9 Comments

Summary:

This week Apple caused a storm by announcing their new iOS App Store terms and conditions for publishers. In a nutshell; long-awaited in-app subscriptions are here, and publishers are worried about their bottom lines. But maybe what they should be thinking about is content.

in-app-subscriptions-feature

This week Apple, caused a storm by announcing their new iOS App Store terms and conditions for publishers. In a nutshell: Long-awaited in-app subscriptions are here, and the service brings with it the usual 70/30 revenue split common to Apple’s other content channels, like music and apps.

So why the controversy? Apple prohibits publishers from offering more attractive (read: cheaper) subscription deals to customers outside the walls of the iOS App Store. Whatever publishers offer outside the App Store must be matched (or bettered) inside the App Store. Oh and just one more thing; Apple will not hand over to publishers the personal details of customers making in-app purchases/subscriptions without the permission of those customers. This last point is great news for consumer privacy, but another nail in the coffin for publishers accustomed to using said data in valuable advertising deals.

If you’ve ever subscribed to a magazine or newspaper you know how it works: A subscription card often asks for far more than just your name, address and credit card number. Those mini questionnaires publishers require of their subscribers supply them with a huge variety of valuable information they can use when selling space to advertisers. In fact, advertisers now demand it; after all, they want to be sure they’re placing their ads strategically — and therefore, spending their money wisely.

It matters not one jot if a publication acquires a few thousand subscribers through the App Store; without the typically-concomitant subscriber data, advertisers will be less inclined to buy space in any iOS publication.

How Did We Get Here?

Much publishing today is less concerned with quality than it is with quantity. The more copies there are of a magazine in circulation — or clicks on a web page — the more eyeballs see accompanying ads. In a world where, more than ever before, readers have more choice of content, but less time to engage with it, for many publishers, the key to generating appreciable revenue lies not in value, but in volume.

And I’m not talking small-time publishers here; in early February, Business Insider revealed AOL CEO Tim Armstrong’s guide to his network’s editors, titled “The AOL Way”, in which the editorial priorities of the company are laid-bare; on a page directing editors in how to decide what topics should be covered, “Editorial Integrity” (in other words, editorial quality) is ranked last, after “Traffic Potential,” “Revenue/Profit” and “Turnaround Time.”

Changing the Game

Online publishing’s focus on advertising, sponsorship and syndication is problematic, for viewers and for Apple as a company that wants to provide worthwhile content for users of its platforms. Great quality content, in this model, is of little use to publishers, despite the fact that it happens to be precisely the thing readers actually want.

Apple, I think, has noticed this problem, and is now taking positive steps to solve it. Apple wants to ensure that publishing on the iPad is never anything less than top quality, where the paramount priorities of publishers lie always in ensuring the quality of their content.

Hard Work for Big Returns

You see, with the rules as they stand today, the only way publishers can be successful in the App Store is by concentrating on producing the very best content. And that won’t happen because they place “Editorial Integrity” in first place on a PowerPoint slide. Publishers will have to commit themselves to produce nothing less than the very best content in the industry. It will take a lot of investment, a lot of insanely hard work and, for some publishers, a serious restructuring of their editorial staff and policies. None of that is easy or cheap, and, for publishers used to and dependent upon advertising revenue, it must seem a ludicrous proposition.

Apple has established a sales and distribution platform that emphasizes content sales and subscriptions over advertising, but if the company really wants to help publishers embrace the “content is king” philosophy, I think they need to do much more to assist in content creation and promotion. However, it begins with giving publishers with something that is still sorely-missing; top-flight iOS publishing tools made available — for free — to all publishers and authors everywhere. iOS is a publishing platform bursting with potential. Apple needs to give content creators an easy — and powerful — set of tools for leveraging it. Its iAd Producer application for the Mac might be a good place to start.

In the end, I believe most publishers genuinely respect their readers and care about the quality of their content; and I suspect they would happily unshackle themselves from their reliance on advertising revenue if only subscriptions and sales revenues could take its place. Apple has provided a tantalizing new path for publishers to tread, provided they don’t just throw their hands up and walk away citing Apple’s greed as a way to take the easy way out.

Related content from GigaOM Pro (sub req’d):

  1. Actually, Apple’s message seems to be “Gate Keepers Are King”, don’t you think?

    Share
    1. Hamranhansenhansen Saturday, February 19, 2011

      No, Apple’s message is that the user is king.

      People are looking at this like Apple is the big guy and magazine publishers are the little guy. No. They are both big guys, the user is the little guy.

      Apple is a public company, we can see their financial statements. They make almost no money from running App Store. They make all of their money from users. Publishers are not their customers, and neither are advertisers, or carriers, or hardware makers, or I-T consultants … Apple’s only customers are users. The Apple platforms are user-supported, the systems are put into place for the benefit of the user only.

      I don’t want to be booted out of an app to a Web browser and told to go digging for my credit card and give out my personal information to an app developer. They can charge me through my iTunes account. Many iTunes users do not even have credit cards, the money comes from iTunes cards they buy at the supermarket or drug store. If you boot them out to a browser, that is a brick wall.

      One problem of the modern world is everybody wants to play armchair quarterback. You ask the man in the street his opinion and he will defend the interest of quarterbacks. Who defends the interest of the football fan in that case? So let’s not play armchair publisher and shed any tears for publishers who want to transfer their user-hostile habits into digital. You want to get on my phone? Start by recognizing that is a privilege. I’m running your app and I want to tap a button and pay you money automatically every month from now on? You lucky bastards! Take that deal. Don’t boot me out to a browser and try to sell me your 20th century deal. Not interested.

      Share
  2. Personally, I’ve heard nothing about Apple’s subscription plan that suggests its basic structure will get publishers to concentrate “on producing the very best content.”

    On the contrary, the 30/70 split and the ‘sell nowhere cheaper than us’ rule encourage publishers to go for the lowest common denominator by pricing low and sticking Apple with the distribution costs. In magazines, the money lies in advertising. The more eyeballs, the more advertising revenue. The iPad isn’t likely to change that. What Apple is saying about their subscription scheme is not that different from the early claims about television. Yet by 1960 Edward R. Murrow, was calling it a ‘vast wasteland.’

    Blocking access to subscriber data, as Apple will be doing, also means that publishers won’t benefit from going upscale with quality content. If you don’t know what your subscriber base is, you can’t persuade advertisers that most are richer than average. You might as well go for Joe Sixpack. At least the subscription numbers can be known.

    Finally, keep in mind that Apple knows almost nothing about magazine publishing, so there’s no reason to believe that their dreams and schemes are realistic. In the end, the market will determine what sells, and I doubt the market is that interested in ad-free editions of Architectural Digest.

    No, I suspect you’re confusing Apple’s claims with what they’re actually creating, the outcome of which no one knows. Apple would do well to display a bit more humility and a willingness to change.

    Share
    1. Hamranhansenhansen Saturday, February 19, 2011

      We’re not talking about magazines, we’re talking about apps. In apps, the money lies in the user paying you. The user is your customer, not the advertiser.

      The Web has driven down the cost of advertising to where it cannot support many kinds of content that was previously advertising-driven. In the old days, the advertiser paid for the content, and the user essentially paid for paper and shipping. Today, the advertiser only wants to pay for 1% of the content. But there is no paper or shipping, so we can get the other 99% or even the whole 100% from the user. But they don’t want to get out their credit card for every content publisher, because they interact with thousands of publishers, it is not practical, and publishers have a history of abusing their privacy as well. A 1-click middle man is needed for the benefit of both user and publisher.

      It is publishers who should display humility, not Apple. Many publishers are falling off the face of the planet due to their own inability to adapt to the modern world. Apple does not owe anyone any humility, they are the most successful company of the 21st century thus far. They are the only one building modern systems to support anything other than advertiser-driven publishing.

      If you want ad-driven publishing, the Web is right there, you don’t need Apple, you don’t need App Store, and Apple devices are by far the BEST Web clients. iOS has an HTML5 application environment that is second to none and is the basis for all other mobile Web app environments. You can publish to Apple devices with 100% freedom, no mediation. Your app can install locally on the device from your own server, you can take the user’s credit card, you can show them porn, you are completely unrestrained.

      If you want user-driven content, Apple has a solution for that also. Participate or not, whatever you choose. But don’t participate and then be surprised that a user-driven content platform is structured to benefit the user. The users are paying for it, it exists because the users participate. You are there to provide service for them, not the other way around. Yes, you will take the iTunes “credit card” when you sell at iTunes Store. Not because it benefits Apple in some tiny way, but because it benefits the user in a very large way. The user is the top of the pyramid on Apple platforms.

      I actually work in publishing. We are excited that the new subscription API gives us a way to provide better service for our App Store users. Any publisher who is not thinking that way should get out of App Store. You can do whatever you like on the Web, which, again, is 100% supported on Apple devices, you don’t lose access to Apple users at all.

      Share
  3. Bohdan Ganicky Friday, February 18, 2011

    Fortunately. Google announced One Pass lately. So there’s hope for publishers not being locked to one platform and 30% share (Google charges 10%) and we are going to enjoy paid content on our mobiles, tablets and desktops, no matter what platform are we using.

    Share
  4. airmanchairman Friday, February 18, 2011

    It is hard to see Apple’s stance changing the throwaway culture of nowadays, but for those who care about such standards, one beneficial effect will be to make the “riff-raff” eventually vote with their feet and bugger the hell off the iPlatform to where their soulmates congregate in the Gadarene rush to the bottom of the gutter…

    Share
    1. Hamranhansenhansen Saturday, February 19, 2011

      Your comment is almost nonsensical. Users are voting with their feet onto the Apple platform, because it is user-centric, not publisher-centric, or advertiser-centric, or I-T vendor -centric, like other platforms. Why would Apple’s user-centric subscription policy drive users off the platform?

      Share
  5. If anything, they’re saying “Platform is King”. Some publishers believe they can sell the same sh1t that are free on their websites on Apple’s platform because iSheep are rich and “good customers”.

    Share
  6. So… How about a cheaper version of that giga om pro for iPad. :)

    Emphasis on the cheaper of course.

    Share

Comments have been disabled for this post