Apple launches in-app Subscriptions…

  • Posted: 16 February 2011 09:20 PM #46

    Hamourabi - 17 February 2011 12:13 AM

    I noticed that PED is getting insidiously negative toward Apple.

    I think PED takes great pride in being “outside the reality distortion field”. Over the past six month his posts have been more and more positive, almost to the point of glowing. If he feels a need to search for flaws in Apple now and again, perhaps we should indulge him.

         
  • Posted: 16 February 2011 09:23 PM #47

    FalKirk - 17 February 2011 01:20 AM

    I think PED takes great pride in being “outside the reality distortion field”. Over the past six month his posts have been more and more positive, almost to the point of glowing. If he feels a need to search for flaws in Apple now and again, perhaps we should indulge him.

    I hate to criticize but lately he seems to have depended too much on Horace’s information… I like what PED does mostly and it is great that he is giving Asymco more publicity, but I wish there would be less of the stuff I get from Horace’s twitter account. Just sayin’.

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    Posted: 16 February 2011 09:29 PM #48

    Here’s what Amazon charges publishers to sell on the Kindle store.

    The true cost of publishing on the Amazon Kindle

    The amount of revenue each publisher earns for their Kindle newspaper/magazine is calculated thus:

    (Price ? delivery costs) x 70%

    ?Delivery costs?? I hear you cry. This is the wonderful world of electronic publishing: Amazon hasn?t got an army of paperboys popping the newspapers through letterboxes each morning.

    It does, however, pay for ?free? 3G connections in the souped-up version of the Kindle, and someone has to pay for that data. Amazon charges 10p per MB for delivery of newspapers and magazines in the UK.

    That’s currently 16? per MB. PER MEGABYTE!!! (apologies for screaming)

    Of course, people (with some justification) expect electronic publications to be cheaper than physical magazines/newspapers. But even if publishers were prepared to take a hit on the Amazon delivery costs, they have absolutely no control over how much their newspapers or magazines cost in the Kindle Store.

    So if Amazon decides to publish PC Pro at the bargain price of ?1.99 per issue, not only are we taking the hit on the delivery costs, but we?re severely under-cutting our print magazine too.

    ?Amazon.com determines the Kindle edition price,? Amazon?s T&Cs; state. ?Publishers will receive an email notification with the pricing details prior to launch of the publication.?Conversely, if Amazon decides to push for maximum profit ? The Economist costs ?9.99 per month on The Kindle store, almost ?20 more expensive over the course of 12 months than a print subscription that also gives access to the digital editions (excluding Kindle) ? the publisher gets in the neck from angry customers. Check out the number of people complaining about the price of The Economist on the Amazon reviews, which average at only two stars out of five.

    No wonder most newspapers and magazines have decided to play it safe with minimal images, or avoid publishing on The Kindle at all.

         
  • Posted: 16 February 2011 09:49 PM #49

    This is problematic… As reported from the WSJ

    http://online.wsj.com/article/SB10001424052748703373404576148142926860706.html?ru=yahoo&mod=yahoo_hs

    “Google’s new One Pass service allows consumers to use one account to pay for access to multiple publications on the Web and across a range of mobile devices.

    The move comes one day after Apple laid out a subscription service for content sold through its iPhone and iPad devices, an offering that some publishers greeted skeptically. Apple would take a 30% cut on sales of subscriptions in its iTunes App Store.

    Google said it will charge publishers 10% of revenue from sales through its One Pass service. It will let publishers set prices and give them more control over customer data.

    Google Statement: A simple way for publishers to manage access to digital content
    Earlier: Apple Opens a Door, Keeps Keys
    “The publisher is the merchant of record,” said Google Chief Executive Eric Schmidt in Berlin on Wednesday. “We don’t prevent you from knowing, if you’re a publisher, who your customers are, like some other people” do, he said, a tacit reference to Apple.

    Mr. Schmidt added that Google’s “intention is for publishers to make all the money.” The 10% fee “roughly covers our costs,” he said.”

    How will Apple respond? Will they reduce their cut to 15- 20% or will they match Google’s 10%? Subscription fees can be large. Shouldn’t the percentage drop as the cost of the content increases? Apple cannot cede the subscription model to Android as it would be devastating to the platform.

    Could this be the main reason why Apple is down in after hours?

    [ Edited: 17 February 2011 12:04 AM by jeffi ]

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    Posted: 16 February 2011 09:53 PM #50

    As I recall, the subscription policy for Apple doesn’t kick in until June 30th.

    That’s an absolute eternity to change things around if Apple sees fit.

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  • Posted: 16 February 2011 10:21 PM #51

    jeffi - 17 February 2011 01:49 AM

    This is problematic…

    I disagree. This is perfect. First, we can stop all the endless blathering about monopolies and anti-competitive practices. Google has a store now too. Surprise, surprise, competition lives.

    Second, this will be a test of whether the Apple model or the Google model is superior or whether they’ll both co-exist. I’m sure Apple didn’t implement their model without thinking there would be a response from Google and others. Whether Apple is right about their model or not, only time will tell. But I feel very confident that their model was well thought out.

    In many ways this is a classic discount v. premium, Android v. iOS conflict. Does cheaper always win or is value worth paying for? Let the games begin.

         
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    Posted: 16 February 2011 10:35 PM #52

    I’ll point to that June 30 deadline again.  Apple can easily lower its cut before this policy even becomes mandatory. 

    It’s a classic trial balloon.

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  • Posted: 16 February 2011 10:44 PM #53

    30% fee is no big deal to a content owner.  But it is a killer to aggregators, aka “app stores”

    While Apple hasn’t said do directly, isn’t it obvious why they are doing it?

    Apple is just trying to force alternative app stores from their ApStore without saying so directly.

    Once Kindle and Netflix leave, and they have to leave under the current terms, iBooks will start getting publishers quickly, because it was Kindle app that was effectively blocking iBooks growth

    Same with Netflix. Effectively banning Netflix means Apple is just about to launch a competing video streaming service on iOS.

    There is also a good reason why Apple wants to get rid of competitive app stores from the App Store.  They don’t want to be dependent on their presence the way Mac was dependent on MS Office and Adobe software.  And now is the time to do it, before those alternatives get too deeply entrenched.

    It is a bold and risky move. But if it succeeds, it will enhance Apples power, and add to profits.

         
  • Posted: 16 February 2011 10:55 PM #54

    Why doesn’t a magazine publisher only offer single copies through their app in the app store?  A single copy at the bookstore costs more than a subscription divided out over 12 months.  They are usually $3.95+ per magazine for a single copy.  This would allow a magazine to test the waters.  Apple has stated the magazines can set the length of the subscription.  I would probably be more inclined to buy a single copy while setting in an airport versus the subscription model.

         
  • Posted: 16 February 2011 11:05 PM #55

    huskerrx - 17 February 2011 02:55 AM

    Why doesn’t a magazine publisher only offer single copies through their app in the app store?  A single copy at the bookstore costs more than a subscription divided out over 12 months.  They are usually $3.95+ per magazine for a single copy.  This would allow a magazine to test the waters.  Apple has stated the magazines can set the length of the subscription.  I would probably be more inclined to buy a single copy while setting in an airport versus the subscription model.

    Subscription is where the money is and where the money always has been. Every publisher knows that once a customer subscribes, they tend to stay subscribed. Subscriptions - and the predictable flow of income they generate - are the Holy Grail of publishing.

         
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    Posted: 16 February 2011 11:24 PM #56

    iphoned - 17 February 2011 02:44 AM

    Apple is just trying to force alternative app stores from their ApStore without saying so directly.

    Once Kindle and Netflix leave, and they have to leave under the current terms, iBooks will start getting publishers quickly, because it was Kindle app that was effectively blocking iBooks growth

    Same with Netflix. Effectively banning Netflix means Apple is just about to launch a competing video streaming service on iOS.

    It is a bold and risky move. But if it succeeds, it will enhance Apples power, and add to profits.

    Apple has consistently reported (and I believe them) that they are running these stores at a bit over break-even. They don’t really care about making much profit selling music, e-books, apps or ads. They get involved with selling all those in order to sell hardware. They’re following the reverse of the razor blade model. They make money selling the razor instead of the blades.

    So I’m not convinced they really want to block the Kindle store or Netflix. As has been rumored, they may make exceptions for these services. They may offer similar products, but they’re not going out of their way to really compete on selection or price (check the iBook Store and iTunes movie rentals). I think they just want to make sure the consumer has choices.

    It’s been pointed out a few times that this is a complicated situation. I think time will reveal how everything plays out. I don’t think Apple is risking much.

         
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    Posted: 16 February 2011 11:40 PM #57

    FalKirk - 17 February 2011 02:21 AM

    ...we can stop all the endless blathering about monopolies and anti-competitive practices. Google has a store now too. Surprise, surprise, competition lives…Let the games begin.

    Exactly. I look forward to announcements of how many new subscribers Rhapsody & the various newspapers & magazines get through this outlet.

    Many of these companies are in financial trouble. They need to make some drastic changes. Instead they’re trying to find others to carry them. Google may do it for a while, but it’s not going to solve the deeper problems they have.

    It’s ironic the publishing industry is now going to trust Google to help them monetize their digital publications. It’s Google who’s been trying to give all of their content away for free.

         
  • Posted: 17 February 2011 02:32 AM #58

    I’ve been giving this matter some more thought and I’m starting to feel better about Apple’s position in all this.

    COMPETITION: Google’s rapid entry into the market is the best thing that could have happened for Apple. It totally took away all the silly monopoly talk and also provided observers with clearly contrasting business models. So far so good.

    BUSINESS MODEL: Which business model is better? We haven’t really seen either one in action yet, but I’m beginning to see this as a replay of Apple TV vs. Google TV. Remember when Google TV came out and it was going to revolutionize everything and Apple was going to be swept from the living room? Yeah. Didn’t happen. Google’s model proved to be clumsy and complex. Apple’s model proved to be focused and inexpensive. Which brings me to…

    PRICE: I was really taken aback by Apple’s 30% commission for it’s subscription model. I expected it to be less. I remember being very surprised that the Daily was getting charged 30% too. And I remember John Gruber expressing surprise about this on the Talk Show too.

    Is 30% too much? Maybe not. I’m going to link to a long article that goes into some detail about prices being charged by other online content providers. Apple’s 30% comes out looking pretty reasonable. See it here.

    But what about Google undercutting Apple’s pricing and only charging 10%? Time will tell, but from what I’m reading, Google isn’t talking about providing a service that’s even in the same ball park as the one that Apple is providing. Wholesalers deal with this issue all the time. Do you go for the discount stores or do you pay through the nose to get your products in the up scale stores? There’s no one answer. It depends on the wholesaler and it depends on circumstances.

    We know that Apple is going to provide a premium experience. Perhaps more importantly, they’re going to make it easy to subscribe and easy to stay subscribed. There is simply no way to overemphasize how important that is.

    Frankly, I’m not sure if ANY subscription model is going to succeed. But I’m starting to feel more and more comfortable with Apple’s position. The pundits and the naysayers think that price is everything. They think that the war is over before a single shot has been fired. After all they ask, who would be stupid enough to pay 30% commission when one could go with Google and only pay 10%?

    People who want to have their product in the finest store with the finest marketing and the easiest sales system - that’s who. Apple has always focused on value, not price. They’re doing it again now. Apple may or may not succeed in making subscription services viable, but if anyone can do it, they can. They’ve done it in the past and they are well positioned to make it happen again.

         
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    Posted: 17 February 2011 03:46 AM #59

    FalKirk - 17 February 2011 06:32 AM

    Frankly, I’m not sure if ANY subscription model is going to succeed.

    Ay, there’s the rub!

    Apple and Google face same problem

    But the biggest problem is one both share: being able to woo consumers who have become accustomed to getting content for free.

    I think it’s the publishers’ problem. Apple has already provided the infrastructure. The publishers need to provide unbiased, engaging content using all the digital tools available to them (instead of falling back on old Adobe tools) and charge a reasonable price for the content. They need to pay Apple a reasonable fee for creating the market and providing the infrastructure.

    Their world has been destroyed by Craigslist, Autotrader, Google & others. They cannot expect to regain the kind of profits they were accustomed to in the pre-internet era. Yet that is what they are still pining for.

    ?ITunes was going to save the music industry and instead it shifted their model from an album model to a per song model. It?s decimated the industry.?, said Ron Adner, an associate professor of strategy and management at Dartmouth College?s Tuck School of Business.

    Another intelligent intellectual who misunderstands what happened. Piracy decimated the music industry, not Apple or the per song model. The music industry tried to fight it with DRM and tried to retain the same profit levels through high prices. 10 yrs. later and they still don’t get it. Instead of dropping the prices to 69?, they raise it to $1.29 and wonder why sales have fallen.

    Once technology unravels media like it has, you have to throw out the old business models and go with the flow. Yes, it means you don’t make easy money like you once did, but you can still do quite well. Just follow Steve’s suggestions. Lower prices and people will buy your stuff.

    First the music industry, then the video industry and now the print industry - all hanging on to the hope of reaming the consumer.

    Adner…added that publishers are panicking and moving too quickly. Both Apple?s and Google?s offerings have a few positives, but at this point, it is unclear whether those positive are enough to get consumers pay premium prices for content.

    No, no, no! Consumers are paying nothing for content right now. Don’t hope they’re going to pay preimium prices. And quit trying to blame the deliverers of content. Look at the content providers themselves.

    People aren’t buying the iPad version of the NY Times (or The Daily) because there’s something wrong with the way Apple gets them to the iPad. They won’t pay for the content because it doesn’t add enough value and it costs too much.

    I’m going to guess that Elle will do well with their iPad subscription. I haven’t even seen an issue, but I know the pricing is reasonable (close enough to the print subscription price) and content that depends a lot on visuals is going to look great on the iPad. Photographic magazines & pictorials like National Geographic will do well if they can move away from delivering their material in pdf form.

    But no. Publishers aren’t going to do that. They’re going to continue to produce huge files that look no different than print and then charge more than the print versions.

    So far, content owners haven?t seemed interested in keeping prices down. Even before Apple announced its plan, prices for many news products for the iPad were priced in the premium range. Time Warner Inc.?s Time Magazine charges iPad readers pay up to $5 for each digital issue, while a subscription to a year of the print version costs just a little over 50 cents an issue.

    In other words, Time has marked up the digital issue of its flagship magazine by ten-fold, despite not having to print and mail it ? and that?s without Apple?s juicy cut.

    Idiots! I say let them die and make room for a new breed of publishers. People that aren’t mired in Adobe’s print-centric tools and know how to use the modern app-based tools to create innovative & engaging content. Make it good, charge a reasonable price and millions of people will gladly subscribe to it.

         
  • Posted: 17 February 2011 04:24 AM #60

    Well, the Apple model is all about protecting the users. Just as the iTunes TV and movie store is all about saving you from annoying ads, “print” subscription on iOS will be about saving you from having your personal data sold, aggregated, leveraged &c by the publishers.

    Nobody like that. It has to go.