“Financial Times owner Pearson has put itself on a collision course with Apple over the onerous terms it is demanding for print app subscriptions, with chief executive Marjorie Scardino arguing that as competition increases publishers will no longer have to cave-in,” Mark Sweney reports for The Guardian.
“Earlier this month Apple announced a new subscription service for magazines, newspapers and music bought through its app store, but offered tough terms including keeping 30% of subscription revenues and retaining control of customer information,” Sweney reports.
MacDailyNews Note: Actually, there’s a bit more to the story:
Our philosophy is simple—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 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. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers. – Apple CEO Steve Jobs, February 15, 2011
Furthermore, 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.
Protecting customer privacy is a key feature of all App Store transactions. Customers purchasing a subscription through the App Store will be given the option of providing the publisher with their name, email address and zip code when they subscribe. The use of such information will be governed by the publisher’s privacy policy rather than Apple’s. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher’s privacy policy rather than Apple’s.
Sweney continues, “‘It is unclear how their proposal is going to work, we are still talking to them,'” said Scardino. ‘The important thing to remember is there are many, many tablets coming out and multiple devices … [from] Kindle to mobiles. If indeed Apple are not happy to give us customer data then maybe we will get it somewhere else.'”
Read more in the full article here.
MacDailyNews Take: Margie’s in for quite the rude awakening.
Pearson quote, “Who needs 160 million potential customers?”
Go somewhere else then……….
Marjorie Scardino is also a non-executive director of Nokia… she’s just not good in picking her horses!
I have to say, whilst I don’t begrudge Apple a percentage, I do see how 30% will be too much for many services to accommodate. As an insurance broker I’m lucky to earn 20% on a policy I arrange, on many things it’s far lower. Admittedly Apple is in a position of power at this stage, but many services just will not be able to afford 30% regardless of how many customers Apple bring them. 30% of their own profit maybe, but if we assume that a company should make the same on a subscription as Apple do then that’s a really high margin that services will have to base their prices on.
Well, feel free to start your own hosting service and iTunes like experience. If you’re going to ride someone’s else coattails, 30% is not a steep price to pay, especially when it’s opening up a new revenue stream apart from your existing but stale one for you.
Don’t agree? There’s Google! Good luck.
really 30% is not to much, take 30% off your own paycheck and you tell me if it’s not to much. Apple is making some harsh mistakes with this 30% silliness, hell, I can see if they where struggling but if I was coming out with an app or subscription, everyone but apple would get on it, than I would go to apple only as a last revenue stream. This will not end well.
Apple is taking 30% from money made with no effort, and money they could NEVER make on their own. If we look at the Mac App Store as an example, we get pretty decent clues about this.
Applications for Mac OS have been available for almost three decades. At first, they were shrink-wrapped boxes, sold on shelves of stores. With the emergence of the internet, many of them became available as downloads as well. With the growth of the internet, many developers discontinued physical boxes and moved to internet-only sales. Some long-time, established Mac developers have sustained their business using this online sales model, advertising wherever appropriate (MDN and other Mac sites, MacAddict/Mac Life, MW, the old Mac User, etc) and bringing in whatever sales they could from disparate sources. Then, Apple opens up this Mac App Store. These long-time Mac developers decide to try it out. Suddenly, their sales numbers go up 100-fold! The revenue that comes in is greater than the sales of ten previous years combined!
The point is, Apple’s iBook Store is an incredibly powerful marketing vehicle. The content on it practically sells itself without any additional marketing investment. The value of the entire eco-system is significantly greater than the 30% Apple is taking. The publishers are too near-sighted to realise that.
Let’s see, I get the SDK for $100, write an app, submit it, then sit back and watch the money roll in with no further investment. all this for only 30% of the gross sales. In any other business my expenses would be 80% of gross sales. If you can’t make it under this scenario you don’t have a viable business.
Take 30% off the costs of a $1.00 hamburger and see how little it really is.
Not if you only make the hamburger one time and sell it over and over again.
Besides it’s not like they are reprinting the magazine or paper every time, like they have to for a news stand, which also gets about 30%.
Pearson needs to remember that 70% of something is always better than 100% of fsck all.
Why don’t you wake up and smell what you’re shoveling!
You’re comparing brokerage services to the publishing industry? You know what you can do with your 20% you f’ing insurance buttwipe.
It’s not the money, it’s the data! It’s always the data and you should know that, you and your actuarial tables.
As an Insurance broker you’re earning 20% or less of a much larger figure $400 to $10000 annually of a policy with a base clientele in the thousands to tens of thousands. Publisher sell subscriptions worth $12 to about $200 annually to millions. Financial rags are the worst because they a rverover priced for what they provide and they use their subscription list to push even more questionable products on their clientele or sell to boiler room operations making unreasonable promises. 30% that Apple asks for barely covers the Istore operations and is probably less than publishers pay for brick and mortar exposure, storage of product , raw materials and distribution costs. These publishers are not giving a discount for the digital copy unless they specifically create unique digital content. Publishers have the option to renew subscriptions by email rather than by Istore app. What they object to is the publishers forced direct marketing campaign and data mining for mailing list info is supersede by Apple at the consumers behest. The publishers don’t want consumers to have a choice on how there information is used. When you can sell the info to multiple shady marketers for much more than the per client subscription is worth then Apple cuts into an ancillary revenue stream that these publishers are unwilling to part with. It should not cut into advertising revenue because counting unique digital downloads should be more accurate than counting subscriptions sent by traditional methods.
I am a professional. I run major projects with multi-million dollar price tags. The percentage of those millions that I get to pocket is infinitesimal. Just a six figure yearly income for this working stiff.
The point is, percentage is relative. 30% of the price of a newspaper that is delivered rurally by car is nothing.
Publishers can afford like 50% in retail chain, but they can not 30% for digital channel?
Pearson should just shut up.
Pearson doesn’t care about the revenue split, it’s all about selling the readers to advertisers: “If indeed Apple are not happy to give us customer data then maybe we will get it somewhere else.”
Yes, the 30% gets attention, but these folks really seem distressed that subscribers get to control access to their information, one must wonder why. The 30% covers the distribution and other costs they don’t incur with the app scenario, I’m sure they’d love to have their cake and eat it too.
The thing is, Apple initially had offered a sweet but honest deal (SJ even wore a strange hat to the editor’s party). But the greedy publishing agencies thought they should wait for Google to open the door for them even more. They thought they can pit Apple against Google and ‘not make the same “mistake” the music execs had once made.’
Well, Apple waited as patiently as it could, but just couldn’t afford to wait forever to plow the field for them to just swoop in with Android one day with the general public being acclimatised by Apple’s “media tablet” experience.
This is Apple playing hard ball. You didn’t like my initial offer (where the only contention was consumer’s privacy), well then, here’s the updated version, now take it or leave it. The ship has sailed for negotiations.
Good luck with that FT.
So, last month (or so) I remember an allegation that iPhone apps were sharing information with the devs without the users knowledge and how bad that was, now there are some people arguing for the right to have apps share information without the users specific permission? It’s not like the information is locked down permanently, only that the subscriber has to agree to share it.
DMac, that is true. The user does have to agree to it. The problem is that the publishers want more information on top of that (income, purchasing habits, etc.).
He can definitely ‘go to hell’ that’s somewhere else 😉
Thought I read that Amazon takes 60% on non-digital sales.
Hilarious title to this article–well done MDN!
As more and more publishers make a case about subscriber data, more and more subscribers will be made aware of the value of their data. Why not use that as a bargaining factor in getting your subscription price lowered… You want my data… lower your price to entice me to allow you access…
I love the fact that Apple is causing all these publishers to spill the beans and expose one of the big issues of subscriptions… And another thing, the magazine/newspaper guys are griping like they were still paying for all the paper and distribution like in the old days.
“If indeed Apple are not happy to give us customer data then maybe we will get it somewhere else.”
Mean old MAC is up to their dirty tricks and shakedown tactics once again. I pity the subscription service providers who try to kindly negotiate with the control freaks in Cupertino. Who does MAC think they are getting between the publishers and MAC’s customers? One thing is for sure, Microsoft would never get in the way of the publishers. If it’s customer data publishers want, fine. Redmond is open for business! It’s such a little thing to be worried about anyway; customers shouldn’t mind.
The question MAC fangirls should be asking is how much is enough? When are you lemmings going to get tired of MAC’s shenanigans?
“Who does MAC think they are getting between the publishers and MAC’s customers?”
classic.
Awesome take Zune! lol!
Bye bye.
Dude, I’m afraid Apple is one of the companies where making threats will not get you where you want…
The truth comes out. Publishers really don’t care about the 30% they have to give Apple for new subscribers. What they’re really upset about is no longer having free access to private customer information that they can sell to advertisers and spammers – customer’s have to opt-in to sharing their info. Apple is in the right in this case and these publishers are scared.
That is so true
In economics we call this “monopolistic competition”, not that apple has anything like a monopoly on phones, but that they have a monopoly on the iphone (and other ios devices), this can be frustrating to some people who mostly like the iphone, but don’t like some piece of it (30% goes to apple for most things, no gpl software, no scripting etc). it seems to me, that these people (sometimes including myself) who are, of course, powerless to change anything, just make a bunch of racket about it and hope apple will change it for them….
It also seems like apple usually (though not always) gets it right the first time.
just my two cents
Worlds collide when greed, dogma, and ignorance dominate over sound judgement. I doubt that Apple’s financial performance and iPad sales will be subjective to Pearson’s Fsck Times.
Scardino: ‘The important thing to remember is there are many, many tablets coming out and multiple devices … [from] Kindle to mobiles. If indeed Apple are not happy to give us customer data then maybe we will get it somewhere else.’
And maybe pigs will fly. Go somewhere else, Scardino. Your attitude fits perfectly with the crapware, revenue, and privacy models offered by other vendors like Google.
Pigs might fly because Pearson is doing the impossible. Pearson is making money hand over fist when all three of their major business units, book publishing, newspapers and education are in industries where everyone else is losing tons and going bankrupt.
Pearson’s massive Profit growth in idustries that are bleeding money indicates they know what they are talking about and Apple may want to listen to their content providrs for once.
@Stephen – that nonsensical rant was just that NONSENSE. iPhone is a PHONE, Apple does not have a monopoly on phones. You do not get to say it is a monopoly because no one else makes an iPhone. It’s like saying Ford has a monopoly on the focus because Chevy doesn’t make one.
You clearly need to read up on what a monopoly is and isn’t.
So she wants my data so she can sell it to the highest bidder. Nice.
Pearson is a lumbering giant. They practically own the education market for text books and SIS. They are the big player in the pool. (remember powerschool? they bought it, macschool, same thing) they are slow, expensive, and full of their own koolaid. They are also very windows centric in most of their software platforms. I hope this doesn’t affect them bringing txts to iPad.
Also of note is the reporter dissing the Apple terms and siding with Pearson in the article, yet they gloss right over the real heart of the dispute: Apples unwillingness to sell my data and privacy down the river. I grow weary of these attempts to paint Apple as greedy when that isn’t the real issue at all.
Go, leave. We won’t miss you. 😉
Wouldn’t surprise me if Gaddafi could be behind all this. Did you know the Libyan investment authority own circa 3% of Pearson…
I think circa doesn’t mean what you think it means.
Whilst you are correct in noting that circa tends to be used with dates in English it can still be used to replace around.
Therefore one could say ‘the salary of the employee wais circa $2,000 per day’.
This would imply that the employee’s daily rate is tentatively around $2,000. It’s not an exact figure, just an approximation.
However, you are correct in pointing out that it is less used on this context in American.
I bet you weren’t expecting to get an English lesson as well as the latest Apple news on MDN!!
Please let me know if you have any other such queries althegeo.
Apologies, I meant was not wais -schoolboy error!
I bet Rupert and the WSJ won’t mind if Pearson and The Financial Times choose to stay off of the iOS platform!! News Corp has already gone all in with Apple and iOS–just more moolah for ole Rupert…
Ok, let’s look at this.
Publisher A: Sells book at $10. There is five hundred thousand invested in terms of pay to the author upfront, graphic design, marketing, etc. Yes, they have their print channel. Let’s just focus on the eBooks.
Obviously it’s a lot cheaper to push out eBooks than it is to print books and ship them, having them sitting in warehouses and stores, etc. BUT, it’s not free. There’s eBook creation fees, and the bandwidth to pay for every download. There’s DRM to confront. And, consumers, like all of you, expect the eBooks to be cheaper. Like half the price of a paper book.
So now, although it’s much cheaper to distribute the eBook than the paper version, since you have to charge so much less, it’s almost like you’re profit is close to the same as it is on the print side.
Let’s say author royalties are 50%. Sell for $10 – $5 to author and $5 to publisher, without accounting for expenses like bandwidth, which is about $0.10-$0.30 per eBook. Apple in the mix? Apple gets $3 from each and every book sale, the author then gets $3.50 and the publisher $3.50.
This hurts the author and the publisher. But seriously. This is someone’s intellectual property. Talking just of manufacturing costs doesn’t cut it. Somebody spent a year, 2 years of their life writing a book. They deserve to be compensated for it. $10 for a well written book is absurdly low: the whole industry just gets eroded because people like you demand cheaper prices because of cheaper distribution costs which just misses the point entirely. You’re paying for someone’s ideas and hard work, just like in software. Books shouldn’t be pushed to cost so little, and with Apple in the mix, it just makes it so much worse.
Your scenario only works if your percentages are accurate. What if the author gets 5%? What if the author gets 30%?
If you don’t know the real numbers in the book publishing game your whole post is bullshit. Every author gets to sign a different contract.
your numbers are off. Authors get a tiny percentage of sales. Most authors are paid an advance against sales and will almost never see another dime from their work. That is why you hear so much about authors getting a big advance.
In hard numbers it is probably more like
Author : 5%
Publisher: 95%
this is yet another flux point where Apple could step in and allow authors to self publish. I am waiting for the floodgates to open.
Last year iOS took in 82.7% revenue of Paid Apps.
Android 4.7%
(Also iPhone took in 50% of world cell phone profits with less than 5% market share – i.e. the other guys mainly sell CHEAP or BOGO phones – shows that buyers or rival phones don’t like to SPEND money)
Go somewhere else and see how much you make….