Apple on Tuesday launched subscriptions to the App Store in a move that was previewed with the launch of News Corp.'s "The Daily" iPad newspaper. The subscription program's nuances may turn out to be a help to traditional publishers.
In a nutshell, subscriptions within the App Store will use the same app billing system, but publishers will set the price and length of subscription.
Customers can review and manage accounts from their account page in the App Store. Apple keeps 30 percent.
The move is likely to make iPad magazines and newspapers much more appealing to the masses. A magazine that can't sell a subscription is neutered from a business model perspective on the iPad. Now that the subscription hurdle is cleared, we'll see if traditional publishers can sell titles.
Apple CEO Steve Jobs said:
“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.
Bottom line: Apple's move to add subscriptions to the App Store is like the gun that starts a race to garner subscriptions among traditional publishers. As I noted in my Kindle Single, 2011 is the year of media subscriptions. The rub is we don’t know whether consumers will go along for the ride. It’s quite possible that 2011 will merely be the year of trying to do media subscriptions.
The other key item in the Apple subscription model is that publishers can acquire subscribers outside the app. Publishers will be allowed to sell digital subscriptions on their site. That move entices publishers to push these digital sales. Apple explains:
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.
That's a windy explanation, but it's a big bone to throw to traditional publishers.