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Apple Subscription for Apps raises big Controversy

Feb 16 2011, 6:26am CST | by , in News | Apple

Apple Subscription for Apps raises big Controversy
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Finally content subscription for apps is here, but will this go through with Publishers?

Apple has launched Subscriptions on the App Store yesterday. The new subscription service available to all publishers of content-based apps on the App Store, including magazines, newspapers, video, music, etc. This is the same digital subscription billing service that Apple recently launched with News Corp.’s The Daily app.

The issue why subscriptions have taken so long to be available is not technical. It is the business model. What Apple is proposing is great for Apple and actually also good for consumers, but of questionable value for publishers.

The Wall Street Journal even reports that the Apple Subscription model could raise antitrust issues. The controversial issues are that for starters Apple takes a 30% share on the subscription fee. Apple also requires that apps cannot link to the content outside of the app. Additionally if the publisher sells digital content outside of the Apple eco-system, they need to offer it for the same price or less in the Apple universe.

Lot's of app developers already voiced their frustration over the new subscription model. According Engadget music service Rhapsody a 30% revenue share is economically untenable. In case of Rhapsody, I assume Apple is not shedding a tear if Rhapsody is leaving the App Store.

Apple requires existing iPhone and iPad apps to comply with the new content subscription rules by June 30th. If Apple gets through with this then they created another huge cash cow. Digital Content publishers either adapt to the business model or leave. Apple clearly has some PR to-do around the subscription model to make sure it gets adopted. The worst thing that could happen is that there will be no adoption and we consumers do not get our digital newsstand on the iPad.

 

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