Financial Times Fights Apple on Access to Subscriber Data

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Newspapers on the iPadThe Financial Times of London is fighting to maintain control over the customer relationship (meaning control of customer data), and does not want to give up that access to Apple for customers that subscribe to the newspaper through Apple’s subscription engine. Rob Grimshaw, the managing director of FT.com, told Reuters that his company is negotiating with Apple on this issue, and implied that he would leave Apple’s platform rather than give up this issue.

Apple added a subscription engine to the iOS software development kit (SDK) earlier this year, and the company requires that any publisher offering subscription access in an app include the ability to subscribe from within the app itself, meaning through Apple’s engine.

While publishers can continue to offer access via other avenues, Apple requires that the in-app subscription option meet or beat any other offer available, and Apple will not give publishers access to the customer data from those customers who sign up through the app.

“We don’t want to lose our direct relationship with our subscribers. It’s at the core of our business model,” Mr. Grimshaw told Reuters in an interview on Monday.

This has long been a festering sore spot with publishers who see that data as theirs by right, and consider it the bread and butter of their business. The Financial Times was an early (and solid) adopter to the iPad, and Reuters reported that the company has been able to increase its paying subscriber base from 440,000 during the print-only days to 590,000 with the help of its online presence and the iPad.

He told Reuters that FT.com is negotiating with Apple over the issue, and that he was hopeful that those negotiations would lead to a positive outcome. He even specified that, “We have a great relationship with Apple.”

But, and this is a big but, he also said, “If it turns out that one or another channel doesn’t mix with the way we want to do business, there’s a large number of other channels available to us.”

One channel, of course, for staying on the iPad would be to pull its app from the App Store, but continue to offer access to FT content through the Safari browser on the iPad. It would be a shame if the company’s app went away, however, as its iPad app has been very well received and is highly regarded.

That’s the only real alternative for being on the iPad, however, and no competing tablets have made any serious headway in the iPad-defined tablet market, which means the real question is going to be is it more important for FT.com to peddle its content through Apple’s App Store or for Apple to have premier newspapers like The Financial Times on its platform.

If the company gives FT.com an exception on this issue, that exception would quickly become the rule as other publishing powerhouses like News Corp’s The Wall Street Journal, The New York Times, Gannet’s USA Today, and other important newspapers are going to demand the same deal that FT.com gets.

The reality is that Apple isn’t known for blinking or being all that flexible, but the company has reversed itself on several issues as the iOS platform has quickly evolved and exploded in popularity. In other words, there could well be more to this story as time marches on.

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Comments

ilikeimac

?We don?t want to lose our direct relationship with our subscribers. It?s at the core of our business model.”

In other words, they make money by selling their subscribers’ personal information to businesses who want to spam advertise to those subscribers. (As pointed out by Gruber)

b0wz3r

Don’t let the door hit you on the ass on the way out…

Lee Dronick

I find it interesting that it is the Financial Times and iPad users generally have money to spend.

Bosco (Brad Hutchings)

It’s worth noting that the owner of the Financial Times is Pearson, a large publishing group that also owns Pearson Education. They come at this from a much stronger position than the typical Apple fan’s view of failing publisher.

kirasaw

and Apple will not give publishers access to the customer data from those customers who sign up through the app.

This is false. Apple will give customer info to the publisher IF the customer agrees.

As a customer this is how I want it to be. If I choose to give my info I will.

matt

@ilikeimac

You’re joking right? You think a legitimate company would sell personal information and risk hurting its reputation. Personal information is probably in the penny range, so thousands of dollars in profits which is meaningless to a company that makes millions.

I happen to be a software developer in the real world that collects data on our customers. It’s used by marketing to make better ads and figure out what our customer population is like and whatnot. Email is also used to announce new products and to offer stuff like free live web training for our product, if they hit the “send me emails” checkbox. Thats all, no evil shenanigans like you think. Like every company that has some web involvement collecting the data is core to our business model and like most all legitimate companies we only send emails if requested and do NOT sell personal information.

Terrin

I worked in print publication in New York City for several years. Print publications do not make money off subscription sales. If lucky, it is a wash and the subscription money pays for the printing and delivery of the printed material. Publishers make the bulk of their money from 1) traditional advertising in the publication, and 2) being able to sell third party companies the publication subscribers names, addresses, and telephone numbers. Don’t fool yourself otherwise. Anybody who signs up for a magazine should notice shortly afterwards he or she will soon start getting offers from other divisions of the same company and third party companies as well. Some of these third parties will be the same advertisers advertising in the publications.

By the way most major companies work that way. Apple has to date been the exception. Apple does not sell your information. That applies to services like MobileMe, even when it was free. Apple could have made a lot of money selling ads with MobileMe and selling your name and address.

Read the privacy policies of a company like Bank of America, AT&T, or one of the big publishers. You have to specifically opt out of those companies selling your information to third parties. I just read the privacy policy at PNC Bank. You can’t opt out of the PNC giving your information to some third parties. When you can opt out, the process is never easy. It hardly ever can be done online.

This fight is not about Apple taking thirty percent. Publishers generally give more then that to brick and mortar stores. Further, they have higher costs associated with product sold to those stores. Thirty percent is a bargain. This fight is about information. Apple is insisting that third party applications by default must ask users permission to give out their personal information. What customer is going to agree to that? Traditional media is used to making money that way. You think spam is an original concept? No, traditional media companies been doing it for years. The government doesn’t care though because junk mail funds the Post Office despite having a big environmental impact and generally being unwanted by many folks. Notice you don’t have an opt out site for junk mail like with unwanted phone solicitation.

@ilikeimac

You?re joking right? You think a legitimate company would sell personal information and risk hurting its reputation. Personal information is probably in the penny range, so thousands of dollars in profits which is meaningless to a company that makes millions.

I happen to be a software developer in the real world that collects data on our customers. It?s used by marketing to make better ads and figure out what our customer population is like and whatnot. Email is also used to announce new products and to offer stuff like free live web training for our product, if they hit the ?send me emails? checkbox. Thats all, no evil shenanigans like you think. Like every company that has some web involvement collecting the data is core to our business model and like most all legitimate companies we only send emails if requested and do NOT sell personal information.

Terrin

They aren’t failing because most customers either are gullible or don’t care that the publisher is making a killing selling the customers information to third parties who are going to then bombard them with advertising.

It?s worth noting that the owner of the Financial Times is Pearson, a large publishing group that also owns Pearson Education. They come at this from a much stronger position than the typical Apple fan?s view of failing publisher.

paikinho

I suppose if the FT’s don’t like the market and conditions Apple demands then they could just abstain from putting their products on the App Store.

It will be interesting to see if Apple opens the floodgates or sticks with control. My thought is they will do the later for now to see if they can wait the FT’s out.

cranium

Are you kidding? Apple is merely asking that the publisher ask tonuse the data? I thought they were saying they couldn’t use it! If it is rely just that, then this just seems like the right thing to do.

I still don’t understand publishers. Help me here. I get an offer from fortune in the mail—$20 per year for up to 3 years. For this small price, thet cover postage and printing and send me the physical mag for 3 years. I called them and send I will save them the printing and mail costs because I’d just prefer the iPad edition for that price. They say no, iPad is $4.99 per issue. WHY? They get even better readership for advertising dollars by getting more people reading the magazine. The only possible solution I can come up with is the sale of my data. It cant be the extra 30% apple would take through the app store because with me calling them for the subscription i was happy to pay the directly, I’d even pay well above what was the subscription offer in the mail since it so much cheaper than the individual issues. The $20 per year isn’t that special, it’s on their website too.  The only thing that I can come up with to justify their approach is that selling the data is worth a ton. Can someone put real numbers to how much they get versus advertising?

cranium

Just a note, I refuse to pay the single issue price on the iPad. If they save printing and distribution they are crazy to ask newsstand price. I assume I’m not alone in refusing to feel like I am being ripped off here. Why doesn’t some publisher just try selling issue for $1.49 and see how many they would sell? I’d go from zero purchased a month to probably about 10 different mags. Are the trying to kill their business? I’m quite happy to read for free on the web and that is what i am doing today.

I just can’t understand their thinking and would really like someone to be able to explain their approach and why it has legs (in their mind at least).

skipaq

@Terrin is spot on and I hope Apple never gives these content providers access to my info without my consent. I remember responding to one of those Publisher’s Clearing House general mailings. From that time until my next move the mail box was stuffed with junk. If this type of info is not worth a lot then why do hackers go after it. I just got an email from Disney because my email address has been compromised. I make a point of restricting who has my info and these spammers are still after it. Disney says don’t be too concerned all they got was an email address. Bull! Don’t tell me this info isn’t worth the hacker’s effort.

No company is perfect in protecting privacy; but some are better than others. If you like a spam filled inbox and clicking please take me off your mailing list, then by all means go the Financial Times way. Count me out.

Bosco (Brad Hutchings)

If you value your privacy being protected, you can expect to pay a premium for the privilege. Ultimately, what FT objects to isn’t the 30%, nor is it the opt-in access to customer data. It’s Apple’s “best price” term, because the price at which they offer their content can’t account for the direct costs and lost revenues the other two terms impose. And then with many publishers, there’s the whole Adobe workflow, where Apple wants to add substantial ongoing conversion costs, while the rest of the consumption device industry embraces that standard.

iPad content customers under Apple’s model are like fat people on airplanes. If you’re going to take up two seats, need an extra lap belt, eat two meals, hog the honey roasted peanuts, stuff up the lavatory, and be a hazardous obstacle in the event of an emergency unboarding, maybe you ought to pay more.

Lee Dronick

I just got an email from Disney because my email address has been compromised.

I was getting marketing emails from Disney and I never signed up with them so they must have gotten the email address from someone else. Note that it wasn’t being sent to my “regular” email address, but to one of my “throwaway” ones that I use when signing up for blogs or online shopping. Unsubscribing did not work as it usually does with good businesses, I had to appeal to corporate.

Not that I don’t want some targeted adverts sent via email. Just that I want them from businesses with which I do businesses.

skipaq

It was Disney Destinations. Now, I have never done anything with that division; but have done a year with Disney Movies. The problem with corps like these (FT is the same) is they mostly share this info between divisions. Opting in or worse-being auto opted in is a big pain. Setting up spam filters and sending out drop me off your list emails is not what I want to do.

There is a huge difference (by the hundreds) in my gmail junk box and my mobileme junk box. And I’m not about to add my contacts list to Googles address book so that it has that info to filter on. I have no trust at all that those contacts will remain undisclosed/sold. Disney has compromised my mobileme account. That doesn’t make their online services a magical place for me.

paikinho

iPad content customers under Apple?s model are like fat people on airplanes. If you?re going to take up two seats, need an extra lap belt, eat two meals, hog the honey roasted peanuts, stuff up the lavatory, and be a hazardous obstacle in the event of an emergency unboarding, maybe you ought to pay more.
—————
Not sure I understand this analogy. In fact I don’t really don’t.

Lee Dronick

Not sure I understand this analogy. In fact I don?t really don?t.

No, but is a good one to use for other purposes.

Bosco (Brad Hutchings)

It’s an over the top analogy to make a point. Apple’s model costs publishers more than other less-controlled models do.

1. Can we agree that a 30% cut and no other way to get a premium content experience on iPad constitutes a cost over and above that on Android, where you can side-load and avoid up-front sharing with Google, you can give the app away and use your own in-app scheme, etc.?

2. Can we agree that if you use Adobe/Flash end-to-end for all your other electronic distribution, and iPad precludes that (or makes you package it differently with limitations) that it adds a cost?

3. Can we agree that having customer data via opt-in probably imposes an opportunity cost versus having it by default?

If we can agree on those things, then I think we can agree that it costs more for many of these publishers to provide an iPad app than a Flash experience playable through everyone else’s browser, etc. It costs more to reach the iPad than other platforms. Yet Apple explicitly demands that the publishers offer their best price to iPad users as a condition of being on the platform.

We can agree that it probably costs twice as much in marginal fuel costs to ship a 280 pound package as it does a 140 pound package, and we generally would have no problem with pricing schemes that charge double. Yet if that package is a person, the carrier is generally expected to transport the 280 pound person for the same price as the 140 pound person. But just because they are expected to do so (and often required to do so) doesn’t erase the added cost of doing so. Nor would we accept airlines that just refused to transport 280 pound people because they weren’t profitable.

The difference in Apple’s case is that pubs like FT can tell Apple that its model is more costly, and if they can’t recover additional costs, they just won’t play ball. When competing tablets have all this high-value, strong brand content, and Apple is lacking a significant fraction of it, Apple will have to change some portion of its approach or it will just lack. And the publishers who can hold out will be in a position to drive things there by promoting competing products that don’t have such high artificial costs built in. That’s where Apple eventually loses with its my way or the highway approach. Pubs like the FT will be more than happy to promote tabs that are more amenable to their businesses, even if those tabs are less *magical*. And companies like Pearson will be more than happy to leverage all of the other content they control (i.e. textbooks) to get concessions on magazine subs. Apple just is not in a position to dictate here, and everyone knows it.

paikinho

Strikes me as a bit mean spirited, unkind, with gross generalizations as to peoples eating habits.

Eating 2 meals on a plane is no longer possible since generally one does not get a meal. And hogging peanuts is a bit derogatory.
Would one say a thin person is hogging peanuts simply because they might eat a pack or 2 on a plane.

paikinho

We can agree that it probably costs twice as much in marginal fuel costs to ship a 280 pound package as it does a 140 pound package
—————————-
I wouldn’t agree that it costs 2x as much to ship a person who is 280 pounds across the country as it does someone weighing 140 lbs. The fuel costs is not double I believe.

The assumption is that the airlines don’t account for this variation of customer weight in their price structure already. Given that Obesity is exploding in our society, the mean weights the airlines are carrying has risen dramatically over the past 30 years. Add to that the more general size increase of the human population aside from the obesity increase over the generations and yet the cost of airline tickets is cheaper today on average than it was back in the 1970’s.

Additionally, since the airlines have been packing in more seats and cramming more people into the plane,  weight is not really such an issue. The disparity between one 280 pound person to a 140 pound person is lessened even more with the increase in overall weight because they have packed 20-25% more people in.

paikinho

2. Can we agree that if you use Adobe/Flash end-to-end for all your other electronic distribution, and iPad precludes that (or makes you package it differently with limitations) that it adds a cost?
——-
No, the cost of developing a distribution app is a miniscule cost to the chance to sell ones product to 120 million people. Plus it can be written off I’m sure as a price of doing business.

paikinho

3. Can we agree that having customer data via opt-in probably imposes an opportunity cost versus having it by default?
————

That precludes that customers could prefer to not have their info for sale. And it assumes that this would not potentially be beneficial to the company.

Since this is a selling point for the Apple ecosystem, more people could subscribe given the knowledge that this will not be an issue. There will be a certain confidence level in the process where none exists now. Instead of an opportunity cost there could conceivably be an opportunity gain.

What apple essentially is doing is providing a different option for the company. Now instead of making no money off of subscriptions, the company can make 70% return on subscriptions so they can be less dependent on advertising revenue.

Bosco (Brad Hutchings)

Sure the example is mean spirited. That’s the point. Most would be offended by or at least mildly uncomfortable with the sensibilities expressed in it. But it doesn’t change the fact that if someone is too big to safely or comfortably (for adjacent passengers too) fit in one seat, on a crowded flight, the airline may lose the revenue generated by that extra seat. Yet, many of us still expect the airlines to accommodate those costs. They’ve tried billing fat people, and people with small kids (aka projectiles during turbulence or a hard landing), and the public hasn’t always been too keen on that.

Well, confronted with additional costs, FT said no, and there really isn’t any case for moral outrage against them to suck it up. The sentiment is “don’t let the door hit you in the ass”, which of course, it won’t. Apple just is not in a position to impose the costs (i.e. as the “fat” guy) and have the publishers (i.e. as the airline) forced to deal with them.

@paikinho: If your arguments on those 3 points held up in practice, they surely would have held up in the case of FT. Similarly, many people tell me I should have my apps in the MAS. I’m doing just fine without that the restrictions that adds, TYVM.

John Dingler, artist

The most valuable kind of assets a company owns is customer data; It’s a recurring from of income, so naturally companies like FT crave it from the get go.

FT wants potential customers to opt-out of giving personal data while Apple gives one the option to opt-in. Since Apple is known to make most of its income from hardware, it has much less need to gather, sell, and resell customer data. These two divergent forms of business models seem to be the essence of the conflict.

The Apple business model better suits me; My peace of mind counts, not FT’s.

Aside from this issue, the Financial Times is a Rightwing publication; It promotes corporate values such as corporate welfare on the backs of individual welfare recipients who actually need it to survive. It’s publications like this that likely failed to check the facts about the lies on Bush’s justifications given for his invasion of Iraq and his near-replacement of the US Constitution with the highly subversive US Patriot Act. Instead, the FT giving statistics to show how much Wall St. investment banks were making off of weapons manufacturers and staple crop failures. All this promotes social unsustainability.

No, I have little sympathy for the concerns expressed by the irresponsible management of the Financial Times or, for that matter, Murdock’s outlets.

mhikl

Would this be a simple solution? FT could have two ways to receive their subscription on the iPad.

1. Free:
  you fill out the form and give all the personal information they want.

2. Hefty charge:
  no personal information taken.

Haven’t a clue what hefty charge would be but, regardless,  everyone would have a choice in the matter.

The Mouth of Spiel and his ilk wouldn’t have to shuck out the shekels for his subscription and would be delighted that Apple wasn’t getting its copper.

The rest could choose to pay or choose to pass. Of course, Apple would get its 30% but that is less than Amazon’s 70%.

I like choice and this seems a no-brainer. Sometimes I do live in the real world . . . me thinks.

Lee Dronick

Would this be a simple solution? FT could have two ways to receive their subscription on the iPad.

1. Free:
? you fill out the form and give all the personal information they want.

There is probably isn’t a legal requirement to enter factual personal data. Use a nom de plume, a throwaway email address and your phone number is 555-1212. Then watch to see who else gets that info.

mhikl

Excellent point, Sir. However, an honourable person wouldn’t do such a think should he choose # 1. (checked and saw think. Freud would have approved, so I left it.)

However, I do have a crazy account similar to “ThisIsS*” with a personal name similar to Nona Y. Busi (all run together for user name), born round 1912 or the lowest I could enter at the time, and a lot of other good fun. Comments are particularly enjoyable. I rant about the 14 year old wife, how very liberal we are here in Canada, the blessing of the palsy girlfriend being able to remove her teeth, the idiot teenagers in the neighbourhood, toddlers pooping on my lawn, my handy sling shot and accuracy, how infrequently a religious peddler comes to my door. I’m ultra rich but reside at a trailer park address. My phone no. I leave blank when I can or used a Conservative politician’s no. in the capitol as I don’t want to have a real human being receiving calls inadvertently. I must remember the 555 thing; clever. I also registered from a windows machine that doesn’t know me.

Paranoid can be a good friend.

I check it ever now and then and clean out the emails. I like tidy.

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