February 16, 2011, 12:39 PM — Apple walked right into this one.
Just a day after the company announced a highly criticized content subscription plan that takes 30 percent of the revenue from publishers selling access to their content via Apple's online store, rival Google unveiled a competing subscription service for which the search giant will only take 10 percent of publisher revenues.
Outgoing CEO Eric Schmidt announced at Humboldt University in Berlin the availability of Google One Pass, a service that lets publishers of digital content set their own prices and terms. Here's how Google describes the service in a blog post:
"Readers who purchase from a One Pass publisher can access their content on tablets, smartphones and websites using a single sign-on with an email and password. Importantly, the service helps publishers authenticate existing subscribers so that readers don’t have to re-subscribe in order to access their content on new devices."
Obviously that's a big selling point for subscribers. But there's an even bigger selling point for publishers, the kind of publishers who are complaining (along with developers) that Apple's subscription plan is too one-sided in favor of the personal electronics giant:
With Google One Pass, publishers can customize how and when they charge for content while experimenting with different models to see what works best for them—offering subscriptions, metered access, "freemium" content or even single articles for sale from their websites or mobile apps. The service also lets publishers give existing print subscribers free (or discounted) access to digital content. We take care of the rest, including payments technology handled via Google Checkout.
In contrast, as my colleague Ryan Faas explains, Apple not only is taking 30 percent of the cut, it's imposing restrictions on publishers designed to steer purchasers of content to the Apple store. Because you know what percent Apple gets from an online subscription to Popular Science made through that geek publication's website? Zero percent.
Further, Google is offering publishers consumer data, while Apple restricts access to customer information. If you're a publisher, which system would you prefer?
Apple Insider's Josh Ong reports that publisher and developer reaction to the iOS App Store rules ran the gamut from hints of legal action against Apple to pointed expressions of disappointment ("a huge dick move").
Not only that, the Wall Street Journal writes:
Some legal experts predicted Apple's new policies will receive close antitrust scrutiny, starting with an analysis of whether Apple has enough market power to stifle competition.
I don't think it does, and Apple's going to be amending its newly announced content subscription service plan pretty soon. This was a big misstep.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.