple’s massive reach — more than 160 million devices worldwide. For now Apple might just call the tune.

About Lee Greenhouse

Longtime strategy consultant focused on the business of information content, applications, and services.
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