Apple unveils subscription service in App Store

'When Apple brings a new subscriber to the app, Apple earns a 30 percent share,' Steve
Jobs said in a statement today. (File photo.)

(Credit: James Martin/CNET)

Apple launched a subscription service at the App Store for magazines, newspapers, videos, and music bought through its App Store.
In a move that goes a long way to addressing concerns of many in the magazine and newspaper sectors, Apple said today that publishers will be allowed to set the price and the length of the subscription term. The processing of payments will be Apple's job and handled within the App Store. Apple will collect 30 percent of the revenue.
"Our philosophy is simple," Steve Jobs wrote in a statement. "When Apple brings a new subscriber to the app, Apple earns a 30 percent share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.
"All we require," Jobs continued, "is that if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app."

Apple should become a significant channel and this might reduce pain. If Apple brings a customer to app it gets 30 percent. When publisher brings new or existing subscriber, Apple gets nothing. That is an advance."

--Chuck McCullagh, publishing consultant

The iPad has proven to be a popular media-consumption device and magazine and newspaper executives are typically excited about the tablet's appeal as an e-reader. But to get their content on the iPad, some in the newspaper and magazine sectors are dissatisfied with the money Apple once offered--a 30 percent cut forever. They were also unhappy with the amount of control Apple would exercise over subscriptions and user data.
But this latest offer from Apple is more publisher friendly, said Chuck McCullagh, a former senior vice president with the Magazine Publishers Association of America.
"Apple should become a significant channel and this might reduce pain [for publishers]," McCullagh told CNET. "If Apple brings a customer to app it gets 30 percent. When publisher brings new or existing subscriber, Apple gets nothing. That is an advance."
But McCullagh, who is now a consultant and advises magazines on their digital strategies, also still sees some sticking points. Apple's requirement that publishers must offer the same subscription for the app as it does out of it, could "bump into the common publisher practice of selling subscriptions at different prices across [distribution] channel's," McCullagh said. Some of those channels include the publisher's Web site, direct mail and newsstands.
Apple said this is the same digital-subscription billing service that the company recently launched with The Daily app, created by News Corp. for the Apple iPad.
In that case as with the latest announcement, Apple is giving subscribers the option to provide personal information, such as name and e-mail address, to publishers. This won't meet the needs of the publishers, McCullagh said, adding that publishers don't want third parties overseeing their relationship with readers.
Apple said that the relationship between the publisher and the App Store isn't exclusive. Publishers can sell subscriptions on their own site or offer free access to existing customers.
Subscriptions can be weekly, monthly, bimonthly, quarterly, biannual, or annual.
Publishers must provide their own authentication process within the app for subscribers who have signed up for service outside the App Store, according to Apple.