Apple hits publishers in the pocket over content revenues

Apple's insistence on taking a 30% slice of all publishers' content revenues has prompted criticism from across the industry.

by James Taylor
Last Updated: 19 Aug 2013
Media companies have been getting excited about the revenue opportunities on offer by selling their content through mobile devices. But Apple had some bad news for them yesterday: it’s demanding that anyone selling iPad- or iPhone-compatible digital subs must also provide the same offer via the App store; at which point Apple will take a 30% cut of any money they make. The end result will presumably be that more and more people buy their subs via Apple – which not only deprives the publishers of much-needed revenue, but also of potentially valuable information about who’s actually buying their stuff. No wonder they seem less than enthusiastic. Even Vodafone has publicly criticised Apple’s attempts to create a ‘walled garden’...

Until now, the likes of the FT and the Times have been able to flog their subs by putting a link to their website in their apps (although Apple obviously took a slice of the app revenue). But now Apple’s saying that’s no longer allowed: users must be allowed to sign up to any such deal via the App Store directly, allowing Apple to take another piece of the pie. Apple boss Steve Jobs insisted his company’s philosophy was ‘simple’: if they bring the subscriber to the content, they get their cut; but if the publisher brings the subscriber to the app, they get the lot.

Sounds not unreasonable, in principle. But the practical issue is that Apple effectively controls so much of people’s access to content via the App Store. It’s clearly a lot more convenient for users to manage all their subs in one place, so they’re more likely to do it via the App Store than going directly to the publishers. It’s not exactly a fair fight, in other words. And because Apple has the publishers over a barrel, it can basically charge whatever it likes – hence this hefty 30% cut. What’s more, it gets to control all the information about the people who are buying.

As CNN points out, it’s notable that Apple had just a single launch partner for its new set-up: News Corp’s The Daily, which as a digital-only product doesn’t have much choice (although Apple has refused to confirm whether News Corp is paying full whack). All the other big names have been notable by their silence, and there’s speculation that one or two may now pick up their ball and go home.

This kind of behaviour isn’t exactly unusual for Apple. And it will argue that having effectively created this market, it deserves to cash in. But it shouldn’t expect the rest of the industry to like it. Vodafone boss Vittorio Colao certainly isn’t impressed: he told delegates at the Mobile World Congress that the industry should be ‘trying to avoid closed dominant systems’, with all concerned working together to ‘grow the pie’ rather than fight each other ‘for a larger slice’. We imagine publishers will agree heartily...

Find this article useful?

Get more great articles like this in your inbox every lunchtime