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Surge Desk

Apple Launches Subscription Service, but Will It Save Magazines, Newspapers?

Feb 15, 2011 – 12:32 PM
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Steven Hoffer

Steven Hoffer Contributor

If Apple is trying to give the publishing industry a nudge in the right direction, it sure has a funny way of showing it.

Just two weeks after the debut of The Daily, Apple has revealed its long-awaited app subscription plan "available to all publishers of content-based apps on the App Store."

The new distribution platform is by most accounts a win for consumers, who will now pay for their favorite content-based apps on a long-term basis, but it's an entirely different story according to publishers and app developers.

Enter CEO Steve Jobs, to explain how Apple makes its cut:
"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."
Publishers are also prohibited from using the app to direct consumers to their private subscription offerings on their own websites.

So while developers will maintain the ability to set the subscription cost and duration, and still stand to reap all the profits off subscriptions made from their own websites, Apple will take a solid chunk out of subscriptions made on the simpler one-click basis from within the app itself.

Smaller developers will be forced to play by Apple's rules, but 30 percent is a "hefty premium" for major publishers such as Time Inc. or e-book sellers like Amazon.com.

Here are a few initial thoughts on the Apple subscription plan, compliments of Surge Desk.

Engadget's Joseph L. Flatley breaks down the situation, plain and simple:
"The rationale here? Apple gets thirty percent off the top off in-app purchases -- enough of a cut, we're guessing, to prompt some bigger publishers from skipping the platform altogether."
All Things Digital's Peter Kafka doesn't foresee publishers jumping at this deal:
"Apple's plan will have significant ripple effects, but one of them won't be a flood of digital magazine offers from big publishers like Time Warner's Time Inc., who have been quite clear that they're not happy with Apple's terms, and will work with other platforms like Google's Android instead."
Business Insider's Jay Yarow reminds publishers whose rules they play by now:
"This is great for consumers, who will have an easier time buying digital goods like newspapers and books in their applications, but it's somewhat worrisome for developers and publishers. ... To any publishers, or developers concerned about paying the 30 percent Apple tax, Steve Jobs has a message -- deal with it, it's not a big deal."
Ars Technica's Jacqui Cheng is not surprised by Apple's approach:
"The official terms are hardly surprising, given Apple's recent stance on content sales outside of the App Store. ... Apple's terms for publishers offering newspaper, magazine, music or video subscriptions is very clear: if Apple helps bring in customers, then Apple gets to take a cut of content sales."
For more Surge Desk tech coverage, check out:
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