Apple’s Subscription for Arrogance

With the sales success of the iPad, Apple recently announced the launch of its online publication subscription service through its iTunes App Store, but it comes at a cost that publishers will feel and may hurt Apple in the long run. There is no question this is a great service, one the publishing industry seeks to exploit as more and more consumers abandon print in favor of portable devices, like tablets, to receive content, communications and entertainment.

But on deeper level the real exploitation happening here are the terms under which Apple intends for publishers to use the iTunes store subscription app. Terms that frankly take a very deep bite out of publishers’ potential revenue and from my perspective shows an air of arrogance on Apple’s part.

The two provisions of its subscription service that Apple is demanding publishers accept and gives off the aura arrogance are:

1. For the right to use the App Store subscription platform publishers must agree to give up 30% of the subscription fee (new or renewal) to Apple.
2. For any subscriptions generated through the App Store Apple will not allow publishers to automatically get access to their contact details and it will be for the subscriber to decide if they wish to supply this personal data for future marketing purposes.

Now, I have nothing against free enterprise and the economic principles of supply and demand, but demanding a 30% cut right off top seems more than a little pretentious and greedy. This feeling is only reinforced by the fact that Apple refuses to share any relevant customer data with publishers. Pay more and get less, what a concept.

My arrogance meter is further fueled when I put my own consumer hat on. Allow me to explain in real-life terms. I am a subscriber to Time magazine. With a busy professional and personal life I have limited time to read all that I would like. However, I have found that Time does an outstanding job of providing me timely, succinct and highly educational articles on a broad array of topics – be it government, international affairs, entertainment, social trends, technology and the like, which I can readily apply to advance my marketing career and even my personal life. In short, I derive real “value” by subscribing to the magazine, where as Apple’s subscription app is simply a transactional platform and whose value quotient to me is minimal.

And because my relationship resides in the value of the content Time provides, it bothers me that Apple believes it holds the keys to my personal information as a subscriber. From my perspective if anyone should have the right to use my personal information for the purpose of marketing other products or services that might be of interest to me, I think Time is more entitled to my information.

Apple’s approach to its subscription app conveys “we’re the only game in town, so take it or leave it.” Maybe this is reinforced by Apple’s belief that its iPad will be the tablet of choice and people will flock to all things Apple. For any brand, no matter how successful it is, this is a very risky attitude to convey, let alone consciously embrace.

The reality is that countless new tablets are starting to flood the market, which are using competitive operating systems for their tablets, such as Google’s very popular Android 3.0 or Honeycomb. These competitors, the Android OS and the apps they offer are already beginning to make a serious dent in Apple’s tablet market share.

In fact, the day after Apple announced its subscription app, Google announced their One Pass publishers’ subscription service. And Google’s cut for being the middle-man is a much more reasonable and agreeable 10%. Not only that, but for a third of the cost compared to Apple’s service, One Pass will allow publishers to maintain direct relationships to their customers – where it absolutely should reside. It comes as no surprise that many publishers are balking at Apple’s subscription model.

Being the undisputed leader of “technology cool” is great, but there is a fine line between the perceptions of being “cool” versus “arrogant.” Apple has crossed it here. Just a misstep or is success going to Apple’s head?

Juri A. Tults