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Is Apple’s New Subscription Model Really a Death Grip for the Industry?

Victor B. Feb 20, 2011 3
Apple iPad

Image Courtesy of Apple

Zuora founder Tien Tzuo writes a guest post on TechCrunch explaining why Apple’s Subscription strategy is not going to help the industry. Zuora is a company that manages subscription billing. Some of their clients include Pandora, Box.net, Ricoh, and Sun Microsystems.

Tzuo says that Apple’s subscription model for the industry where they take a 30% cut of subscriptions purchased through their apps and using iTunes is dangerous because they are “setting up new rules that could bring the publishing industry to its knees.”

One of the biggest arguments Tzuo has against the subscription model is that there is only one pricing model. He also states that there is no way to bundle the digital with physical subscription, for people that still want the combination of both. Also customers want flexibility with their content to read on whatever device they have, which he says this subscription model will not let them do.

His solutions for publishers boil down to not relying on Apple and coming up with their own flexible subscription strategy that caters to their business.

He also says Apple can redeem itself by letting “publishers own the subscriber relationship.” Sharing subscriber data would help both parties and as he states “customer data is truly the lifeblood of the publisher’s business model.” He also suggests that customers should be given the ability to view over different platforms.

For the most part I agree with his points about flexibility in both the billing and the consuming of content. But Apple also said in their press release that the 30% cut is only for the subscriptions purchased through Apple. The publishers are free to offer the subscriptions themselves, keeping 100% of the payment. Maybe the 30% Apple is demanding is a lot, but they are in effect the retail store, similar to magazines being sold in Barnes and Noble stores. It would be interesting to see how that 30% cut compares to the cost of getting the physical copy of the magazine/newspaper to someone’s door, or to the store.

Despite the clashing ideas between publishers and Apple, hopefully the ultimate decision maker will still be the consumer.

VIA TechCrunch