For those of you who’ve had your attention to digital media distracted by events playing out in the Middle East and New Zealand then it may be news to you that Apple intend to charge publishers to it’s iPad and iPhone platforms a whopping 30% of subscription revenues.
The plan proposed by Apple would require that those who wish to distribute their online content to iOS devices (which includ the iPad and iPhone) would be required to offer users an option of subscribing directly from their application.
Apple would then take nearly one-third of the selling price for the online product. Previously, users had been able to purchase products through their Internet browser and sidestep Apple. The publishers were then able to collect 100% of the revenue from their sales. Also, links within apps to purchase products in this manner will be banned as of the 30th of June.
Publishers in the UK and US have reacted angrily to the proposed “tax” and there have been lots of suggestions that Apple are about to back down. But we at the The Levels think that this is the very last thing that they’ll do.
The power has shifted and publishers better get used to that. As the divine Pete Cashmore says ” unless a media company is able to build a better tablet or a better phone or convince customers to return to paper magazines and newspapers, nothing changes the fact that the publishing industry has lost control of its most valuable asset: distribution. It was always the printing presses and the delivery trucks, not the words themselves, that were the seat of the publishing industry’s power. The audience has moved elsewhere,”
So, for the smaller and niche publishers the 30% tax is going to be a reality. But, we also anticipate that there may be more than a few back room beer and sandwich deals going on between Apple staff and the heavy weight publishers.
For some like News Corp there will always be a deal to be done that doesn’t involve handing over vast amounts of revenue to Apple and for others like Conde Nast there are advantages even to Apple to be associated with key influencer titles such as Vogue and GQ.
Smaller publishers saw the iPad as the answer to many of their collective dreams, and launched headlong into their perceived nirvana forgetting that Apple operates a closed walled garden that’s in place for a reason. Apple are now cashing in on their dreams.
So, I guess the choice for the smaller player is either pay up or flip flop your way to Android. And for the big guns, cheese & pickle and a pint of Bass it is then!