Blog Post

Apple Will Motor By Taking A Cut Of Renewals

Apple’s new rules don’t just apply to new content subscriptions but to all subscription-related transactions thereafter as well. That could put Apple (NSDQ: AAPL) on an escalator to sustained 30 percent commission, even from publishers who initially sign up subscribers by other means.

Sure; when the rules are enforced in June, readers who previously subscribed to a title on the web can still happily authenticate in the magazine’s app.

But, once that reader’s subscription is due for renewal next month, quarter or year, are they really going to put down their iPad and type their credit card details in to the website on their laptop… ?

Or are they just going to click one iTunes button on that same iPad? Like an unstoppable gravitational pull, subscription events will move from publishers to iTunes because Apple’s own method is inertia-less.

Steve Jobs said: “When Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent.”

But it’s not just new subscriptions from which Jobs will take a 30 percent cut – it’s also weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly renewals.

We’re not saying this is a wholly bad thing – many publishers will happily consent to giving away a 30 percent commission for the benefit of the new opportunity given to them by Apple…

But we are saying that instances in which publishers are so graciously allowed to keep 100 percent of the money they earn from direct sign-ups will wane in time, as Apple’s irresistable, self-anointed option becomes the default for many readers and allows it to claim a greater share of purchases.

Publishers may resort to targeting their subscribers with renewal notices via other channels, like email reminders.

2 Responses to “Apple Will Motor By Taking A Cut Of Renewals”

  1. If Apple’s cut is in fact a recurring charge for subscription, they may have trouble keeping some content on their device. I would recommend they maintain some additional flexibility in this area in order to negotiate with the more popular content holders just as mall opperators make deals with anchor stores.