European publishers upset over Apple's iTunes subscription fees

Posted:
in iPad edited January 2014
A group of European newspaper publishers has warned Apple that a 30 percent commission on iTunes subscription revenue and restrictive conditions would be unfair, according to a new report.



The BBC reports that the European Newspaper Publishers' Association has expressed concern over Apple's revenue split for iTunes digital periodical subscriptions and possible restrictions limiting whether iPad users can subscribe to a periodical through the company's own website.



The ENPA warns that Apple is demanding too large a cut of publishers' profits while potentially banning newspapers from taking subscriptions via their own websites.



"Consumers may only have access to the newspaper of their choice via the iTunes store, where the transaction would be subject to commission," said the ENPA in a statement.



"Newspaper publishers should have freedom of choice of payment systems for their readers and the possibility to negotiate pricing levels for their digital publications," the statement read.



Apple announced an in-app subscription service for its App Store last week alongside News Corp's The Daily digital newspaper. Regarding the service, iTunes chief Eddy Cue said Apple would provide more details in the near future.



Prior to The Daily's launch event, reports emerged that Apple had denied an eBookstore app from Sony on the grounds that its in-app sales were not routed through iTunes. However, Apple denied the claim, asserting that its developer terms or guidelines had not been changed.



"We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase," said Apple spokesperson Trudy Miller.



According to News Corp CEO Rupert Murdoch, The Daily, which will be the first iOS app to utilize the new subscription feature when it goes live, has the usual 70 - 30 revenue split agreement with Apple for the first year, though Murdoch expressed hopes that future negotiations with Apple could diminish its cut.



European publishers apparently feel "betrayed" by Apple and are planning a summit for later this month to "compare notes" on Apple's subscription rules for iOS.



According to Grzegorz Piechota, the European president of the International Newsmedia Marketing Association, Apple has been inconsistent in how it has communicated and implemented its new policies.



?Apple said?that in their policy with Sony Reader, they are not changing anything, just enforcing existing rules. But when they talk to publishers direct, they are saying something else," said Piechota.



?Apple has been contacting some publishers, and not contacting some. Some get emails, others get informal phone calls,? he continued. ?The whole process of accepting or rejecting apps is not transparent. It?s very hard to explain why some apps are being accepted and some are being refused; some apps allow you to read content that is bought somehwere (sic) else and others that won?t let you do this.?



Last month, Belgian economy minister Vincent Van Quickenborne called for an antitrust probe of Apple on possible abuses by the iPad maker to dominate the newspaper market.



Last year, US publishers expressed frustration over the lack of an iPad subscription feature. Conde Nast, Hearst and Time have all been mentioned as being in discussions with Apple, though a deal has yet to be reached, according to a report by The New York Times last month.
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Comments

  • Reply 1 of 45
    I think what Murdoch said is the way this will play out...



    I think part of Apple's strategy is taking this larger cut at the beginning but knowing there's a chance they may drop it in the future. Apple makes so much money on hardware and I'm sure they'll be wanting to keep content producers happy.



    The real question is how much does it cost Apple to serve content (iTunes, storage, etc.) and what profit margin is reasonable on top of that? any ideas? lol
  • Reply 2 of 45
    sandausandau Posts: 1,230member
    psssah, if they don't want to pay the price of admission, I say they should go publish on the 'open' android market. I'm sure there are enough Galaxy Tabs to cover their subscriber needs. lol.



    Or, if that doesn't suit them, make their own damn tablet.
  • Reply 3 of 45
    Is this deja vu all over again, or is AI just having another senior moment, with this story?
  • Reply 4 of 45
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by anantksundaram View Post


    Is this deja vu all over again, or is AI just having another senior moment, with this story?



    So, it wasn't just me thinking this.
  • Reply 5 of 45
    Like the music industry, Apple was supposed to save the publishing industry but it turns out Apple will be killing the them.
  • Reply 6 of 45
    Go Europe. More restrictive rules that don't really help anyone. Apple created an awesome product and gives businesses opportunity to make money hand over fist, and they whine that Apple takes too large a percentage. 30% isn't that outrageous to create the software, create the store, take care of billing, etc.



    If they don't want to pay, all they have to do is create a website and let people log in there. Don't use an app and it costs you NOTHING.
  • Reply 7 of 45
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by bjojade View Post


    Go Europe. More restrictive rules that don't really help anyone. Apple created an awesome product and gives businesses opportunity to make money hand over fist, and they whine that Apple takes too large a percentage. 30% isn't that outrageous to create the software, create the store, take care of billing, etc.



    If they don't want to pay, all they have to do is create a website and let people log in there. Don't use an app and it costs you NOTHING.



    There are many unanswered questions about who does what.



    In the case of The Daily, Apple appears to be only providing the payment processing so 30% is rather a lot. If Apple also provides distribution then 30% is not so much - periodicals already forfeit a good portion of their cover price to existing distribution channels.



    We won't really know much of what the details are until Apple announces its subscription plans in the next few weeks. So, I think the European publishers are, for now, just trying to shape opinion.
  • Reply 8 of 45
    If they don't like it, why don't they STFU and publish on Android? Oh, they can only sell for free with ads?
  • Reply 9 of 45
    Quote:
    Originally Posted by fuwafuwa View Post


    If they don't like it, why don't they STFU and publish on Android? Oh, they can only sell for free with ads?



    Well put...
  • Reply 10 of 45
    drdoppiodrdoppio Posts: 1,132member
    Quote:
    Originally Posted by bjojade View Post


    If they don't want to pay, all they have to do is create a website and let people log in there. Don't use an app and it costs you NOTHING.



    Exactly. I don't understand their whining. Isn't it simple enough to put your material online, and use HTML5 for any specialized content? If they cannot get people to subscribe for access to a web site, how is a dedicated application going to help them?
  • Reply 11 of 45
    radjinradjin Posts: 165member
    It's simple. If you don't want to pay the cut through an app and Apple's app store, then forget about the app and sell your subscriptions through a web browser instead. Millions of sites sell subscriptions every day using only a browser. But if you want to play in Apple's sandbox, you have to pay the owner.
  • Reply 12 of 45
    chris_cachris_ca Posts: 2,543member
    Quote:

    The ENPA warns that Apple is demanding too large a cut of publishers' profits while potentially banning newspapers from taking subscriptions via their own websites.



    "Consumers may only have access to the newspaper of their choice via the iTunes store, where the transaction would be subject to commission," said the ENPA in a statement.



    So Apple has stated there is a 30% cut for subscriptions?
  • Reply 13 of 45
    Quote:
    Originally Posted by Chris_CA View Post


    So Apple has stated there is a 30% cut for subscriptions?



    No, Murdoch stated in an interview that Apple gets 30% for the first year and that he hopes to renegotiate that percentage in the future.



    Apple is supposed to announce the specifics of their subscription features and pricing in the next few weeks. It's fine for Apple to get 30% if they are also doing the content delivery but, to me, they should get a lower percentage if they are just handling the payment processing with the publication doing the content delivery.
  • Reply 14 of 45
    As someone above stated... and I'll add a few:
    • forget Apple... go Android and Windows Tablets... see how that works out.

    • stick to your web-strategy, which is currently working fantastic... right?

    • make a "touch-friendly, mobile-browser Web-App": It's free, and you can do anything you want with it regarding subs and pricing. That'll work... or maybe not.

    Realize that your publishing empire is dying, no one wants ALL of their news through ONE source, and think "aggregator" and "news syndication" like TRVL and FlipBook.



    Do nothing. And please, just STFU and fold already. Game over. Retire. Go down to Spain. Meet your buddy executives. Talk and reminisce about the "Old Days"...... OR....



    ...take Apple's bait and give up the 30% cut, and see what happens.



    Considering 2 major paper price hikes just last year, gas prices and EU-Printer Union Tarifs on the rise... why do I think you just might come out ahead... IF....IF....



    you actually create a quality publication that people want to read rather than giving out free bird-cage liners and table-leg extensions.
  • Reply 15 of 45
    Nowhere do I see the cost of a traditional paper from paper, printing, distribution and delivery compared to the 30% cut on iTunes.

    I suspect that the only reason for the papers? unease is the lack of feedback on their subscribers.

    Apple and the papers should be able to work out a solution to please the newspapers enough to stop complaining.



    If not it is only sour grapes and envy of Apple making a fair return on all the work they do to get their paper read.
  • Reply 16 of 45
    I see this FlipBook mentioned when talling about newspapers. On the Canadian iTunes store it is a cartoon animation app.



    What FlipBook are you all talking about?
  • Reply 17 of 45
    Quote:
    Originally Posted by Charel View Post


    Nowhere do I see the cost of a traditional paper from paper, printing, distribution and delivery compared to the 30% cut on iTunes.

    I suspect that the only reason for the papers’ unease is the lack of feedback on their subscribers.

    Apple and the papers should be able to work out a solution to please the newspapers enough to stop complaining.



    If not it is only sour grapes and envy of Apple making a fair return on all the work they do to get their paper read.



    I totally agree, apple is providing the market and the distribution for their product. To me the math is pretty simple. 70% profits on a expanding subscriber base vs. the current 100% profits on an exponentially decreasing subscriber base. The printed newspaper is practically dead and if news organizations want to survive they are going to have to embrace the new technology. I imagine these issues go a lot deeper than just subscription revenue and has a lot to do with how ads are targeted to readers and how the ad marketing data is collected and shared.
  • Reply 18 of 45
    This view that an owner can do what he wants with the product as per a form of capitalisme sauvage is an American centric view which is not shared in the European Union or in most other Western countries.



    The test is whether a company with a dominant position abuses that dominance. Microsoft abused their position with Windows and the EU took action over it. Even though no-one was forced to buy a Windows computer, their dominance in the market place reduced competition and led to unfair practices. The suggestion that a person or a consumer builds their own tablet or operating system is unrealistic.



    If Apple are abusing a dominant position and following unfair practices then it is no defence to say that it owns the product. The promotion of fair practice and competition is important and the EU has taken action against American and European companies that have attempted to behave unfairly or abusively.
  • Reply 19 of 45
    chris_cachris_ca Posts: 2,543member
    Quote:
    Originally Posted by penchanted View Post


    No



    My point exactly.

    They are complaining about 30% when it has not been said it's 30%.
  • Reply 20 of 45
    There's actually a LOT at stake here. Firstly, there are three very different types of Apps. (a) Apps from businesses that have competing hardware (Amazon, B&N, Sony) and Apps that do not (Zinio, PixelMags) and Apps that are individual titles (The Daily, The Australian) etc.



    In the case of the first, it would not be unreasonable for Apple to expect the full 30% of In-App sales because they are competitors. If 30% wipes out the profit margin on an Amazon eBook, Amazon are free to remove their App from the iOS Store. If, as is more likely, the App is a loss leader, Amazon would trade on iOS at a loss as users would likely also buy eBooks from Amazon.com - it is worth it for access to the market of Apple users. I would be surprised to see iBooksstore App on a Kindle. Equally, would you expect Barnes and Noble to approve putting iBookstore on a Nook?



    For the Zinio's of the world, these virtual newsagents have a very different model. They do not make hardware. Their profit per book or magazine is likely much smaller. They likely have a website selling subscriptions to download content to the App. Here the choice is less clear on how to proceed. Apple could enforce the "IAP required for approval" position, but they would likely have to drop the commission to a rate where the business could ever hope to afford, possibly as little as 5%. Alternatively Apple could choose to approve the App if the ONLY way to buy content for it was on that provider's website, BUT perhaps require the App to NOT be free. In this scenario, Apple are a shop window for a clearing house, so economics dictates that 30% is unlikely to fly for In App Purchases (IAP) those types of Apps - these Apps also have the added distinction of bringing new content and customers to Apple's hardware, where in the first type of Apps, that is debatable.



    Finally, you have single title Apps. This seems a simpler situation, where there is no competing hardware equation and the title is probably available on multiple platforms. Here, again, it is just economics whether Apple can provide enough users to warrant 30% fees. Each title will have to make that economic judgement and factor it in to their price. As Mr Murdoch said, The Daily will pay 30% for year one, but expects to negotiate for year 2 plus. This makes sense as Apple arguably bring more to the table in the relationship at this precise point, but IF The Daily can chalk up reasonable sales on other platforms, or if it proves to be the case that even a News Corp backed title can't turn a profit with a 30% IAP fee, then you would expect all parties to negotiate going forward.



    Kindle App is not Zinio is not The Daily - flexibility will be required in the App Store rules to bring all parties to a financially and strategically satisfactory position.
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