Why Apple Won’t Kill Print and Google Won’t Kill Apple

Why Apple Won’t Kill Print and Google Won’t Kill Apple

Apple announced its new plan for content publishers this week, and already it’s making money for the publishing industry by enabling wild, eyeball-grabbing headlines guaranteed to bring in the readers.

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Digital-publishing-technology provider NewspaperDirect called Apple’s new policy ” unjustifiable,” “inexcusable,” “self-serving” and “ridiculous.”

The International Newsmedia Marketing Association felt “betrayed.”

OK, OK. We get the idea.

Movie critic Roger Ebert summarized another view in some quarters by tweeting: “Steve Jobs contributes his bit to the destruction of print media.”

That’s a compliment, not a criticism, by the way.

Meanwhile, just a day after Apple unleashed its new plan, Google unveiled one of its own, called Google One Pass. USA Today says the Google plan “undercuts Apple.”

So let’s collect ourselves and think this through. Is Apple’s plan really a major slap in the face to the publishing industry? Will it help kill print? And is Google’s One Pass a preferable alternative?

How Apple’s Plan Affects Publishers

So what is Apple’s publishing plan, exactly? The idea is to replace the (obviously flawed) old system of forcing publishers to send out, say, each issue of their newspaper or magazine as an individual app. The new system allows a publisher to sell daily, weekly, monthly or annual subscriptions, the content for which is delivered via the existing app over an iPhone’s or iPad’s Internet connection.

The service covers not only the kind of content that would be published by print magazines and newspapers, but also music and video.

The plan gives publishers the option to sell subscriptions from within the App Store with a one-click process.

Apple’s fee is 30 percent of the subscription price. Any pre-existing subscriptions can be served by the publisher without them paying the 30 percent. And publishers can offer subscriptions to be sold outside the App Store, but the deal can’t be better than the one offered on the App Store.

There are three beliefs or assumptions about the Apple plan that have some in the industry up in arms. They are:

  1. Apple’s 30 percent cut is too high
  2. Apple gets between publishers and subscribers
  3. Apple will gain control of the industry

In general, my take is that the first two are false, and the third is mostly true.

The 30 percent is higher than zero, higher than Google’s take (more on that below) and higher than publishers wanted. But it’s far less than publishers are currently paying for the same services via the print model (payment processing, fulfillment and delivery, etc.).

Ultimately, 30 percent is either worth it for publishers to reach the iOS audience or it isn’t. If not, then they shouldn’t participate. If so, then they shouldn’t complain.

Everything about the content publishing business is based on pricing equal to “whatever the market will bear.” From subscription prices to ad prices to contracted publishing services — everyone is demanding every penny that a critical mass is willing to pay. Apple is doing exactly the same thing.

Publishers would prefer to pay less and get more. But Apple is offering a valuable service, platform and subscriber base and is charging a lot for it. Apple charges more because publishers get more. That’s how the publishing industry works.

The idea that Apple gets between publishers and subscribers is a red herring in exactly the same way. Publishers already outsource fulfillment, which means the taking of orders, management of subscriber databases and product delivery. Apple is simply serving as a fulfillment house.

Will Apple gain control of the industry? In a word: kinda. I think Apple’s control of the magazine industry (not necessarily the other content publishing industries) will end up somewhere between Apple’s control of the music industry (which is high) and of the movie downloads industry (which is low).

Their control will come in the form of transforming the way magazine subscriptions are marketed, fulfilled and “consumed.”

How Apple’s Plan Affects Print Publishing

The Apple plan is a dramatic improvement over the way print subscriptions are handled — for the reader, that is.

First, it’s easier. Most print subscriptions have to be paid for by check, or by filling out a credit card form on paper or on a Web site. With the Apple system, you just click “subscribe.” It will be an impulse buy.

Second, subscriber personal information (name, e-mail and zip code), is opt-in for subscribers on the Apple plan. Publishers don’t like the fact that this is optional. They tend to want much more data (gender, age and more) and they want it required, not optional.

The truth is that, like the music business, the publishing industry has been screwing subscribers for decades and Apple is offering a radical new way that favors the consumer.

When you subscribe to a print magazine, you suddenly and rapidly get two or three old issues. They do that because your renewal comes earlier. Many magazines are hard to unsubscribe from. And they tend to sell your personal information to junk mailers. Magazine fulfillment is a shady industry. Publishers keep their hands clean by outsourcing this dirty work to other companies similar to how many companies outsource collections or repossessions.

Apple’s approach is simple, straight-forward and easy. Click and you’re subscribed. Apple already has your credit card. And it’s easy to unsubscribe. You can choose to keep your personal information private. People are really going to like this approach and, as a result, more people will subscribe.

But despite this vastly superior model, I don’t think Apple will materially affect the fortunes of print publishing. Print magazines and newspapers will become a high-end luxury for older, richer or more sophisticated readers no matter what Apple does. I think the real surprise will be that Apple’s model will bring in new readers who otherwise wouldn’t subscribe to magazines.

How Google’s Plan Compares to Apple’s

Google’s subscription plan, which will be based on the existing Google Checkout service, is already available in the US, Canada, the UK, France, Germany, Italy and Spain.

Media reports are making a big deal out of comparing Google’s roughly 10 percent cut to Apple’s 30 percent.

However, the two services aren’t exactly comparable. Google’s plan is really a centralized system for subscribing on multiple platforms. It’s Google’s version of a subscription model that already exists elsewhere. Apple’s system is a truly new publishing model, and one specific to iOS devices.

In any event, Google’s plan isn’t as cheap as it sounds.

In the publishing industry, subscribers pay with either money or personal data or both. Subscriber data is as good as cash to magazine publishers, because they can easily turn it into pricier advertising.

In fact, while most reports focus on the consumer or newsstand side of the magazine industry, which accepts money from subscribers, they ignore the business side.

Business publications “sell” subscriptions not for money, but for information about the subscriber. Let me give you an example you may be familiar with.

IDG publishes Macworld. If you want to subscribe to the print version, you go here. You pay money, and they send you the magazine. Macworld is a consumer magazine.

IDG also publishes Computerworld, which is a publication I also write for, and which is an example of a business publication. When you subscribe, you go to this page and fill out information about yourself. You pay no money. You pay with data. That data is worth more to advertisers than any reasonable subscription fee.

At first glance, Google’s program appears to be a better deal for publishers. They get more user data and pay a lower percentage for fulfillment. But from the subscriber’s perspective, they have to pay with both money and user data, which is required under the Google system but optional with Apple’s.

Of course, it’s not an apples-to-apples comparison. But the point is that user data has significant monetary value to the publishing industry.

If data is currency, which it is, then Google is charging publishers less but users more.

Why Apple Will Succeed

Publishers and others can and will complain about Apple’s terms for serving up content subscriptions on the iOS. But Apple will succeed. The reason is that the combination of the Apple demographic, the ease of subscribing and the opt-in user data will mean iOS users will be by far the best audience. They will subscribe more, pay more for those subscriptions and respond more to advertising.

It’s likely that Apple’s system will re-enforce the qualitative advantage of the iPad. Already, iPhone and iPad users tend to be bigger spenders overall than those of other major platforms. Already some publishers are saying that Apple’s share is too high, and they may be tempted to publish on other platforms, especially Google’s. The higher-end publications will be far more likely to accept Apple’s terms. The end result will be that iOS users will be viewed by the publishing industry as a “premium audience” for “premium titles” and “premium advertising.”

The result will be something similar to what happens in the cell phone industry overall, where Apple sells a tiny, one-digit percentage of all handsets but makes most of the revenue. Apple will probably end up publishing a minority of existing content publishing titles, but make most of the money.

There is also an interesting dynamic at play that nobody in the publishing industry wants to talk about. The fewer publishers embrace Apple’s plan, the more successful those few will be.

iPad users are starving for real content subscriptions. If only a handful of major magazines embrace Apple’s plan, that handful will succeed much more than had everyone jumped on board. Publisher’s know this, and they’ll all looking at each other to see who blinks.

The future of publishing is tablets. That’s where the growth will be. If publishers want access to iPad users (which does and will represent the most and the best potential subscribers), they’re going to have to play by Apple’s rules. And they will.

(Photo courtesy of Mags On iPad)

About the author

Mike ElganMike Elgan writes about technology and culture for a wide variety of publications. Follow Mike on Google+, Facebook and Twitter.

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