The Apple-inspired tablet subscription brouhaha that was sparked in Europe and spanned the globe in a matter of weeks is a proxy for two simple propositions: control of the customer relationship and the flexibility for news publishers to seamlessly expand news beyond paper.
The issue is emotional to newspapers because of the peculiar moment in our industry's transition to multi-media, the love of the iPad platform, the change in Apple rules, and the poor way the rule change was communicated. That's a toxic combination of love and hate.
This may be a defining moment for the whole category of devices and the future business model of newspapers.
For those catching up to developments, here's the story in a nutshell:
- When Apple created its app store, it allowed publishers to choose between the one-click iTunes model or a redirect to the publisher's web site if the app was part of a wider digital offering — allowing publishers to collect the customer data and manage the relationship. This helped fuel the passion behind iPad app development.
- Working with Apple has been challenging for publishers from the beginning. The app review process, already as magical and mysterious as the iPad itself, lacked any semblance of transparency. Apps would even be rejected for content commonplace in print in certain markets.
- More than three months ago, Apple quietly began withholding approval of news apps that redirected customers to the publisher's Web site.
- In recent weeks, Apple abruptly informed news publishers that apps utilising a system other than Apple would henceforth be rejected, and existing apps must come into compliance by June 30.
- Publishers that offered in-app purchases of other products by credit card have been told the feature will be disabled as it is seen as a way of bypassing the iTunes model.
- Publishers that had approvals for requiring compulsory registration by customers have been told it must be turned off.
- European press associations have demanded investigations, and national competition authorities are obliging. Publishers and press associations worldwide are taking a quieter approach, though they are no less concerned. INMA is convening a Roundtable on Tablet Subscriptions February 17 in London.
In short, the overriding issues are about the rule change, the app review process, customer data, and censorship of content.
News publishers need to control their own destiny when it comes to their business model and relationship with customers. That relationship is evolving toward a seamless, platform-agnostic “newspaper anywhere” model that the new Apple policy trips up before fruition.
Newspapers and magazines are complex beasts — their products, their audiences, their platforms, their business models. They aren't a game like Angry Birds or a banking app like Chase with single-purpose, platform-specific value propositions. What happens on the iPad might affect what publishers do in print which might affect what publishers do on the Web; it's all inter-connected in a way different than most other brands in the app store.
For example, the customer data issue is a bit deeper than just about having names and an e-mail list for promotions. The devil is in the details: if you sell a “platform-agnostic” subscription via the Apple app store and you don't get a physical address, how could you ever deliver a printed copy as part of a package? How could you ever know enough about your customers to develop out a metrics-rich advertising model?
I have no crystal ball on the business model for other industries. But I know the news publisher must make the puzzle pieces of multi-media work, and the move by Apple trips us up before we cross the threshold.
The value of the iPad to Apple is somewhat similar to the value created by sports franchises where profits are often slim but franchise value grows exponentially. In a side way, the pennies that Apple might get from an iTunes purchase is nothing compared with the cumulative value of more and more news apps that make the iPad or iPhone indispensable to consumers. The iPad is an entertaining, expensive, hollow toy without apps that connect consumers to the world around them.
Let’s be fair, publishers: Apple's iPhone, iPod and iPad are exciting platforms for us to showcase our unique content to an ever-growing digital audience. And for some publishers, iTunes is just the right user-friendly service to sell subscriptions by, perhaps worth the eye-popping price of 30% of revenue — especially for newspapers that don’t have their own e-commerce solutions.
Yet Apple's new subscriber tool for publishers, still to be fully launched, offers only a weak opt-in choice for customers who may wish to share their details with the publisher of the app.
What I'd like to see from Apple is more flexibility and less rigidity. Not all newspapers are the same. Give publishers an option to preserve that customer relationship if, as many of the major players have, they are willing to invest in the robust e-commerce capabilities. Recognise publishers as key partners, not just vendors. Frankly, publishers counted on this when they entered the relationship with Apple in the past year.
And if this is all about the 30% cut to Apple, I wonder if newspaper publishers would pay some kind of fee to Apple for the use of their distribution service.
In the not-too-distant future, there will be a plethora of alternatives to Apple that will create a new competitive context, even though Google Android's rules show similar rigidity to Apple along with 30% commissions to sell in its Android market. There will be massive market pressure to create platform-agnostic systems where news publishers can deploy simply — no doubt the HTML5 revolution long talked about.
This is not a war; just a disagreement between new partners. Please, Apple, let publishers have the relationship with their customers as they see fit.