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Subscriptions Come to Apple’s App Store: Good News or Bad News for Movies, Magazines?

February 15th, 2011 02:50 admin Leave a comment Go to comments

apple_logo_150.jpgApple announced the availability of its new subscription service in the App Store today. This service extends the billing service made available with the recent launch of News Corp’s The Daily.

That means that subscriptions purchased from within the App Store utilize the same billing system that’s used to buy apps and in-app purchases. Publishers will be able to set the price and the length of the subscription – weekly, monthly, bi-monthly, quarterly, bi-yearly, or yearly. Apple touts this one-click subscription and renewal option, that will give customers the ability to manage all their subscriptions – including cancellations and payments- from within their iTunes account page.

Will Subscriptions Save (Digital) Magazines?

Despite the promise of slick content delivery via the iPad, digital magazine subscriptions have been lackluster. Part of the problem, until now, has been their availability only as single issues, forcing customers to purchase each copy individually rather than subscribe to the magazine for regular updates. Wired Magazine, for example, launched its iPad app to much acclaim and excitement, and while it sold 100,000 of its debut issue, those sales have plummeted since, only selling around 23,000 of the November 2010 issue.

Publishers will give Apple a (hefty) 30% cut of subscriptions – the same revenue share for app developers. Although the subscriptions will make it easier for customers to buy digital content, publishers have long balked at some of the privacy restrictions Apple has put in place, arguing that they need to have more customer information than Apple was willing to provide in order to help sell ads and provide their subscribers the content they want. According to today’s press release, customers will have the option of providing the publisher with their name, email address and zip code when they subscribe.

There’s no word in today’s press release from Apple if and when publications will join The Daily in offering subscriptions.

The Repercussions for Others Who Sell Digital Content via the App Store

Although the news of the subscription model might sound, at first, like good news for those who’ve struggled to port their content delivery mechanisms to the iTunes store, there are hints in today’s announcement of trouble ahead.

Apple will allow publishers to sell digital subscriptions outside the app, but there Apple says that the same subscription offer must be made available – at the same price or less – to customers who subscribe within and outside the app.

But here’s the sentence that has some folks worried: publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

That language may have vast repercussions on the apps that do offer digital content now. After all, as the press release states, Apple’s new subscription service is available to “all publishers of content-based apps on the App Store, including magazines, newspapers, video, music, etc.” That doesn’t just mean subscriptions for Wired. That means subscriptions for Netflix, Hulu, Pandora. And as the recent dust-up with the Sony Reader indicates, it may limit the ability for apps like Amazon Kindle to point users to their website in order to buy content to later consumer on the iPad.

It may be that Apple is confident of its lead and market share with the App Store and with the iPad. But with Android hot on its heels and with a crowd of tablets in wings, waiting for their moment in the spotlight, Apple’s new subscription service may make magazine subscriptions easier at the expense of driving some frustrated customers and publishers elsewhere.

Source: Subscriptions Come to Apple’s App Store: Good News or Bad News for Movies, Magazines?

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