Why Apple’s Pushy Publishing Plan is Paying Off

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Apple is catching a few flies with vinegar, if the slow but steady stream of magazine publishers who’ve opted to accept the company’s new in-app subscription rules is any indication. On Monday, Bloomberg’s Businessweek joined the iPad coalition of the willing, adding its name to a roster that includes the likes of Maxim, Elle and Popular Science.

Why are publishers signing on? One big four-letter word followed by a number comes to mind: The iPad 2 has been, by all accounts, a massive early sales success, and Apple still seems to be having trouble meeting demand. It’s no coincidence that Apple scheduled the mandatory change to its own in-app purchasing system for subscriptions to come into effect June 30. Between the time the new policy was announced and when it goes into effect, we’ll have seen the launch of the iPad (a hit at home and abroad), Apple’s quarterly results (sure to impress and likely show strong tablet numbers), WWDC sold out in no time at all, iOS 5 likely unveiled at WWDC, and even more details about the iPad’s selling success at the WWDC keynote.

Still, the move to accept Apple’s terms — which include a 30-percent share of all subscription revenues gathered through apps sold in the iPhone-maker’s App Store — hardly represents a universal groundswell of support from the magazine industry. In fact, many major publishers are clearly still holding out, possibly in the hope that they can convince Apple to relax or modify its App Store policies regarding in-app subscriptions and the sharing of customer information. But despite noteworthy holdouts like Conde Nast, Time Inc. and Hearst Corp., big fish like the New York Times and now Bloomberg (which says it is actually “very pleased” with Apple’s terms) are a good indicator that in this battle, Apple has the upper hand.

And it doesn’t have to do any talking to bring that point home to publishers. iPad sales, and forecasts like the one issued by Gartner Monday morning, which sees Apple staying on top of the tablet heap until 2015 (though problematic), are argument enough. The iPad provides publishers with access to at least the existing crop of more than 15 million iPad owners, but that number has probably grown already by quite a bit, and shows no signs of slowing. Isn’t that worth a 30 percent cut?

Not to mention the fact that Apple has all the power in these negotiations. While magazines are a nice-to-have feature on the iPad, they’re far from the only draw of the device for consumers. In fact, as Mathew Ingram has repeatedly pointed out on this blog, magazines in general aren’t doing a good job of providing appealing content on the iPad. In short, magazine publishers need Apple more than Apple needs magazine publishers, so if this is a game of chicken, it’s not one which Conde Nast et al. are well positioned to win.

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