Will Apple's New Content Subscriptions Punish You? (Updated)

Apple is now offering the same subscription service used by The Daily to all publishers. Despite all the predicted gloom and doom for the magazine industry, Apple's terms seem fair: publishers would be able to keep using whatever subscription methods they want.

Here's how it works, in Steve Jobs' own words:

Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing. All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app.

So if you subscribe to the New York Times using their web site, they get 100% of the money. But if you click on the iPad's subscribe button, the Grey Lady only gets 70%. This may seem excessive to most publishers—not to Rupert Murdoch, obviously—but it's no different from other commission methods in the physical distribution channel.

The question now is: How are publishers going to deal with the profit differential between the iPad and the Android tablets? In the latter, they keep 100%. In the former, if people subscribe through the iPad, they keep only 70%. If they charge more for the iOS version to compensate, consumers would feel punished just because their gadget choice. And I don't see people changing to an Android tablet just because they want to get a subscription to the New York Times for 30% cheaper. Most people already don't give a damn about the New York Times, anyway—although many would like to subscribe to it at the same price of The Daily.

I'm glad subscriptions are available for every publisher now, if they use it well. I want your digital media, you old publishers you. I want your magazines, your newspapers, and your comic books. I just don't want to keep paying $1.99 for each bloody Marvel comic book, because that price is highway robbery compared to their paper counterparts. And most people are like me. They can't see why they have to pay so much for ten minutes of entertainment or information. But if you hit a sweet subscription price, people will jump into it and you get millions of readers, instead of just a few thousand.

Hopefully, this is what subscriptions will bring at last: Affordable publications for readers and a healthy growing environment for publishers.

Update: According to a memo sent to publishers, the subscription method is obligatory. That changes things quite a bit. While publishers would be able to sell subscriptions using external methods and keep 100% of the profits, they will have to use Apple's in-app subscription yes or yes. If they don't use it, they will be eliminated from the App Store. And apparently, this may include everyone even if they don't sell subscriptions.

While I understand that Apple could charge money for those using their servers to distribute content, I can't understand how Apple can charge a company like Netflix or Amazon, which serve the content from their networks. If true, that is neither reasonable nor fair.

Apple Launches Subscriptions on the App Store

CUPERTINO, Calif.—(BUSINESS WIRE)— Apple® today announced a new subscription service available to all publishers of content-based apps on the App Store℠, including magazines, newspapers, video, music, etc. This is the same innovative digital subscription billing service that Apple recently launched with News Corp.'s "The Daily" app.

Subscriptions purchased from within the App Store will be sold using the same App Store billing system that has been used to buy billions of apps and In-App Purchases. Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.

"Our philosophy is simple - when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Steve Jobs, Apple's CEO. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."

Publishers who use Apple's subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

Protecting customer privacy is a key feature of all App Store transactions. Customers purchasing a subscription through the App Store will be given the option of providing the publisher with their name, email address and zip code when they subscribe. The use of such information will be governed by the publisher's privacy policy rather than Apple's. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher's privacy policy rather than Apple's.