Apple App Store Finally Gets Subscriptions - InformationWeek

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2/15/2011
08:49 PM
Kurt Marko
Kurt Marko
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Apple App Store Finally Gets Subscriptions

Those of you who, like me, have been wondering when you'll finally be able to ditch dead tree magazine and newspaper subscriptions in favor of your iPhone, iPad or Touch; well our days in the wilderness are about over. Apple finally announced their new App Store subscription service today, opening to all publishers a feature introduced for News Corp's The Daily <

Those of you who, like me, have been wondering when you'll finally be able to ditch dead tree magazine and newspaper subscriptions in favor of your iPhone, iPad or Touch; well our days in the wilderness are about over. Apple finally announced their new App Store subscription service today, opening to all publishers a feature introduced for News Corp's The Daily a couple weeks ago. Oh, sure, you've been able to browse Web sites since Day One, but we all know these weren't designed for handhelds, seldom make efficient use of tablet real estate and often use iOS-unfriendly Flash. The Daily's site gives a good illustration of what's possible. Much as the iBook and Kindle apps have done for books, Apple's subscription service could finally be the key to making the iPad an all-purpose replacement for periodicals.Despite opening up a huge new market while solving the authentication, billing and content management problems once and for all, the kvetching has already begun. The obvious objection is to Apple's 30% cut of subscription revenue for sales made through the App Store. Of course, this is the same cut they've always taken for both apps and books and never mind that this saves publishers the cost of printing, distribution and account management, it's still greedy Apple taxing poor, struggling content producers. Furthermore, this app tax only applies to sales through the store; if publishers sell subscriptions through their own Web sites, for example by offering discounts to existing, dead trees subscribers, Apple gets nothing. The only stipulation, and this one surely rankles, is that the same offers made outside the App Store, must be available inside. In other words, if users find the App Store buying experience more compelling than the Web alternative, Apple gets their cut.

While Apple's 30% share doesn't seem unreasonable for electronic editions of paper products, it probably will put a crimp in subscriptions for content that's already gone digital like music or video streaming. In fact, Rhapsody has already declared the terms "economically untenable"; and I can already hear the gnashing of teeth at Netflix. The other sticking point is customer information. According to Apple's announcement, "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." Meaning, publishers won't automatically know their readership and thus be able to sell targeted advertising.

On balance, the subscription services should open up a huge new market for print publishers and finally provide a path to re-do the mistake they made in giving away content on the Web. For users, it's hard to beat App Store convenience. The situation is less salubrious for digital subscription services, but that's probably as Apple intended since they would rather sell music and video through iTunes anyway.

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