Apple, Publishers Still Miles Apart on iTunes Subscriptions
Magazine publishers used to salivate over the iPad. Now they're a lot more reserved. They make hopeful noises about Google's Android tablets instead. — That's because Apple and the publishing industry haven't been able …
Context & Ripple Effects
Eight months ago the iPad was framed as publishing's last hope — the device that would finally make people pay for magazines again. That optimism has curdled: as of December 2010, Apple and the major publishers have failed to agree on iTunes subscription terms, leaving magazines selling single issues rather than recurring digital subscriptions inside their apps.
The standoff is handing Google an opening it is actively equipping for — the confirmed Widevine acquisition points to streaming-media ambitions, Android 2.3 is imminent, and publishers are already making hopeful noises about Android tablets as the less restrictive storefront.
First-order effects
- Magazine publishers hold back recurring subscription sales on the iPad, capping the revenue model that made the device look like a lifeline in April 2010.
- Google gets a ready-made pitch for its tablet push: a storefront willing to offer publishers subscription terms Apple will not.
Second-order effects
- If Apple's terms stay fixed, expect publishers to route new subscription products toward Android first, forcing Apple either to soften its cut-and-data demands or watch its device become a newsstand without news.
- A failed negotiation with the dominant app store pushes publishers toward collective alternatives — joint newsstand ventures rather than one-off app deals — changing who owns the customer relationship.
Third-order effects
- The dispute is an early instance of the structural question of the tablet era: whether content owners' subscription economics get set by platform gatekeepers or negotiated by them, with every publisher-apple pairing watching the outcome.
The trend: Tablet-era publishing is turning into a contest over who controls the subscription relationship — the storefront or the content owner — with publishers willing to shop platforms when terms bite.