Will Apple subscriptions give media companies a brighter future?

Tuesday, February 15th, 2011 By

ipad magazine content

Apple has positioned itself to be the newsboy for digital publications. Image: CC Farm Security Administration/Wikemedia Commons

Apple has announced it will offer subscriptions to digital media and music content through the Apple App Store. Apple subscriptions are an extension of a service Apple launched recently for Rupert Murdoch’s “The Daily,” an iPad newspaper. Most publishers haven’t yet committed to Apple subscriptions because of the company’s restrictions and customary 30 percent cut.

The Apple App Store subscription service

The new Apple subscription billing platform in the App Store could clear a big obstacle to the success of iPad newspapers. Until “The Daily” came along, customers had to manually purchase and download issues each time they were released. Two weeks after subscriptions to “The Daily” were launched on the App Store, Apple’s subscription service is now available to all publishers of content-based apps. Apple subscriptions let App Store customers buy subscriptions to iOS-based newspapers, magazines, music and video content with a single click. Customers can subscribe to “The Daily” app for 99 cents a week or $39.99 a year. Apple will process payments and keep 30 percent, as it does with all Apple App Store transactions.

Apple holds the cards

As media companies struggle to build online subscriptions as their traditional businesses collapse, many are reluctant to put Apple between them and their potential customers. Apple is driving a hard bargain for those who see hope for the future of their industry with the iPad, iPhone and iPod platforms. Publishers can name their price and length of subscription. But in addition to Apple’s 30 percent cut, the company demands that publishers with media for sale in the App Store sell subscriptions within the app as well as directly from their own site. Publishers must also offer the same subscription rate through the App Store that is available buying direct.

Apple stacks the deck

Existing App Store publishers such as Hulu Plus, Netflix, Amazon and Rhapsody have until June 30 to bring their apps into compliance with the Apple subscription service. For other media companies that have managed to stop losing money on digital content, the profit margin is still thin. Apple’s 30 percent cut may seem out of the question. But publishers, sluggish in their adoption of the Internet, have no owner-operated central distribution system for digital content. Apple has done that for them, and their future could now be in Apple’s hands, not their own.

Sources

PC Magazine

Ars Technica

The Register

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