Battle-weary magazine publishers, in the middle of their most important fight yet, now find themselves up against a new—and powerful—enemy: Apple’s Eddy Cue.
The specter-like vice president of Internet services—who, despite being thrust into the limelight at the February launch of Rupert Murdoch’s The Daily, has long enjoyed his role of the faceless company man—has materialized with a fury. As the point person for publishers sparring with Apple for a subscription model they can live with—key to this is the ability to sell digital subscriptions, not just single copies, on the iPad—he has, after ceaseless haggling, offered them a model they seemingly can live without: not one of the top magazine companies has accepted the terms.
Dealing with the mysterious ways of Apple has always been an exercise in frustration. Few exemplify this more than the 47-year-old Cue, a man whose tweets are protected, Facebook profile is private, and who Apple, notoriously unhelpful to journalists, seems intent on shielding. An Apple PR person contacted Adweek after hearing from “one of our friends” that a story was in the works, but never replied to an interview request. Even the sighting at The Daily’s launch was less about exposure than the need for a stand-in for the ailing Steve Jobs.
Yet his influence is undisputed. Cue, who started at Apple some 20 years ago as a low-level IT staffer, has been running iTunes for several years (during the time it became a dominant force in music). In 2008, Jobs dispatched him to mend glitches in MobileMe, a subscription-based service, earning Cue the reputation as a fixer—and as Jobs’ man.
Some who know him say that Cue, a Duke alum and big Bull Devils basketball fan, comes across as upbeat and easygoing. Tim Bajarin, president of Creative Strategies, a tech consulting firm, and one of a few with access to individual executives at Apple, describes Cue as “warm,” “unpretentious,” and quick to tell a joke. Bajarin adds that he’s extremely pointed in business discussions, the product of a culture prevalent at technology giants.
“They approach the market with the idea they can change the world,” he says.
But publishers have not been privy to Cue’s warm and fuzzy side. To executives who have had dealings with him, Cue is known as an inflexible and unpredictable negotiator who frequently reverses and contradicts himself. When publishers told him they needed a direct relationship with buyers of their digital content for the purpose of renewing and upselling them other products, Cue, they said, verbally committed to terms one day, only to act a few days later as if the previous conversation never happened. One explanation: He was being overridden by Jobs in the interim, leading to the question of whether Cue is merely Jobs’s avatar, just as he was at that press conference for The Daily.
Further, after agreeing to a contractual framework between Apple and the publishers, he suddenly announced there was no need for a contract at all. Rather, he has said, publishers should merely use Apple’s own terms-of-service agreement, designed for software developers. Publishers told that Apple didn’t allow in-app subscription sales were baffled when exceptions were made for publications like The Wall Street Journal and The Economist.
“They just lie,” says one publishing executive. “It was an open subject of conversation. They don’t operate according to normal standards of conduct.”
What angers publishers the most is Apple’s refusal to acknowledge that, unlike the music and video businesses—where pricing was the issue—their model depends on maintaining customer relationships. Apple’s subscription model, introduced in February, allows them to do that, but grossly favors the store with its one-click-to-buy process. To Apple, in fact, the publishers seem to be just another software developer. At one point in a meeting about pricing, to the horror of a participant, Cue compared publishers’ content to Angry Birds.
Yet some still hope they can charm Cue, and by extension Apple, into submission—showing a perhaps willful ignorance of history wherein, under Cue, Apple came to dominate the music business, driving down selling prices with its 99-cent model. They take pains to see Apple’s point of view and speak, almost admiringly, of its single-minded focus on its customers. Perhaps, having hung so much hope on the tablet, publishers find it hard to let go of the idea that this relationship can work—especially as no serious competitor to the iPad has emerged. Publishers, it would seem, need Cue more than he needs them.