As the Media Turns: Has Apple Bulldozed One Deal Too Many?

It is one of those truisms that is especially relevant in the PR world: don't pick fights with those who buy ink by the barrel. While in most cases it is electrons that are at stake these days, the principle is the same – and one that seems to be lost on Apple.

Using the same approach and sharp elbows that worked so well in music and smart phones, and in an apparent attempt to convince yet another distressed industry that rising tides of coolness and brand can lift all ships, Apple is playing hardball with publishers and media companies.

I am talking, of course, about Apple's efforts to find a mutually agreeable model for monetizing content from publishers, and this week's chapter, in which the company announced the launch of subscriptions on its App Store.  If the move was meant to appease the industry – which had complained about lack of support for subscription pricing – this has not worked, judging by the headlines.

Let's not forget, these are media companies, which all have pretty big megaphones, of course. These are the downtrodden left-behinds of the digital era, a group that has the sympathy of the public and vaunted principles of the Fourth Estate (and its status as a special and protected institution) behind them.

If Apple is helping them find a way out and show a way forward with new content platforms and monetization gambits, it is on their terms.

Did they make their latest move because they want to respond to industry conerns, or is it because others like Google are cozying up to publishers with better deals? Probably a little of both, see this post Clash of the Tech Titans: Google One Pass vs. Apple.

I have started to see some negative articles about a vendor that has always been a media darling (what a tortured relationship, this morning an NBC Today newscaster discussed possible government antitrust action Apple and almost in the same breath gushed about an Apple store coming to Grand Central Station).

Yesterday's Wall street journal article Apple Risks an iPad Backlash said: 

By playing hardball with media companies on App Store subscriptions, Apple risks a painful rebound. Few media outlets can afford to not have their mobile applications available through Apple's App Store. With the iPad, Apple has an early lead in tablets, with a 75.3% share of global tablet shipments in the fourth quarter, Strategy Analytics estimates. And while its share of smartphone shipments was only 16.1%, the iPhone is the phone of choice for many affluent consumers. But that hardly justifies Apple's terms for subscriptions sold within its App Store. The company will keep 30% of the revenues and won't automatically give publishers information about their subscribers.

Yesterday, TechCrunch ran a post Why are You Defending Apple? It said: 

As you’ve doubtless heard by now, yesterday Apple revealed its new fee structure for premium content: all apps that offer premium content outside of the App Store have to also offer it via Apple’s official in-app purchases (this includes Amazon’s Kindle) and Apple takes a 30% cut of all subscriptions…

My reaction has been one of trepidation. I don’t like where this is headed, and I think that many who consider themselves technophiles are completely dropping the ball by rationalizing what Apple has done……

I don’t like the precedents that Apple continues to set. The App Store has existed for less than three years, and Apple has been drastically changing the rules on the fly…

I don’t take issue with Apple demanding a small processing fee to handle credit card transactions, but 30% is too much, especially combined with the restriction that publishers can’t change their pricing to adjust to the tax. Not every business will be able to offset the decrease in margins with the increased purchase volume promised by one-click payments. And companies that are in the business of reselling premium content with fixed costs, like MOG or Amazon, don’t have many options… The App Store isn’t a storefront in the way that Amazon.com or Walmart are — this isn’t just an extravagant affiliate fee. We’re talking about the primary method of app distribution for one of the most important computer operating systems, ever.

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