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Publishers: Apple Wants 30%, Forever
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.
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Comment by Paul Graydon on February 23, 2011 at 4:11pm
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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?
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Comment by Brian on February 22, 2011 at 5:41am
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All Apple needs to do now is outsource creation of apps to China, reject the ones from people in the US, and they can just sit around making money off licensed content disseminated through their ecosystem.
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Comment by Truman Leung on February 20, 2011 at 4:53pm
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"Will publishers line up for a 30% spanking" ... great line, Dan.
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Comment by James Pakele on February 16, 2011 at 5:57pm
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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....
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Comment by Anthony Piscitelli on February 16, 2011 at 11:45am
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Comment by Dan Zelikman on February 16, 2011 at 9:00am
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It's like you're in my mind! :) I've been drawing out this debate on paper for the last few weeks. I like the alternative thinking, but you're right – there are clear benefits to both sides.
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Comment by J. David Beutel on February 16, 2011 at 8:37am
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The iPad/iPhone demographic is willing to shell out for convenience, so Apple will take its cut.
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Comment by Daniel Leuck on February 15, 2011 at 8:07pm
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@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.
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Comment by Gabe Morris on February 15, 2011 at 7:50pm
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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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