For those interested in selling premium electronic content, the week of Valentine’s Day this year was filled with hearts, flowers and, potentially, some candy boxes with pieces already missing. Recent back-to-back announcements by Apple and Google unveiled plans to support premium subscription sales, leaving many publishers surprised, puzzled and a little stressed out as to how to react to these offerings. Should they give these new plans a fat, wet kiss, blow kisses from afar, or send them back with a note saying “address unknown?” By week’s end, many publishers were still searching for the right reactions.

The problem that content publishers face with these plans is that they are in some ways quite radically different, both in their structure and their implications. The opportunities and stark choices that publishers face now are underscored most by Apple’s announcement of their subscription plan. Used so far only by Rupert Murdoch’s The Daily news app for Apple’s iPad and announced with no apparent preview to major media companies, the new Apple subscription plan seems to have been received by most publishers with a hushed surprise.

At its core the Apple plan is fairly simple, but not necessarily easy for media companies to stomach. Apple will take a 30 percent cut of all subscription revenues generated by sales through their iTunes app store, though publishers selling subscriptions through their own e-commerce services may sell apps and take 100 percent of the subscription revenues. However, if they do sell their subscriptions for apps outside of Apple’s e-commerce facilities, publishers must use their own technology to validate the subscription on Apple platforms. Moreover, from within a subscription-supported Apple app a publisher may not link to other content or offers outside of the app, and the pricing for the Apple subscription must be no more than any other subscription offer outside of the Apple e-commerce stores.

The economics of the Apple plan are restrictive enough in many ways, but even should publishers opt in to all of these requirements, there’s no guarantee that they’ll know who their subscribers are. Apple will release information about apps users obtaining content via a subscription only if they opt in to share it with them. For magazine publishers used to being able to share demographics with advertisers and marketers as one of the core of their marketing efforts, that tends to put a rather large chink in their typical expectations for media sales. [Read more...]