Apple's New Subscription Plan Not So Great for Publishers

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There's nothing newspaper and magazine publishers crave more right now than a straightforward way to sell subscriptions via Apple's App Store. In theory, iPhones and iPads could be a lucrative platform for publishers to sell digital versions of their products. But the news that Apple is on the verge of announcing a plan to let them do just that is likely to be of limited comfort to the beleaguered industry.

The program Apple is poised to announce is targeted at newspapers, according to the San Jose Mercury News. But it's a reasonable guess that the same template will also apply to magazines, which until now have been mostly sold as single copies through iTunes. Right now, only a few papers, including The Wall Street Journal and the Financial Times, offer paid subscription apps that give buyers access to the whole paper.

Apple's new program would allow other newspapers to join them, but not in the way they'd like. The big issue is control -- of the relationship with the customer, and of the customer's information. Publishers want to know who their subscribers are so they can hit them up with renewal notices and tie-in offers, and sell their eyeballs to advertisers more effectively. But Apple sees app users as Apple customers, not someone else's -- and it would prefer to keep it that way. "Steve Jobs believes that if he made recurring credit card charges available to vendors, that it would be abused, and he doesn't trust developers to use that judiciously," says one publishing executive who deals with Apple.

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The new compromise, such as it is, is that app subscribers will be invited to opt in if they want their information shared. But that's far from a solution as far as publishers are concerned. If not having their information shared is the default option, that's surely what most customers will choose. The result will be subscribers who are far less valuable to newspapers (and that's before Apple takes its 30 percent cut of the subscription price).

A better compromise would allow publishers to offer some kind of incentive to subscribers to yield up their information. Perhaps those who opt in could receive a discount off the subscription price. But that would run up against another Jobs prejudice, his preference for simple pricing structures.

"He's so caught up in control of his ecosystem, there are times when he misses the desire of his customers," says the executive who deals with Apple, "both the publishers and the end users."
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