With Apple's new iTunes subscription feature publishers can publish their digital content via the App Store and collect a recurring subscription fee. Users can easily organize, browse and manage their subscriptions in one place. That sounds great until you hear about the cut Apple is taking: 30% for the lifetime of the subscription. That sounds a little steep to me. It makes me wonder, given the fact iPads have an excellent high performance browser with the latest HTML5 capabilities, why wouldn't publishers just deliver the same subscription content on the web? In addition to keeping 100% of the fee they would be targeting multiple devices. The coming onslaught of Android tablets also have state of the art HTML5 browsers.
The answer I've been hearing is the convenience of browsing and managing subscriptions from one place and the need for offline viewing. I can see the convenience argument, but loosing 30% of their subscription fees may be enough to motivate a group of major publishers to back an HTML5 newsstand. The offline argument doesn't hold because you could facilitate this with regular web content via the new local storage API.
The next few months will be very, very interesting. Will publishers line up for a 30% spanking from Apple or stand their ground with HTML5? Now would be a really good time for an HTML5 bookstore start-up that has the right connections in the publishing industry. If you could get a handful of the big guys it could start an avalanche.
Slightly OT: http://twitter.com/#!/Rafe/statuses/40590312988475392
"Launch presenter reveals Apple charges $4 per device that connects to iPhone dock port. Wow." Interesting, is that their way of discouraging multi-functional devices?
Apple needs to tread lightly here. Initially I think the content providers may go for it because they feel they have to. However, they will go with it, until they can figure out something else, or until they feel they can sway their customers to subscribing another way. Charging fees for this kind of thing opens them up for attack by Google, who's business model is to offer everything free or extremely cheap.
Oops, already happened: http://www.wired.com/epicenter/2011/02/google-one-pass/
Apple needs to realize that they are no longer the only game in town so no longer have the bargaining weight that they used to have. Especially doing things like rejecting Sony's eReader for not going along with their new subscription model. Which brings up a whole other story....
@Gabe I agree. 30% is definitely steep for a middleman, especially when most of the rags are struggling. Within the next few months we will find out if Apple is calling the shots.
Traditional affiliate fees for subscription-based services are usually about 20-30% for a first purchase and 5% for follow-ons
At 30%, it's crossing a thick line from facilitator to middleman.
Overall, it's tough to charge much for online subscriptions. And 30% forever is just sucking up too much $$ from an already squeezed system.
Then again, anything that gets users accustomed to paying for content is not a bad thing... To me, that's the one value add. And it's a big one. The alternative might not be publishers having to give up 30% of their subscription fees, but 10% of nothing.
Still, something doesn't smell right about the diktat Apple holds over these decisions.
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