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In some regards the plan appears to meet many publishers' key
demands. They can sell iPad subscriptions on their own websites,
keeping 100% of the revenue and collecting all the customer data
they want. And they can elect to give existing customers free
access to the iPad app, an ability that Time Inc.'s People magazine was able to secure but more
magazines have not. But when a subscription originates within the
App Store, where a huge proportion of sales will naturally occur,
this plan may still leave publishers wanting.
Netflix and Hulu Plus, for example, are currently on the iPad
with apps that authenticate subscriptions sold elsewhere,
subscriptions on which Netflix and Hulu Plus keep all the revenue
and subscriber data. But any new subscribers who sign up through
the App Store will give Apple the opportunity to take 30% and a
direct relationship with the customer.
Apple doesn't automatically pass on any information on
subscribers who sign up inside iTunes, nor on what they watch or
read within the app. Apple will allow publishers to ask subscribers
to share information such as their name and ZIP code voluntarily.
Last week a magazine executive said that approach wouldn't satisfy
some publishers. "It depends on whether you're optimistic on the
opt-ins or pessimistic," the executive said. "Some people would say
that's a good start. Others would say nobody is going to opt
in."
"Our philosophy is simple -- when Apple brings a new subscriber
to the app, Apple earns a 30% share; when the publisher brings an
existing or new subscriber to the app, the publisher keeps 100% and
Apple earns nothing," Steve Jobs, Apple's CEO, said in a statement.
There are other caveats that will give some media owners pause.
For starters, Apple requires that publishers offer their
subscriptions through iTunes at the same price or lower than
elsewhere, even though Apple's 30% cut renders those subscriptions
less profitable. Publishers are getting much more generous terms
from Google, for example, which sees the content as necessary to
drive adoption of Android.
Apple's announcement today doesn't mention any publishers
participating in the plan beyond Rupert Murdoch's tablet newspaper,
The Daily, which went on sale earlier this month. The Daily sells
for 99 cents a week or $40 a year on the iPad. Other tablet
editions are coming later this year. The app prompts subscribers:
"Share your information? The publisher would like your name, email,
and ZIP code so they can send you messages about related products
in accordance with their privacy policy." Subscribers then must
choose between "Allow" and "Don't Allow."
While the plan continues Apple's standard revenue sharing for
anything sold through iTunes, the arrangement is still far from
standard for publishers, which have long enjoyed direct billing
relationships with their subscribers. "The only person standing
between us and our subscribers was the mailman," one publishing
executive said recently.
Data on subscribers is one of publishers' most valuable assets,
a trove of information that they both use to pitch additional
products to their subscribers and sell to other marketers that want
to do the same thing.
Time Inc. executives last week said they were continuing talks
with Apple and were "confident" they would be able to reach an
agreement to sell subscriptions through iTunes. Is this it? For the
moment, Time Inc. execs aren't talking. A spokeswoman declined to
comment, as did executives at other magazine companies.
Publishers say privately that terms are going to vary widely
among online distributors, depending, of course, on their leverage
and the amount of production and back-end work they agree to
undertake.
"Subscriptions across digital bundles and print bundles will not
be a one-size-fits-all solution," Time Inc. Chief Digital Officer
Randall Rothenberg said last week. "Walmart has a different way of
retailing than Duane Reade has. We're still in early days of the
evolution. It's only been nine months for the world to learn a new
form of retailing."
