Apple's iPad muscle flex: Setting the stage for a showdown with publishers?

A quick muscle flex by Apple over a subscription version of the Sports Illustrated iPad App is giving magazine publishers everywhere a glimpse of how things go when you play by Apple's rules.

But it's also setting the stage for a showdown - a game of chicken, if you will - between magazine publishers and Apple over the firm control that Apple maintains over the apps that go into App Store.

Peter Kafka, who writes the Media Memo blog for All Things Digital, tells the story of Time Inc., where execs "have been going nuts" over Apple's rejection of its subscription app, a move that forced Time to sell the iPad version of the magazine as a $4.99 single copy sale sold via iTunes.

No one is exactly sure why Apple rejected the subscription app, though Kafka floats two theories: the first being that Apple is protecting the consumer data that the magazine publisher might collect and the second being that Apple wants to control the subscription, allowing it to essentially control the digital magazine market.

Now, if you're a magazine publisher, you know the real value of the subscription is not the revenue but rather the data. And imagine the treasure trove of data, beyond just a subscription list, that could be generated by tracking in-app behavior or interaction with various forms of advertising. That's valuable information when it comes to turning that content into ad revenue - which is the real bread-and-butter for the magazine.

So it makes sense that Apple would want to maintain some control over that. It also makes sense that Apple would have some muscle to flex, seeing how it makes both the platform and the device, a first-of-its kind and a smashing success with a huge market lead right out of the gate and no true contender in sight.

Now, there is an option for the publishers - and that's where that game of chicken comes into play. Apple's take on the situation is that there are two platforms supported for apps of all types, including magazine. Publishers can either abide by Apple's rules and develop an approved app for the App store or take the HTML5 route and develop an iPad experience that's based in its browser.

Essentially, it's Steve Jobs saying, "My way or the highway."

For now, Time Inc. is stuck with a tough decision - largely because it would be out on that limb alone if it revolted. Time's media counterparts, Kafka reports, so far haven't even submitted subscription apps and Hearst, which is trying to creative with sales of multiple copies, seems to be OK with giving Apple its 30 percent - and all of the data.

As Time Inc. considers its next move, it's important to remember that, while there's plenty of excitement around Apps today, that's not to say that HTML 5 and browser-based won't replace apps as the next "platform."

Google, a big advocate of the cloud, has also been talking up browser-based computing for some time now and, given how young the market is, there's plenty of opportunity for another player to come in and disrupt Apple's app-based jump start.

Granted, Google is still trying to make a name for itself with Android and mobile phones. And when it comes to tablets, the biggest buzz around an iPad alternative has been the Dell Streak - but now, it looks like that won't be a contender after all.

The question is how long it will take for a contender to come in or for HTML5 "apps" to take off and whether a publisher such as Time can afford to stay out of the App Store and out on that limb while the iPad app ecosystem continues to flourish.