Will New Apple Chief Mean Shift for Publishers?

Tech giant has been intractable with media companies

Apple, its products adored by consumers all over, has nonetheless had a complicated relationship with publishers, who have battled with the tech giant over its intractable position involving the sale of content on its devices. But those who have railed against Apple's hard-headedness are unlikely to see any satisfaction immediately from Steve Jobs’ transfer of power to Tim Cook, at least for now.

Cook, Apple’s COO, who filled in as acting CEO twice when Jobs took medical leaves of absence, has been described as the mild, soft-spoken counterpart to the passionate but autocratic Jobs, but no less competitive.

“Cook is a very competent manager, so it is unlikely that he would change what is working so well for them,” said one publisher who requested anonymity, citing ongoing talks with the Cupertino, Calif.-based company. “Later, he is likely to be more accommodating than Jobs since he doesn't have (no one could have) Jobs credentials as a genius.”

Back when Apple released the iPad in the spring of 2010, it was quickly hailed as an antidote to the publishing industry’s waning advertising revenue and its circulation woes. But those hopes quickly faded as Apple, under the direction of iTunes boss Eddy Cue, proved itself unmovable on two main issues key to publishers. Publishers hoping to sell subscriptions and single copies through Apple’s iTunes store had to cede control over information about their customers—data they consider critical to renewing and upselling their readers. A secondary objection was the 30 percent cut Apple took of each sale.

“I don't get the impression that Steve Jobs and Tim Cook disagree on this issue,” Paul Verna, senior analyst at eMarketer Inc., said in an email. “Even if Jobs is no longer able to participate in Apple's decision-making process, Cook will execute on Jobs' vision, which is to take as large a cut of revenue and control as much of the subscription experience as publishers will allow.”

Verna added, “So far, publishers have swallowed hard and played the game mostly by Apple's rules, despite recent concessions by Apple. In the long term, it's possible that publishers will eke out more concessions from Apple, but this could happen even with Jobs in the picture. The issues are complex, and they transcend Jobs' personality.”

Nor are publishers holding their breath in anticipation of seeing big changes in the near future.

“I really do believe it’s going to be business as usual,” said Gregg Hano, the group publisher who oversees Bonnier Corp.'s Popular Science, which was one of the first magazines sold on the iPad. A new report from tech consultancy Good Technology affirmed Apple’s continued preference among consumers, despite an increase in market share by Google’s Android, with the iPad accounting for the vast majority of the tablet market. That means Apple’s going to be the dominant tablet maker for some time, he said. 

But Outsell analyst Ken Doctor sees some room for movement. Yes, Apple has a commanding position in the market for now, Doctor said, noting the Financial Times' closely watched decision to circumvent Apple's iTunes (and Apple's hefty cut) by replacing its app with a browser-based one for tablets. “If, though, [Apple] has its antennae out, and sees that the FT HTML5-is-king approach is catching on, both among publishers and retailers [Walmart], we could see some new movement,” he added.