Apple subscription – death to periodicals

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So, it finally happened, Apple has announced subscription service for in-store purchases, and, by definition, will now be prohibiting any “tricks” with linking to an outside web site to complete the purchase. All while taking the same 30% cut of the sales price.

Given the margins that subscription services work on, it’s insane. And it will be the death of subscription services on iOS devices. Magazines can’t afford Apple’s cut, which means either complete removal of purchasing/subscription and the route of a free app that is purely ads-supported; a restoration of prices to those fake “retail prices” (you know what I’m talking about, when magazines send you a postcard screaming “85% off regular price!”); or some other trickery.

Also, theoretically, ads could turn into giant annoying movies, that are unskippable, uncloseable, and appear before each section of the app is open. But that’d probably kill the user experience. Given there are not enough iAds to fill all the spots, there’s no other way to compensate charges via ads.

Given that I don’t have an access to the copy of official rules I can only speculate on if “tricks” such as entering an unlock code or just saying “go to our web site (you know the address) and register there” and only showing content for the user that enters username/password will work. My guess is that won’t work — Apple didn’t spend all those money luring in users into its ecosystem to give up a chance of getting 30% for nothing (well, almost nothing, hosting is probably pretty cheap, review costs are paid by developer’s fee). Users, given a choice between doing purchase on content provider’s site and Apple’s iTunes (the only possibility to have a link to actual purchase page) of course will select iTunes, because it’s easier. So, it means that purchase option will just vanish. Or you’ll see artificially inflated price (where subscription for a month on Android device will cost $2.99 and iPhone/iPad $3.99). If Apple starts to complain, there probably will be trickery (official Android market price will get adjusted to $3.99 with a message that buying on publisher’s site means a discount).

This, of course, also means dashed hopes of magazine publishers. If the only way to reach Apple’s wider audience is to pay 30% tax, then halo of “savior of media companies” suddenly dims to a cheap plastic imitation — margins are low, sales at current prices are already disappointing, and trying to push the cost back to user (you want it on a shiny iDevice, so you pay more) will lead to even smaller sales.

A bit pity about streaming providers, like Pandora and Netflix — if they get forced to allow in-app payment, then those services will probably go away from iOS devices too. And if Netflix will be everywhere but Apple TV/iPhone/iPad, and if Pandora goes “poof”, and all the magazines vanish, Amazon gets removed, then there may be a bit of a trouble in iParadise.

I’ve already prepared a large tub of popcorn and will enjoy the show regardless of the outcome.

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