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The hidden headlines of the Apple app subscription controversy

18 February 2011 · By Earl J. Wilkinson

News publishers and Apple need each other. Yet to make the partnership work, we need solutions that respect vast differences in size and business models among publishers, an understanding why a disconnect from customer data is a bad business model, and why flexibility on content restrictions is necessary.

Now that European publishers have put their exclamation point on the Apple app subscription controversy and Google has countered with its own service, let's add some colour to an otherwise black-and-white week. Allow me to flush out some nuances.

If you sort through yesterday's INMA meeting in London, the various public statements this week, and the like, here are some big headlines that fell through the cracks and didn't get reported:

Apple Hears Us, Has No Answers Yet: Apple didn't do enough due diligence with news publishers — certainly in comparison to Google. What I hear is that Apple executives are absorbing the publisher blowback, they want to address it, but they're floundering for answers.

Content Restrictions Key Point: The European publishers don't like the revenue split, the lack of transparency in the app review process, and the unwillingness to share data. Yet these pale in comparison to how livid they are about content restrictions which they're couching in press freedom terms. Cases commonly shared are newspapers whose apps were rejected because there were too many articles about the Android platform and because of “Page 3 girls.” To them, this is an American company applying American standards to their content.

Small Vs. Big Players: An important nuance is that the Apple policy may be good for small players. That typically means game developers. Yet I'm thinking more smaller newspapers that don't have the robust CRM systems to collect data and play in a bigger game.

Subscription Vs. Single-Copy Newspapers: More evidence of the lack of homogeneity in the news industry is the fact that newspapers in many countries are distributed on a single-copy basis — in some cases, no subscribed customers. These publishers have little idea who is reading their newspapers — and never did. The Apple deal is just fine with them.

Disconnect From Customers Old Story, Bad Model: Looking across a global canvas, the Apple situation is not the first time publishers have been disconnected from their customers. You might be surprised to learn that many publishers don't have a direct relationship with their print newspaper subscribers. They ceded that function in previous decades to third-party distributors who control the subscription lists. This seriously affected the publisher's ability to create an advertising model in certain countries. And I can report that, to this day, publishers in those countries desperately want to rid themselves of this thug-like distribution model. This is not a winning formula in an era when advertisers need to know about audiences and publishers need to know how their products are being consumed.

Retailer Vs. Reseller and Revenue Split: Regarding the 30% cut of revenue, let's compare music content to news content. Apple is the retailer when a song is bought from iTunes. It delivers the song to computers and mobile devices and it keeps the song on its servers. By comparison, Apple is not the retailer when it comes to news content; in fact, it a reseller with service a lower factor since it doesn't keep publisher content on its server.

For all of this public back-and-forth, let's remember that news publishers love Apple. They adore them for bringing hope and a hint of sizzle to an industry that desperately needed both. One look around the room at the INMA meeting in London, and people were carping about Apple while tapping out notes on their iPads, iPhones and MacBook Airs.

So now that we've had our say, let's all exhale. News publishers and Apple need each other.

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About Earl

Earl J. Wilkinson is executive director and CEO of INMA. In his interactions with INMA members worldwide, Earl has one of the broadest views of newspapers of anyone serving our industry today. He is a trendspotter and a leading advocate for cultural change, transformation, and innovation. This blog represents his unique view of the emerging global news media industry.

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