Apple Shakes Up Digital Subscription Program For Publishers

Taking a page from News Corp.’s model for The Daily, Apple has green lit a new subscription plan for publishers that distribute their digital content through the app store.  The program, which was announced today, will affect hordes of magazine and newspaper publishers including many of the titles that already have their products available in the app store such as The New York Times and New Yorker. The New York Observer received the following news from Apple about their subscription format.

Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.).

Apple CEO Steve Jobs further clarified the profit breakdown between his company and contributing publishers.

Our philosophy is simple – when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.

Darrell Etherington of GigaOm notes that the Apple-publisher partnership may not be as simple as Jobs describes.

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. 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.