Apple’s New App Store Subscription Rules Are Not Horrible

Apple has served notice on publishers who use the iOS App Store to distribute content. You cannot sell subscriptions unless there is a link from within the app for customers to quickly and easily subscribe. Warner Crocker and Sumocat already weighed in on this issue.

Here’s my question about the whole Apple model. What’s wrong with that? Publishers may not like giving Apple 30% and losing subscriber data. The tech media has been crying fowl as well, saying that 30% is an unfair rate. Google answered saying, “We will only take 10%. Come to Android where the water is fine!”

But if you look at it more carefully, 30% is not that unfair. In fact it is a bargain. There are number of reasons why.

Wired ipad app

Publishers Will Sell More Subscriptions

The easier it is for consumers to buy a subscription to a magazine, the more likely they are to buy. I know it is not that hard to click a link that opens Safari on the iPad where I can enter my credit card data to get a subscription to PC Magazine. But if all one has to do is hit a link, enter a password and tap OK, then even more people are likely to do that. I cannot support this with figures, but it just makes sense. The easier it is to buy a subscription, the more likely people are to buy it. This makes it easier than buying a magazine subscription the old fashioned way. Remember filling out those annoying little cards that used to litter the floors of the magazine rack area of the book store?

Subscription card2

The math is not that hard. If I sell 4 subscriptions for 2.50/month, then I’ve made $7 after Apple takes its cut. I only need to sell two more subscriptions to make up the $3 loss. Two more equals $5 but Apple takes another $1.50 (30%) and I get $3.50. I’m actually making $.50 more.

  • THE OLD WAY: 4 X $2.50 = $10.00
  • APPLE’S WAY: (6 X $2.50) X.70 = $10.50

There is no guarantee that a publisher will get 2 more subscriptions for every 4. That’s a 50% increase. But when people see what digital magazines can become, I think they will get two kinds of subscribers. First, they will get their regular subscribers who loved the print magazine and just want to read it digitally. Second, they will get new readers who didn’t know about the magazine or weren’t likely to subscribe by filling out cards or a web site form. Finding the magazine digitally was the only way these people would have ever become subscribers.

Publishers will make more money the easier it is to buy subscriptions. But they don’t make all or even most of their money from subscriptions. They get a lot of their money from in publication ads and from selling the mailing lists.

Avatar creative movie posters

Publishers Will Make More Money From Ads Eventually

Right now, if I want to put an ad for my killer summer block buster in Sports Illustrated, I have to come up with a two dimensional poster-like ad. I pay for it. SI runs it.

The iPad is a different animal than a print magazine. The ad in the digital version of SI could have rich multimedia content that the reader is more likely to enjoy. Instead of just the movie poster style ad, I can include a trailer. When it comes out on DVD, I can include a link to the iTunes Movie store. I can include links to the movie web page where fans can interact. I can include a link to the movie video game in the app store. There are probably dozens of other creative things I can do to pad my revenue via iPad mag ads. That ad in SI becomes far more valuable to me. As more and more people buy digital magazines, publishers can charge more and more money for the ads.

Publishers Will Be Able Collect More Valuable Reader Data

Selling the subscriber list is a much bigger cut of the pie than we think it is. I’m not just talking about selling it to people who want to market stuff. Subscribe to a a print magazine and watch the junk mail flow more readily. Publishers do that a lot.

What we’re primarily talking about here is being able to sell to advertisers based on information they collect about us. The more publishers know about their customers, the more they can charge for ads, which are then more targeted. If the publisher knows that they have a lot of men reading their magazine, they will create male-focused advertising and it will be more effective.

One of the issues publishers have is that Apple won’t be giving over the subscriber information. The publishers say that is not good.

If publishers get creative, they can harvest even more useful data about us from within their magazine’s app. Based on what links we are tapping, they know more accurately what we are interested in viewing. This is far more valuable than stuff like age, gender, geographical location, and annual income. Those things are useful. But isn’t it more useful to know that I like gummy bears or tennis shoes because I tapped on links for those things?

Creative publishers can gather this info without us even knowing that we are revealing this kind of stuff about ourselves. We just think we are reading stories about shoes or checking out where to get cheaper candy. Based on what articles we read, what ads we select, and what info we request, they know what we like and can focus ads. The ads will be more effective because it is for stuff the reader is already interested in seeing.

Publishers Will Please More Readers

It is more enjoyable to get the content we want to view or consume the way we want it. For early adopters of the digital publishing revolution, we will feel more warm fuzzies for a company who tries to give us what we want how we want it rather than treat us like the enemy. The music industry missed out on this. The publishing industry is going down the same road. If they learn from the RIAA that it is a mistake to treat customers rudely, they will make us happier and we will be more likely to buy their content rather than steal it.

Torrent sites will have pirated copies of anything anyone puts out there in digital form. But if it is really easy to buy at a very reasonable price, we are not going to go to all the trouble of finding the content in obscure locations. After all we don’t want to get viruses or malware at these places.

Please publishers, make reading your content easy and reasonably priced! I will buy a lot of it! Make it hard and ridiculously priced and I won’t bother. Right now, the best way to do that for iPad owners – all 15+ Million of us – is making content available in the iOS App Store even if Apple’s rules are a little hard to swallow at first.