UPDATED

Apple has finally clarified what it will demand of publishers that want to sell subscriptions through its iPhone and iPad app ecosystem. The demands are extortionate, and traditional publishers agreeing to them are crazy if not suicidal.

Here’s Apple’s official pronouncement. Key items:

Apple will permit publications to sell subscriptions from inside their apps. But look at what Apple then demands:

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, 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.

The arrogance of this is stunning. Consider, first, that publishers are not allowed to sell their content at a higher price inside the App Store even though Apple takes 30 percent of the money. And then consider that publishers are not allowed even to show their audiences, from inside the apps, how they can bypass Apple and get the subscription directly from the publishers themselves.

The second demand is in line with Apple’s current insistence that it can decide what content is allowed within news organizations’ apps. The cowardice they’ve shown in this arena has surely emboldened Apple to extend it in this anti-customer way.

None of this should surprise anyone who’s been watching Apple take firmer and firmer control of the iOS ecosystem, or who’s watched media companies compete for the right to be Apple’s pets. But it’s discouraging nonetheless.

The Apple deal will make more sense to startup publishers that want to avoid billing issues by leaving the back-end finances to Apple. Even they, however, should realize that they’re turning over their futures to a company that is not working in their interest in the long run.

What this should do is lead publishers, especially traditional ones, to speed up their development of HTML5 applications and apps for other operating systems like Android. But as the lemmings head for the cliff, I’m not holding my breath waiting for them to change course.

UPDATE: Ryan Carson pleads with people to “fight Apple’s subscription extortion.”

10 Responses to “Traditional Publishers that Agree to Apple’s iOS Subscription Demands are Insane, or Desperate”
  1. PXLated says:

    Interesting reading the comments to Ryan’s post – Didn’t count but general impression was they were going against him.

  2. Greg says:

    Well, Dan, I’m with you here. Stunning arrogance, indeed. But maybe this really IS going to be the blatant extortion that makes developers wake up and realize they don’t HAVE to develop apps to be seen on an iPhone/iPad?

  3. alex says:

    Actually in some ways this is understandable .. otherwise you will just use their newsstand showcase to redirect people to your site and charge them less so you could put all the money in your pocket .. is like saying go to Barns and Noble, get the flyer and come around the corner that we will sell you the same one for half price .. do u think B&N will agree with that? don’t think so .. So instead of talking about arrogance I would say .. they’re just protecting their business .. there are a lot of digital newsstands that require u to sign for exclusivity … so are they arrogant too?
    I’m not here to defend Apple … far from that .. but I do think some of your critique are just plain wrong .. just my ¢2

    • Dan Gillmor says:

      Your analogy is way off. This is more like B&N a) having a dominant market share for selling magazines from racks (which thankfully it doesn’t); b) telling publishers that if they wanted to be seen on those racks they had to give B&N a 30 percent cut of all subscriptions sold via magazines originally sold in the store; and c) not allowing publishers to have house advertisements inside the magazines pointing customers to their own (the publishers’ own) subscription services.

  4. Jz says:

    It’s about readers and not about publishers! As a reader, I love Apple’s rule and couldn’t care less about 30% or 70%! Apple is all about readers, google is all about how to sell users data to publishers. If NYTimes wants my subscription, it better comes to iPad cause i’m not going to subscribe to it through it’s ugly website!

    • Dan Gillmor says:

      Jz, Apple is all about Apple.

      • jz says:

        You will never understand!

        • Paul says:

          jz, I value Apple for all there more user centered approach on applications and services. I am prepared to spend something more, because in the long run, it’s cheaper.
          The buck stops when Apple starts to mess with my content and my data, whether my own or what I want to get from others. At some moment Apple will determine what you can read.
          So I agree with Dan.
          Software providers should take their responsability and never mess with data or information that’s been edited, transported or sold via their products and services. If Steve wants to be a publisher too, he can, but from the same standpoint as other publishers.

  5. I’m least concerned about “traditional” publishers. I suspect, without doing any research, that these publishers are used to paying a premium for customer discovery and acquisition. I’m far more worried about online-only and new media content providers who operate on very slim margins.

    • Dan Gillmor says:

      Actually, they’re more likely to be okay with this. They never had a chance to monetize what they do, or at least never tried very hard to do it beyond keyword advertising. For many little content providers, Apple is going to look like a great marketplace — at least until they run afoul of Apple’s content control, by which I mean the company’s insistence that it can determine what is acceptable content.

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