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Summary:

Apple’s recent tweak to its its in-app subscriptions policy was not a big “back-track”, a “reversal”, nor a “climbdown”.

It was an adjustme…

Steve Jobs holding iPad
photo: curiouslee

Apple’s recent tweak to its its in-app subscriptions policy was not a big “back-track“, a “reversal“, nor a “climbdown“.

It was an adjustment, designed to soothe an impasse that remains in place between Apple (NSDQ: AAPL) and the many, if not all, proprietors irate at what they see as a landgrab.

Despite the concessions, the situation is still a veritable no-win for all three groups concerned, an unsatisfactory “lose-lose-lose” stalemate that must be resolved fully at a later date…

1. Proprietors

  • Some operators like *Time* Inc and Hulu are now granting iPad access to folk who have subscribed elsewhere, but they are disabling the taking of new subscriptions inside apps. It’s a logical but masochistic workaround which blunts the original promise that iPad could create new revenue by bringing in new customers.
     
  • So much for iPad “saving journalism” – content owners and distributors are now self-limiting their potential consumer bases only to their existing size.
     

2. Apple

  • When it first imagined delivering subscription content through its tablet, Apple’s eyes surely ka-chinged with dollar signs. But, by trying to wring every last dollar from proprietors from the very start, it has frosted partner relations and limited the scale of its likely success.
     
  • Imagine how many more subscriptions Apple could have sold had it commanded a little less from providers. From June 30, however, the business potential for subscription iOS content will be like an iceberg – most of it is so far unrealised.
     

3. Consumers

  • Customers, the thinking goes, are perfectly happy to pay where the experience is “frictionless”. But, by requiring punters subscribe anywhere except in their apps, Apple and proprietors have conspired to make the proposition disjointed and confusing.
     
  • Even the workarounds are unsatisfying. For example, although Hulu has revoked in-app subscriptions, it is still trailing subscriptions on its app’s download page, complete with non-clickable URL. Gee, thanks.
     
  • Those operators who do come aboard are now free to hike in-app costs to absorb Apple’s commission. But, when consumers find lower pricepoints for the same content on different devices and media (like, say paper), consumers may justifiably baulk.
     

So, if it is to realise the full potential of the fabulous opportunities for tablet content subscription, Apple’s recent concessions must be its last.

  1. Apple believes its platform is a superior marketplace, and it is willing to eat its own dog food. Apple is betting its subscription earnings potential – its 30% cut on in-app payments – on this belief. If the classic theory of the consumer as rational man holds true, then not one consumer will pay for a more expensive in-app subscription and Apple will loose all. The rational thing to do is to pay a lower price ex-app. But where is ex-app? Another place… Apple believes the preeminent advantage and attraction for the consumer is the Convenience of in-app purchases. I think Apple is right.

    So, let each stick to his own. Apple bets on convenience driving in-app sales, even at potentially higher prices. Content owners not willing to give Apple a cut bets on consumers finding their way to another place for ex-app sales at potentially lower prices.

    A single-purpose consumption app without in-app purchase options is just a reader/viewer. A dual-purpose consumption AND in-app sale app is more attractive for the consumer and seller alike. I fail to see this as a bad value proposition on Apple’s part. Content owners should not be afraid to go premium with their offerings. Apple is giving them a fair opportunity and a square business deal to do so.

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