Wired magazine, one of the several iPad magazines affected by Apple's new subscription model
The Android vs iOS battleground has shifted to the publishing world following back-to-back announcements from Apple and Google. First it was Apple’s subscription model on Feb 15, then Google announced its One Pass subscription model a day after.
Even before Apple’s announcement, indications were that Apple was adopting a tough, “Our platform, our terms” philosophy with publishers. And sure enough, that’s what Apple did with its subscription model: It wants 30% of all sales generated through its platform, and it alone will have customers’ names and contact information unless buyers opt in to share that data with content creators.
And publishers thinking of a way to compensate for the 30% are boxed in: they can’t pass on the extra cost to users. Also, publishers aren’t allowed to lead subscribers to offer lower prices outside the app – so if, say, Scoop were to offer me a cheaper deal on a website as opposed to their in-app purchase, that would be a no-no.
“Our philosophy is simple—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 and Apple earns nothing,” Apple CEO Steve Jobs wrote in the press release. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app.
Understandably, no publisher in their right mind – arguably even Rupert Murdoch – would be whooping and clapping over the news. The reaction from publishers were an “icy silence” according to CNN Money, with Conde Nast, Hearst and Time Inc choosing not to comment on Apple’s plan.
Hey, if you got nothing good to say, shut your trap, right?
Google’s One Pass play
Enter Google into the argument with its One Pass offering, clearly countering the strict terms that Apple is offering. Using Google Checkout, this service will allow users, using only one account, to buy and subscribe from various digital publishers on the web and through mobile apps. Google will take a 10% cut from each subscription, and will let publishers keep subscriber information.
“The publisher is the merchant of record,” said Google chief executive Eric Schmidt. “We don’t prevent you from knowing, if you’re a publisher, who your customers are, like some other people do,” he said.
Android on tablets is expected to be huge this year, but it has to play catch-up with Apple in terms of wooing publishers and paying consumers. While Apple has big name publishers like Conde Nast, Time, and Hearst on the App Store soon after the iPad launched, Google announced an eclectic (read: European) bunch of adopters on launch date: There’s Axel Springer AG, Germany’s largest newspaper publisher, France’s Nouvel Observateur, Spain’s Prisa and Rust Communications, which owns about 40 US-based newspapers.
As far as most users are concerned, that’s one big meh.
There’s just one problem…
But does One Pass and Apple’s model change the game in any way? Matthew Ingram from GigaOM is skeptical that Google’s One Pass – which is essentially a glorified pay-wall – will lead to a mass adoption of tablet-based subscriptions, because of a fundamental user behavior: not many users are willing to pay for content anyway.
“Magazine and newspaper publishers have have had little success so far in getting people to pay for their apps,” Ingram wrote. “Why would it be any easier with Google’s One Pass? If anything, it’s likely to be even harder, because it’s based on the open web — and users are likely to notice that all around them is free content, while iPhone and iPad apps do a fairly good job of disguising that fact.”
Silence isn’t dissent
As for publishers, their icy silence towards Apple is hardly an uproar of dissent, which shows that they’re willing to live with Apple’s terms. And why should they opt to play an either-or game with Google or Apple anyway? Both markets are lucrative and potentially huge, and shutting off one player when user adoption isn’t all that great in the first place doesn’t make sense.
“Of course we would always like to see a lower commission, but we are able to work with this commission rate at this time,” Philippe Guelton, chief operating officer of Hachette Filipacchi Media US, which publishes Elle, told PC World. “Apple is offering a great turnkey tool that allows us to test with little to no financial risk.”
Publishers will fork out the 30%, and may incur some production cost-cutting (less videos and flashy bells-and-whistles) to reflect that – which may not be a bad thing, given how huge some magazines — like Wired — are.
Publishers will be loathe to agree with Jobs, but having 70% of a new subscriber’s money is better than having nothing at all – and as Ingram wrote, there’s a higher chance of people paying for content on Apple’s store.
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