The subscription model Apple announced today is unlikely to please anyone
There was a rumor in the Time Life building last week that Apple AAPL — which had been in a stand-off with the publishing industry for nearly a year — had “blinked” and was about to cut a deal favorable to the publishers.
It was not to be. When Apple announced its new App Store subscription service Tuesday morning, it was as draconian as the publishers feared. Among the terms:
- Any subscription offered outside an app must also be offered for the same or lower price inside the app. No passing on extra costs to the user.
- Apple takes 30% of the revenue from in-app purchases — be they Amazon books, Time Inc. magazines or Hulu Plus TV shows. As Joshua Benton writes in Nieman Journalism Lab: “Giving up 30 percent of tablet revenue is one thing; giving up 30 percent of print subscription revenue is suicide.”
- The publisher gets to learn the name, e-mail address and zip code of in-app subscribers only if the user clicks a button agreeing to share that information — something most are unlikely to do.
- Publishers may no longer provide links in their apps (to a website, for example) that allow the customer to buy content or subscriptions outside the app, which pretty much shuts down the business model of, say, Amazon’s Kindle app.
In the press release, Steve Jobs makes all this sound like the most reasonable thing in the world:
“Delighted” is not likely how the publishers feel today. We note that no developer or publication except News Corp.’s NWS The Daily is mentioned in the press release. We suspect the rest are still studying it. You can read it for yourself here.
NOTE: Time Inc. TWX publishes Fortune magazine and hosts this blog, but I don’t speak for Fortune or its publisher.
Also on Fortune.com:
[Follow Philip Elmer-DeWitt on Twitter @philiped]