January 17, 2011, 1:28 PM —
According to recent reports from European newspapers, Apple has begun telling magazine publishers that it may begin enforcing "stricter rules" on electronic editions of their publications. The targets of these rules seem to be publications that offer print subscribers electronic versions for free on their iPhones and iPads.
Offering print subscribers access to premium or subscription only content online isn't a new concept. Many magazines and newspapers around the world have turned to this approach to boost print subscriptions. With the rise of mobile devices, the approach is a natural fit as users can more readily access print articles as well as expanded content while commuting, having a coffee break, or spending some time on a treadmill at the end of the day. It's a perfectly logical extension of the traditional subscription model.
So, why would Apple object to that?
The almost obvious answer is money. Apple takes a 30% cut of all app sales in its iOS App Store (as well as the new Mac App Store). The company has no overt objection to free apps or free apps that provide additional content and features through in-app purchases. Of course, Apple gets a 30% of in-app purchases.
However, if an app is distributed for free in the App Store but requires that users pay for content through an outside mechanism (like a print subscription), Apple doesn't get any cut of the revenue. That's one big reason to enforce "stricter rules" when it comes to newspaper/magazine content.
That isn't likely the full story, however. Plenty of other types of software tie a free app to a subscription or non-Apple licensing model. The Netflix and Hulu+ apps are two perfect examples. Enterprise apps like those offer by Cisco and Salesforce.com that allow access to corporate applications tie to a completely external licensing structure as well (and a more lucrative one, no doubt). Yet, Apple isn't going after any of them – at least not that we know of.
It seems much more likely that the issue centers around Apple's supposed plans to announce its own subscription mechanism (one reported to make its debut with Rupert Murdoch's all-iPad newspaper called The Daily).
If Apple has its own subscription model that gives the company not just a cut of the revenue but also access to subscriber information, it has a vested interest in weeding alternative subscription apps out of the App Store. Killing off competing options strengthens Apple's own model, which gives the company further leverage for partnering with publications and parent companies. The subscriber information it gains helps and further leverage here. Both the subscriber data and closer relationships with publishers could also be used to push Apple's iAd platform as an electronic advertising choice for App Store publications.
Those are all major reasons for Apple to clamp down on magazines and newspapers that rely solely on their existing subscription models for app-based content.
Interestingly enough, the only reports of these notices from Apple have come from European publications. It's hard to say if that means that Apple has already let major publishing companies in the U.S. in on its plans and arranged partnerships or if there's some other motivation at work.
Whatever the case, the new rules are said to go into effect April 1, which could be significant as that would put them in sync with the iPad's first anniversary. Given Apple's one year lifecycle for product lines including the iPhone and iPod lines, it seems likely that we'll see a next generation iPad released around that time. It's pretty reasonable to assume that we'll see some iOS update (possibly iPad-specific) as well, which would be the perfect time to announce an App Store subscription model.
What do you think? Is Apple just being greedy or is there something more at work here? Would you opt-in for an App Store subscription model? Share your opinion in the comments.