Apple has started in earnest to regulate in-app purchases for paid content that circumvents paying iTunes their share of royalties. This is making many content publishers uneasy as it means drastic revisions to potentially thousands of applications.
Last month we heard reports of Danish publishing companies getting notices from Apple to revise their iTunes applications to fall in-line with paying Apple directly a cut of all book and magazine purchases. Earlier on in the week this policy hit the mainstream news as Sony’s new Reader application was denied from being listed because users paid Sony directly for Magazine and eBook purchases.
Apples success of the iPad is spurning the company to make sure publishers give them a piece of the pie. Currently most applications such as Wired, and Barnes and Noble iOS apps allow you to purchase magazines, ebooks, newspapers and other digital content directly from the company. If you purchase a Times newspaper subscription from Barnes and Noble, they bill you directly monthly for the publication. Apple hopes to change all of this and handle all billing for in-app content to be filtered through iTunes. They also intend to charge companies up to 30% of each subscription based sale.
Apple yesterday announced the ‘Daily Newsstand’ whose sole partner to date is News Corp. The Daily is a subscription based system that allows subscribers to get unique paid content from an army of well known authors and independent contributors.
iTunes is big money and is transforming the way people access paid applications, music, video and content. With the recent intergration of iTunes and the App store to be available on the Mac line of PC’s it will gain even more market share. Last year Apple was said to garner close to 1.1 billion dollars from royalties paid to it via their content distribution platform. Apple is betting that it can change the way we consume digital publications the same way it transformed accessing music.
How does the date factor into the deadline for magazine and newspaper purchases? United Kingdom based company Yudu, best known for developing digital edition content for publishers, got a notice from Apple citing that applications that take payments outside of iTunes will be summarily rejected.
Recently the Wall Street Journal claimed that “Newspaper and magazine executives have long lobbied Apple to implement a subscription feature, since revenue from single-copy sales can be erratic. But they are worried about what they might be giving up by using it. Some publishers have said they are unwilling to go along with an Apple subscription offering if it doesn’t allow them to access data about who is buying their apps.”
Centralizing the subscription based environment might be the best solution for paid content in the future. Having everything in one place, and stabilizing online digital content prices might be the best bet for customers. If you look at the Android Market and the splinter markets that exist, its hard to find quality content. Apple may want its hands in every transaction that occurs on their platform, but it produces high quality digital media.
How will all of this effect some of the largest online companies doing business with Apple via the iPad and iPhone? Will Amazon have to cut Apple in with all of its purchases going forward and write it off as the cost of doing business, or do they have another ace in the sleeve? Amazon currently is not talking about their future plans to fall in line with Apples new policy.
Whatever direction this takes us in, Apple already changed their Terms of Service, spelling it out very clearly about their new direction. This potentially could be a game changer.