Just as mainstream publishers are hitching their digital futures to Apple with a deal to sell subscriptions through the company's new Newsstand, one major publisher is saying, in effect, who needs it?
On Tuesday, the Financial Times launched FT Web App, a browser-based app for tablets, which is expected to replace the app it sells via Apple when the FT’s terms with Apple expire June 30. The app is optimized for the iPad and iPhone, but the FT says it will be adapted to other devices, including the Samsung Galaxy and Motorola Xoom.
The news comes, coincidentally, as Apple has been making headway with other mainstream publishers. Major publishers including Condé Nast and Hearst have agreed to sell subscriptions to their titles on the iPad, with Apple taking the 30 percent cut it's been demanding. And yesterday, Apple announced a “Newsstand” app that’s been long sought by publishers. The app will let consumers store and browse all their newspaper and magazine subscriptions in one place, similar to the iBooks feature, although it’s unclear how the work flow will be and if the Newsstand will be open to free aggregator apps like Flipboard and Pulse or just paid publications.
The FT isn’t the biggest publisher out there, but it’s one of the few that’s figured out how to build a paid digital strategy, making its new app move particularly noteworthy. There are clear advantages to Web apps. Publishers, free from the constraints of the App Store, can charge what they want, keep all the revenue for themselves, and gather whatever data they want to from consumers. There are cost considerations, too. Rob Grimshaw, managing director of FT.com, said the FT started thinking about creating HTML5 technology last year as a way to avoid the cost of developing an app for every device expected to come out.
Meanwhile, Apple’s new subscription terms kick in July 1, meaning the FT was faced with giving up a deal that let it keep all the revenue from subscriptions and control its relationship with its customers. Grimshaw was polite but firm in describing its talks with Apple: “We’d love to reach an agreement,” he said. “But . . . we’ve got something that isn’t broken. The terms don’t work for us, and we have to be hardheaded about it.”
The FT may lose exposure by not being in the App Store, as Outsell's Ken Doctor points out in an analysis, but Grimshaw says it can promote the FT Web App other ways, such as search, email marketing, and links from FT.com. “In many ways, it’ll be much easier to find the Web app than native apps in the App Store,” he said. “Apps don’t have to be something that exists in the App Store. As a publisher, you can control your own channel to market. If you know you have another way to reach your customers, it puts you in a stronger position when it comes to platform providers.”
But it’s not likely that the FT move will have an immediate domino effect. Other publishers may be tempted to follow suit and say the hell with Apple, but most of them are reliant on the device maker to build a digital business because Apple still dominates the tablet market. As for the FT, it’s unusual among publishers in that it already had a strong business outside the App Store (although that’s changing; mobile devices now represent 15 percent of new subscribers on a base of 224,000).
Grimshaw said he doesn’t expect Apple to bend based on the FT’s initiative, at least not immediately. “Over time it may change the balance a bit between the publishers and the platform providers. Apple isn’t the only show in town, and that will become more true as more manufacturers bring their devices to market over the next couple of years,” he said.