The Financial Times strikes the first blow in the war on app subscription charges
How things change. It seems only a few months ago that magazine and newspaper publishers, maddened by the fact that the Big Bad Web enabled readers to access their content for free (and sceptical about the effectiveness of paywalls), decided that Apple's iPad was just the ticket. Henceforth, they would publish their stuff not as web pages but as iPad apps. Not only did this offer them a shiny device that would display their wares in glorious living colour, but it would also force cheapskates and freeloaders to pay real money for the privilege of accessing them. This was possible because nothing happens on the iPad without going through Apple's iTunes store, and Steve Jobs knows your credit card details. Thus the "free riding" that was commonplace on the web would become a thing of the past.
Accordingly, publishers fell like ravening wolves on the iPad, investing large amounts of money and effort in developing apps to run on the device. The Economist has a particularly fine one Рwhich I believe is actually superior to the paper version of the magazine (at any rate, the print editions now pile up unopened on my hall table). Rupert Murdoch set up an iPad-only daily that is published from New York. And even Cond̩ Nast, an organisation that had hitherto been rather sniffy about electronic editions, started to publish some of its prime properties (such as the New Yorker), via the iTunes tollgate.
All of which was hunky dory. There were, of course, some minor irritations: there always are when dealing with Steve Jobs and co. For one thing, Apple levied 30% of the cost of every app sold. Then there was the issue of customer data. Most publishers desperately want to collect their customers' details for marketing and other purposes, but Apple firmly repulsed any attempt to obtain this information from iPad subscribers. All that data, said His Steveness, would belong to Apple.
So publishers ground their teeth but consoled themselves with the thought that at least they were getting paid for their content, which was a vast improvement on being ripped off by the web.
Then, last February, Apple dropped a bombshell.
It concerned in-app subscriptions. For periodical publications on the iPad, publishers can set the length of a subscription – weekly, monthly, quarterly, annual. Users select a subscription period, then click to order; this then debits the credit card associated with their iTunes account. The bombshell was the announcement that henceforth publishers who sold in-app subscriptions would have to pay Apple 30% of any resulting revenue. "Our philosophy is simple," explained Jobs. "When Apple brings a new subscriber to the app, Apple earns a 30% share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing." But Rule One of the Jobs rule-book is that Apple Never Earns Nothing. Publishers would therefore be required to remove any links within their apps to outside-iTunes purchasing options. And if they offered subscriptions and other digital content outside the App Store – thereby sidestepping the 30% cut – Apple would insist that the relevant app also include iTunes purchases.
To call this high-handed is like saying that Hitler lacked tact. But it is the Apple Way. It has, however, led to a lot of muttering and plotting in certain corporate circles. The outfit most immediately affected was Amazon, which had produced a free Kindle app that enabled people to read Kindle ebooks on their Apple devices. Within the app is a "Shop in Kindle Store" link that, when activated, opens Amazon's home page in the iPad/iPhone browser. Prior to the Jobs announcement, 100% of the revenue from any ebook purchases made beyond that point would go to Amazon. The logic of the Apple move was that Amazon would either have to remove the "shop in Kindle Store" link, or pay the levy.
Amazon's response to the challenge has been multi-pronged. As far as I can see, it has caved in on the issue of in-app purchases, because the "shop" link is still there. But at the same time it has launched a web-based "Kindle Cloud Reader", which offers one access to one's Kindle library outside of the iPad App but which enables Amazon to keep 100% of any purchases made from the Cloud Reader.
Until recently it wasn't clear whether other iPad publishers would take the Amazon line. The first indications came in June when the Financial Times launched a web-based app similar to the Amazon Cloud Reader. Then, on Wednesday, came the coup de grace: the FT announced that it was pulling its iPad and iPhone apps from the iTunes store. The message to Apple from major publishers is now clear: get real about subscriptions or get lost. Thus endeth Round One. Round Two begins shortly. Book your tickets now – on the web.
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Source: http://www.guardian.co.uk/technology/2011/sep/04/apple-ipad-apps-subscriptions-revolt
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