Thursday, February 17, 2011

We can live with the new Apple subscription model, says Transcon CEO

Apparently, a 30% subscription commission taken by iTunes, while steep, is something that the CEO of Transcontinental Inc., Francois Olivier says his company can live with, according to what he told the Montreal Gazette. Transcontinental Media publishes the largest number of consumer magazines in Canada. The new sub model will help newspapers and magazines  make money, Olivier says.
Apple this week announced a new subscription model that will allow the sale of daily, weekly or monthly subscriptions whereas the previous iteration made subscribers buy each issue of any publication separately.
“That was one of the things that was missing in the Apple model,” Olivier said. “It was used to selling songs on iTunes piece by piece, but in the newspaper and magazine industry, the bulk of our readers are subscribing to the publications.”
Olivier said he doesn’t mind the 30 per cent cut that Apple will take off the top of any subscriptions, which has been criticized by other industry leaders as too steep. “When we sell magazines through news stands, the stores often take more than that, so it doesn’t feel like a totally unreasonable number.”
According to Advertising Age writer Nat Ives, however, many U.S. magazines are still  staying away from Apple's new iPad subscription system to protest the fact that Apple won't tell them who's subscribing through the App Store unless subscribers specifically say they can.
"Without the demographics, which iTunes won't release, the print world is castrated," said Gary Armstrong, the former Wenner Media executive who is now consulting on branded content development for media brands.That means the iPad won't help the magazine business as much as many publishers fantasized, Mr. Armstrong said. "Is it a complete failure?" he said. "No, but it's obvious it will now never be the panacea they long hoped for, and they'll have to readjust their entire business model."
Waiting and seeing may be the wisest course for publishers, since already there is competitive pressure on price that can only increase over the next few months. Google's announcement this week of a competing tablet sub system with only a 10% fee is the first of what could be many. According to the Wall Street Journal
Google said it will charge publishers 10% of revenue from sales through its One Pass service. It will let publishers set prices and give them more control over customer data.

"The publisher is the merchant of record," said Google Chief Executive Eric Schmidt in Berlin on Wednesday. "We don't prevent you from knowing, if you're a publisher, who your customers are, like some other people" do, he said, a tacit reference to Apple.
 James McQuivey, an analyst at Forrester Research, said in the story that some publishers might sign up for the Google service purely to show Apple they aren't happy and to encourage competition. 

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Anonymous Anonymous said...

I think the worst thing about the iTunes model, though, is the loss of data. Apple owns the list and keeps all the purchasing data, if I understand it right. Maybe the extended reach to audience is worth it but I'm kind of skeptical. I'd be curious what your thoughts are.

2:27 pm  

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