My 2/27/11 Missoulian column
Two weeks ago I predicted the death of The Daily, an app for the iPad produced by the News Corp. The Daily is a new publishing effort to provide daily news solely on the Apple iPad, in conjunction with a new subscription service of Apple’s iTunes store that delivers the paper once a day.
At 99 cents a week, The Daily is a new business model for news. Some wonder if it will have a disruptive effect on the news market and make iTunes a leader in online news and “print” media distribution, as it is in online music.
(I predicted the The Daily will go under because of low quality journalism, a buggy app and because it’s limited to the iPad.)
But there have been some interesting developments over the past few weeks concerning Apple’s new subscription service. Google jumped in the day after Apple’s announcement with its own media subscription service called One Pass, which charges publishers a lower percentage rate than Apple.
Apple’s iTunes subscription business angle is this: publishers can sell subscriptions to newspapers and magazines through the iTunes store. Publishers get great exposure, ease of sales and downloading, and Apple gets a cut of the subscriptions and renewals through iPads, iPhones and iPods.
But some publishers are screaming that Apple is a rip off with its 30 percent cut of sales. Google’s One Pass works differently in terms of publisher’s rights and only charges 10 percent.
Galen Gruman has a good take on the economics of news and magazine publishing at PCWorld. He says the basic business model has been flawed for some time, and Apple is exposing these problems.
In the past, publishers have depended more on advertising revenue than the actual subscription cost to stay in the black. And with Web advertising greatly impacting print advertising, publishers now find themselves in a jam with trying to raise subscription fees.
Gruman says publishers have ignored the advertising vs. subscription discrepancy problem for years, and now Apple is making them confront it. Read Gruman’s article at http://www.techhive.com/article/220185/apples_subscription_service_upsets_the_cart.html
Will Apple end up helping online publishing sort itself out? Or will publishers balk at giving 30 percent to Apple and run to Google?
Apple obviously investigated the situation as part of its own foray into subscriptions, and must have seen an opportunity to disrupt the market.
But the other unspoken problem with online news is that millions of people are used to getting their news for free on the Web. Will Apple be the critical mass to make that change?
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