Apple Sub Plan Might Mean War

  • February 21, 2011, 12:00 AM EST

When Apple announced its iPad subscription plan for newspapers and magazines last week, publishers should have jumped for joy. It was the announcement they had been waiting for, after all. Instead, it seems the news has only deepened the divide between Apple and the industry, and brought them closer to open war.

“They’re the beautiful girlfriend you had in high school who was a bitch for no apparent reason,” grumbled one publishing executive, who like most won’t criticize Apple on the record. “They’re putting publishers on a very tricky path by making no promises and moving at a glacial pace. They’ve chosen to make it as difficult as possible to execute. They’re frenemies, for sure. You have to hope at some point the FCC or someone here begins to look at it.”

(In fact, federal antitrust law enforcers are looking into Apple’s new terms for content sellers, The Wall Street Journal reported.)

While it seems the industry is getting what it’s long wanted—the ability to sell subscriptions, not just single copies—Apple has rigged the game. Most sales will go through its App Store, and Apple will take a 30 percent cut of every transaction there. Plus, consumers who go through the App Store will have to volunteer their information to the publishers, and it’s unlikely many will do so. Also, Apple has decided that publishers can’t undercut the prices offered in the App Store, which means they can’t play around with special deals for print the way they have in the past.

Any hopes that the iPad would be the industry’s savior has faded, and months of dealing with Cupertino since the tablet was introduced last April have left publishers disappointed and frustrated. While praising the company’s products and consumer orientation, they complain of unexplained delays by Apple’s gatekeepers in getting apps approved, one-line rejection messages and an anti-nudity policy that was applied arbitrarily. And policies seemed to change with maddening regularity. One publishing company head called a guideline “the Tuesday rule,” knowing that by the next day, it might have changed. The newly announced subscription rules added insult to injury.

Or maybe it’s injury added to insult, because Apple’s new policy could put a serious dent in publishers’ bottom lines.

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