My Thoughts on Apple's New Subscription Model
The more I think about Apple's new subscription model for content in iTunes, the more I like and agree with it. Apple's primary concern is to deliver the best user experience to its customers and to make money. Most objections lie around Apple requiring app developers, that have an application that delivers content via a subscription, to offer it as an in app subscription with Apple receiving 30% of the sale. These developers can offer users access to the same content delivered via iTunes with a sign up on their own website. In this case the content provider would give Apple 0% of the sale.
Additionally there is a discrepancy in my mind between subscriptions, memberships, and third party stores. Netflix and Rhapsody have membership services where you pay a monthly fee to access a library of content. Third party stores like Amazon Kindle and Zinio allow you to view content purchased outside the application. The Daily and Popular Science are subscriptions where you pay a monthly fee to access newly created content that is then pushed to your device. It is unclear if then new subscription policy will apply to all of the aforementioned scenarios or only some of them
Lets examine three examples of how services, users, and applications could interact with these new policies after the Apple imposed June 30th deadline.
Netflix
User A has been a Netflix subscriber for years. He buys an iPad and downloads the Netflix iPad app, logs in with his existing membership and begins to watch his favorite movie. In this case Apple receives 0% of his Netflix subscription and Apple does nothing for the content provider. User B lives under a rock with his iPad. He discovers and downloads the Netflix app, subscribes to the membership via an app subscription. In this case, based solely on what we currently know, Apple would receive 30% of the subscription cost. For this 30% Apple has delivered a new user to the service, handled all of the associated billing, and can give Netflix data on the member for marketing purposes.
Kindle
User A wants to buy a book from the kindle store. She fires up a browser of her choice, buys the book, and it appears in the kindle app on her device. Apple gets 0% in this scenario and does nothing. The user then wants to buy another book while in the app so she buys it via the old in app purchase framework (not the new subscription model) and Apple receives 30% of the sale. Apple again processes the billing but provides no discoverability because the user already has the app installed and can provide no additional marketing data than Amazon already has collected from the user.
Popular Science
User A has a current Popular Science subscription and wants to transition to a digital copy on his iPad. He signs up for the iPad subscription on the publishers website and enters that login info in the iPad app. Here Apple receives 0%. User B is browsing the app store and discovers and downloads the Popular Science app. The user purchases a monthly subscription using the in app subscription framework. Apple would get its 30% in this situation. For this 30% Apple is handling all billing, pushing new content to the device, providing the publisher with a new subscriber, and giving them marketing information about the user. When the publisher brings in a new or existing subscriber Apple is providing the same service while receiving no monetary compensation. So while 30% might be on the high side for the services Apple provides, it is balanced out when you take into account that for many subscribers Apple will provide these services for free.
I don't see the first two scenarios playing out. I believe that this new subscription model will only apply to scenarios like I detailed with Popular Science above but I am sure we will find out soon enough.
Don't expect content subscriptions costs to remain where they are if they're going to be forced to pay a tax to Apple. Someone has to cover that fee and, as it always does in every business market, the end-user is ultimately that someone. "Crap rolls downhill" as they say, and in this case, that 30% is the crap, and it's going to trickle down to the end user.
Apple isn't providing any services for "free," rather they're charging content providers 30% to perform the services. If content providers were smart, they wouldn't allow any in-app purchases, rather they'd just pop up a message that says "Hey, go to the website and buy from us directly so we don't have to raise your costs." and really stick it to Apple.
These services are already built into the existing model for content providers. Amazon already has a billing department to handle digital purposes, so either these departments get layed off and Amazon pays Apple, or Amazon continues to do what they do best and doesn't sell books through Apple.
Everyone thought digital distribution would bring down the costs of print (magazines and newspapers) because Apple was providing a means to save on overhead. But Apple then charged content providers a fee and the 30% tax just meant that content providers had to charge the exact same amount for digital content as they did for the print.
You can go buy a copy of a magazine for $4.99 at your grocery store, or $4.99 on the ipad. Either way, you're still paying $4.99 and it sucks to be us. Ultimately, the ripple will get to end-users and as we've seen in past models (Hulu going from free to pay, Netlflix raising prices, iTunes songs going from $.99 to $1.20) prices are going to go up to cover the overhead costs.
Your points on 30% billing...and giving say Popular Science a new subscriber makes no sense. Popular Science is now out 30% of the original sale. Who cares if it's a new subscriber they are still making less money, and apple is making money off of something they had no part of creating, the magazine.
In the end it's just apple being greedy and making money off of other people's hard work.
Content is different, and every platform has similar if not higher fee structures. Amazon takes more money than Apple so I guess they are just being greedy too.
Apple's way is a great business model, a superb business model, but it's not always ethical.
And I never said one thing about defending Amazon but if you want to go there. The one thing that they have going is still the openness and lack of control on the customer. I love the fact that I can buy songs off of Amazon without worrying about Apples damn exclusive crap they put on their songs. Why do I have to pay more money to be able to play my songs on other devices with no problem. With Amazon's songs I can sync them up to my Droid, Computer, Itunes, ipod etc. with no problem. Songs I bought on itunes a long time ago, I can sync them to my droid but oh wait, I get to my car and try find out that they're protected and can't be voice activated in our car.
The point is it's good to control you business practices but you don't have to control everything. You start putting you hands on everything you soon start to piss people off, and lose customers.
Apple are already getting a cut of the app sales, why should they then get a cut of the content?
My trouble with Apple in this is that they are acting as if they are providing the sales lead to the app developer. However it is the app developer who has put in all the effort into developing the app, and then has to give a cut to apple for doing nothing!