NewspaperDirect Offers a Strategy to Publishers Wrestling with Apple Tax

Only a year ago, Apple’s iPad was touted as a publisher’s dream: a portable device that delivered an intimate and immersive reading experience.  Today, Apple formally announced a 30 percent tax on all content sales via iTunes, requiring all publishers to provide in-app subscription plans that are the same (or better) than their subscription plans outside of the app.  On those subscription plans, Apple will take 30% off the top!

Right up front, let me assure everyone that NewspaperDirect is totally against this money grab from Apple and believes that publishers and subscribers should take the same position.  Here’s why:

1.  It is unjustifiable for a hardware device manufacturer to charge 30% on a transaction that costs them less than 5 percent to perform.

2.  It is inexcusable to force publishers to comply with a manufacturer’s tiered subscription levels under that manufacturer’s terms and conditions, not just on its own iOS devices, but on whatever platform the publisher supports under their subscription plan (e.g. Android or BlackBerry or even PCs).

3.  Apple’s personal data policy is completely self-serving, helping neither publishers nor their subscribers.

Offering opt-in choices for subscribers to share their personal data with publishers is fine for single copy sales, but when a user specifically subscribes to a publisher’s content, the publisher should have access to the personal data of “their” subscribers.  These are not Apple subscribers; these are the publisher’s subscribers.

In a world where personalization is becoming more and more important, publishers must be able to tailor content to the preferences of their subscribers. Under Apple’s policy, this will not be possible.

And what is even worse is that publishers will not be able to count these subscribers in their audited circulation.  Ridiculous!

“I’m very dismayed that Apple would make such an unpopular move at this time, given the abundance of high-quality alternate devices entering the market,” said Nikolay Malyarov, NewspaperDirect’s VP of publishing and legal affairs. “We’ve already seen how Android-based phones negatively impacted the iPhone market share; I expect nothing less from the open, full-featured Honeycomb-based tablets, BlackBerry and Win 7 devices coming soon.  People want a wide variety of choice when it comes to devices, and this move will likely compel content owners and publishers to rethink their tablet strategy.”

Publishers must act now to avoid lock-out from their subscribers

NewspaperDirect recommends that publishers immediately implement a viable cross-platform strategy and factor Apple’s 30 percent cut into content sold via the App Store:

1.  Cease all free promotions of the iPad in newspapers and on publishers’ websites. Instead, accord more attention to non-iOS devices in their publications. If Apple is choosing to exert control over their channels, publishers should focus on channels that are not subject to the whims of greedy hardware vendors.

2.  Develop free news apps for the Apple iOS, and use them to drive traffic to publishers’ websites where more reasonable options are available to subscribers on other platforms.

3.  Pursue a multi-platform approach that uses cross-platform technologies and create two subscription models on your website:

Subscription plan 1:  Offer content across all supported platforms except iOS devices at your normal subscription rate.

Subscription plan 2: Offer content across all supported platforms including iOS devices for 30% more than Subscription plan 1.

Marketing will be key in communicating to subscribers the added value they will receive through a subscription with publishers rather than through Apple — value such as subscription portability across devices and platforms, digital value packages, loyalty programs, etc.

Publishers who already have iOS apps in the App Store or have apps in development, will  need to update their subscription plans/tiers to comply with Apple’s new policies.  NewspaperDirect will take care of all the UI development to ensure your apps are fully compliant.

“Apple’s subscription model and user data policy for publishers is very short-sighted,” said Alex Kroogman, CEO of NewspaperDirect.  “With powerful, new web apps gaining popularity, and technologies like HTML5 which provide native-like functionality on tablets, publishers can now give their subscribers an excellent news app, directly in the web browser, and completely bypass Apple’s App Store.”

Apple has gone too far.  It’s time for publishers and subscribers around the world to stand up and fight this extortion.  Do your part – speak out now!

Gayle