∞ It's not Apple's fault the publishing industry is screwed up

The publishing industry and the media have been up in arms since Apple introduced its new subscription service last week. What I don’t understand is why publishers think it’s Apple’s responsibility to make them successful.

[ad#Google Adsense 300×250 in story]Let’s face it, the publishing industry has been going downhill fast for many years. In some respects, they have nobody to blame but themselves.

Of course, as a society our reading habits have changed dramatically as technology advanced, but publishers have been giving their product away like penny stocks for a long time. This was in large part to counteract declining circulation, but they devalued their publications too.

You can get magazines and newspapers from subscription Web sites, pull out fliers, telemarketing phone calls and a number of other annoying methods that lead most consumers to just say no.

The Internet changed publishing forever and many publications were very slow to capitalize on the opportunities, instead choosing to stand in front of an oncoming freight train. That didn’t work out so well for them.

Now we are on the cusp of another publishing revolution and the industry is again standing in front of that freight train.

I read an article on TechCrunch over the weekend written by Tien Tzuo, founder of Zuora, a subscription billing company. He outlines what he feels are some of the problems with Apple’s model, but I think the article also proves my point.

Tzuo says that Apple only offers one subscription model and that won’t work for a variety of publishers.

I don’t see why not. Apple allows publishers to set the price and length of subscriptions (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). How is that different than my home delivery subscription now?

To be clear, Apple takes a 30 percent cut of subscription revenue only when Apple brings that customer to the magazine or newspaper. If the publisher brings that customer, Apple gets nothing.

How does this differ from paying telemarketing firms to get subscribers?

Tzuo says:

Apple has no way to bundle physical and digital goods. Do you want to give up home delivery forever?

Yes, absolutely. I’ll gladly give up my home delivery. Apple isn’t in the business of home delivery, so why do publishers think they would offer that option.

Tzuo says:

With the Apple model, there’s not enough adequate ad revenue from tablet editions of magazines and newspapers.

I’m sorry, how is that even remotely Apple’s problem. Advertising is the publishers problem, not Apple’s.

Tzuo says:

Consumers won’t stand for one subscription through one device.

Again, not Apple’s problem. If publishers want their magazines available on multiple platforms, then make it available for multiple platforms.

Tzuo goes on to criticize Apple for giving consumers the opportunity to not give their information to publishers. I’m sorry, as a consumer this is a good thing to me. I’m paying you for your magazine, not so you can call me every week and harass me about another special deal.

Apple is not a charitable organization — they are in business to make money. If Apple is maintaining the technology and infrastructure for this new publishing paradigm, then they should charge for that.

In traditional publishing, companies had to pay for paper, ink, the organization to maintain everything, shipping, telemarketing, fliers and a host of other expenses. The new publishing model does away with many, although not all, of these costs. Why then is paying Apple 30 percent a burden?

This is a business decision for the publishers. It’s that simple. If you think Apple’s terms are too aggressive, then bow out of this publishing model and go on the way you always have.

Apple is not forcing publishers to come on board and publish for the iPad. They are offering publishers an opportunity to sell their magazines and newspapers to people that own 160 million iOS devices. If you don’t want it, move on.

However, I believe the publishers that do move on from this new publishing model will be the ones written about in a couple of years that have gone out of business because they refused to change.

Probably written about in publications available on the iPad.

  • Well said. I’m ready for the whining about the subscriptions to be done with already. The publishers dug their grave, and Apple’s trying to help dig them out. Instead of figuring out how to make it work, they’re crying about it.

  • Spot on, Jim. @mangochutney had pretty much the same conversation yesterday.

    Seems to me that the publishers have three choices. Signing up with Apple is probably the quickest.

    They could also stick their heads in the sand and keep doing things the way they always have. That will probably work well for niche publications.

    Finally, they could tell Apple to get bent, and build their own Android solution. I personally don’t pay that much attention to Android (being a kool-aid swilling Apple fanboi), but as I hear it, there’s more Android handsets out ther and approximately a metric ton of Android tablets on the horizon. So the market is (will?) be there eventually. Android is open, so they can build it any way they want. Of course, this is going to be hard…

    They’ll have to build something. Generally, it seems that entrenched industries like print publishing aren’t nimble enough to do this without ruining everything in committee.

    Betting on a theoretical market, such as Android tablets, requires a leap of faith; not something ‘old’ industries are known for doing.

    If they were willing to place the bet, and execute smartly, they’d have a chance of forcing Apple’s hand. But my money says they won’t.

    • They have the content, they’ll do both platforms, and even more, because the user base of Android+Apple is more than just Android. As simple as that.

      The entire pose that they will “pick Android over Apple” is a negotiation tactic and a complete non-sense in terms of their actual actions.

      As for those for whom the model doesn’t work: Don’t feel privileged. Don’t feel that Apple owes you anything. Don’t feel Apple needs you. Don’t feel you can force them into bending over to accommodate you. They don’t, and they won’t.

      Even if the entire industry joins together to oppose Apple, which won’t happen, the fact is we have no great journalist and writers, which stand out in the sea of mediocrity that is periodical newspapers and magazines. Content is a commodity. It doesn’t have to be, but this is what it is in our status quo. Everyone is replaceable. And objecting to iOS means someone else will fill the void before the old dogs have the time to finish their little protest speech.

    • Agreed.

  • The Cappy

    I think a lot of this is true. I’d be curious to know what the non-electronic costs amount to, in a big magazine. I suspect that advertising costs shouldn’t be counted as one of those items the iPad does away with. iTunes doesn’t do a very good job of showing you more than the top 20 or so items in a given category. Everything else, you found because you searched for it, or you linked to it.

  • “To be clear, Apple takes a 30 percent cut of subscription revenue only when Apple brings that customer to the magazine or newspaper.”

    What does Apple do to “bring that customer” to the magazine?

    Does it market the magazine? No.

    Does it produce the content which they person wants to buy? No.

    Does it promote the subscription on iTunes? No (they’ve never done promotion for in-app purchases).

    For its 30% slice, Apple does a whole lot LESS than it does for application developers. Devs get promotion, testing, hosting, etc – publishers get credit card processing. Which they could do themselves at about 1% of the cost.

    Yes, it’s not Apple’s fault the publishing industry is screwed, But that doesn’t make a 30% cut for doing nothing a good deal. And when you have one part of the channel screwing over another, it’s always customers who end up suffering.

    • The solution for publishers that feel that way is simple — don’t do it. They can continue to publish print products in a declining market.

    • Yes. My impression is that many folks saying that Apple’s stance is a great thing for publishers are essentially arguing that all iOS in-app purchases have the same economic model — that there’s no substantive difference between buying a new level pack for Angry Birds and buying a years’ electronic delivery of Extreme Snowboarding Monthly. But the benefit of Apple’s system to iOS app developers stems almost entirely from Apple’s unique position as only way to get their application on iOS in the first place; with that knowledge in mind, there’s no reason for a developer to build up “competing” infrastructure to support distribution and e-commerce. But when you’re talking about existing content from publishers that already have distribution and e-commerce platforms — ones that they can’t get rid of unless they want to be iPad-only like “The Daily” — the cost/benefit structure is very different.

    • Harvey Gartner

      On the face of it Apple brings the iTunes App Store. In itself a lucrative place to be.This is only the first shoe to drop in managing the App Store. I predict others. There are ? hundred thousand apps in the store. Apple is going to bring that store into manageability. The deadwood and freeloaders are going to be culled. Any app that connects outside the app is going to guarantee Apple’s policy of auto opt out. No data scraping from the App Store. PayPal need not apply.

    • Jkprice525

      Amazon charges publishers 30%. No big change here.

    • Gustav

      Does it market the magazine? Hmm… it sure did for The Daily. Featuring it on the front page of the App store is premium marketing – it has sure done a lot for other app developers.

      Does it host the app that users download to read the magazine? Yes

      Has Apple spent millions building the iPad platform that draws users to look for magazines to read on their iPad? Yes.

      Don’t say that Apple has done nothing. Simply having the magazine available on iPad is going to bring in a lot of sales – and that’s due to Apple building the iOS platform – don’t tell me that cost nothing.

      You can quibble about percentage cut all you want, fair enough, but to say Apple adds no value is silly. If Apple adds no value, then this would be a non-issue and we wouldn’t be discussing this today.

    • Steven Fisher

      You are seriously deluding yourself into what developers get for their 30%.

      Most applications sit there, quietly waiting for the user to enter a lucky search. That’s not promotion. A magazine published through the iTunes Store will get exactly the same amount of promotion.

      Apple runs our application, looking for an excuse to reject it. That’s not testing, that’s a bullshit excuse generator on a long delay timer. How would you like it if every piece of content could be rejected a day, a week, a month, or two months, or six months later (without any possible way to know how long it will take) for a single mistake?

      What we get is hosting, huge delays, and massive amounts of frustration. And credit card processing.

      You know what? It’s EXACTLY the same thing. Except we don’t have any other options.

      • Anonymous

        I don’t think the app store review process that you describe applies to content. No one is going to check each word. There are publications that Apple isn’t interested in, like any other newsstand.

    • Ian I don’t think your argument is correctly stating Apple’s position.

      Think of them more like a news-stand. News-stand owners take a cut of the list price of the magazine. They are a shop, and Apple’s App store is a shop. If the publishers want to do their own subscriptions (which are nothing to do with the news-stand) the new-stand doesn’t take a cut and neither does Apple.

      Where people are getting confused is when the news-stand does it’s own subscription, but like Apple’s position, this is no different than the news-stand getting a paper boy to deliver it. The news-stand still takes the same cut even though the delivery cost (the paper boy’s wages) is very small.

  • Tzuo left out his real #1 reason: “Electronic subscriptions make me superfluous.” Sorry, dude, but as time marches on certain professions get left behind. Ask your neighborhood wheelwright how business has been the last hundred years.

  • Vamsmack

    I don’t really care about developers to be honest I just want the content, if you’re not on the app store someone else will be.

    This idea that Apple has to do anything for the 30% is wrong. They built the infrastructure for the App Store to run on and that gives you the ability to reach millions of people if you want to market the app by all means go ahead and do that but Apples part is done and if they want to feature you then cool but otherwise they haven’t stopped you selling your app to me and if I see value in your content I will subscribe. Simple.

    • Harvey Gartner

      The trick from here on out is going to be whether or not the App is in the store. If you make an App that you want in the store and you can’t get it there, it does no good to market it anywhere else. Get it in the store. If it’s there it meets Apple’s requirements.

      • Harvey Gartner

        Me replying to myself. There are other places to market your App. Many in fact. Growing market, actually. It probably will run just fine in the Jailbreak store. Port it to Google, RIM,etc, etc, meet their requirements. The market right now is “Anything you(Apple) can do, I(Google,etc) can do better”. There is a new race for market in digital subscriptions. Jobs and Murdoch are the two leaders here, Murdoch just has to deliver digital content that people subscribe to. But so are all the other digital subscription partnerships that are made to run on digital devices. There’s no limit to the number of different content providers that want to sell digital subscriptions for mobile devices. Finding desirable digital content subscriptions that work for mobile is what this new market is. It will be worked out. Actually getting those Apps on the devices is what the content providers are having a hard time doing. Having them in the store is not the same as having them on the devices.

        Get them on the device. Or bring them to your great web App experience from their browser.

        • Harvey Gartner

          Me replying to myself, again. Almost everything I’ve posted is superfluous to the point Jim was making. It’s not Apple’s fault they can’t figure it out. I’m eye to eye on that. Anyone blaming Apple is aimed at the wrong target.

        • Steven Fisher

          You’re flat out wrong. Android does not cover iPhone applications. The jailbreak market is a joke.

          If you have an iOS application built, there is but one place to market/distribute it: the iTunes Store.

          That’s not necessarily a bad thing, but it is reality.

  • First those two “About…” posts last week, now this.

    Jim, that is too much sanity for my poor brain to handle 😉 For heaven’s sake, stop and post some sensationalistic, attention-grabbing rumour.

  • While I agree with Mr. Betteridge that the 30% Apple is taking is too high for what they deliver — IMO a lower percentage would encourage faster growth of the platform and greater diversity — I believe like so many others here that the publishing industry has to pay-up or shut-up.

    To use different words:

    The Klingon Empire publishing industry is dying and I think it deserves to die.

    — Follwing Ezri Dax’s train of thought in episode 22 of Star Trek Deep Space Nine’s 7th season.

    The publishing industry didn’t try to adapt for years; they continued to use almost half a century old business models. They didn’t try to learn from the music industry’s fate. Instead they relied on other companies to provide solutions for them and have been naive enough to believe a product by a for-profit hardware producing company will be their saviour? — I’m referring to the iPad of course. Now Apple has provided one for them, but they don’t like it, because it cuts further into their already small margins: * Margins that have become smaller because of their failiure to innovate and adapt. * Margins that have become smaller because their value proposition can’t hold up against free content on the internet. * Margins that have become smaller because customers don’t see their offerings as worth the money.

    Then there’s the case of Apple caring for their customers, the consumer. You read that right, Apple’s customers are everyday people, not the publishers. And for some unfathomable reason Apple seems to take care of their customers, by — in this case —providing them with an easy way to check where their money is going (which the publishers hate), to easily cancel subscriptions (which the publishers hate) and by not automatically giving away customer data (which the publishers hate).

    I don’t even want to get started on the topic of the need for publishers these days, or self-publishing.

    Marco Arment of Instapaper and Tumblr fame has recently joined a company called readability.com in an advisory position. I don’t know that much about the inner workings of the system, but they’re on the right track if you ask me:

    Today, our goal is simple: to deliver a great reading experience and provide an avenue for supporting writers and publishers on the Web. As a Readability subscriber, the great majority of your subscription fees go directly to writers and publishers that create the content you enjoy reading.

    They realise this by having the reader pay a self-set monthly subscription, of which a large portion is given to the authors of content you read and like.

    This might be a far from perfect solution to sustain a prospective writer, but it’s innovative and most importantly meritocratic. And the latter is a concept almost forgotten in the publishing industry.

    P.S.: I’ve added this article to my readability reading list, I hope you get something out of it Jim.

    • Looks like the Readability app will be blocked from the App Store.

  • Adam

    Okay, so you talked a lot about traditional print publishers migrating to this new platform, but what about content providers who came about on the web more recently and never had those physical distribution costs? Their margins are a lot lower. I’m talking about services like Netflix streaming, Rhapsody, or Pandora. Rhapsody has already come out and said that giving 30% of their revenues to Apple is “financially untenable” — so what, are they lying? Why does Apple deserve 30% of ongoing revenue for Rhapsody subscribers when Rhapsody provides the bandwidth, Rhapsody negotiates with music labels for content rights, etc.? Apple provides nothing other than hosting for the original application binary. Once the user downloads that binary, Apple is more or less out of the picture. The only solution for Rhapsody is to withdraw from the platform or raise prices across the board. How is either of those options good for the end user?

    This would be the equivalent of Microsoft demanding 30% of all sales from iTunes on Windows because Apple is using their platform. Absurd. Apple would raise prices or stop producing iTunes for Windows.

    • Harvey Gartner

      How does Microsoft compel anything at all about a platform that anybody can put anything on. Microsoft curates nothing about someones Windows usage.

    • Anonymous

      If Microsoft actually did curate the systems, and users bought into that system wanting to be curated. Sure. That isn’t the case, far from it. Microsoft stops doing anything other than fixing bugs itself after GM release and HW specification, so it doesn’t really make sense. Windows does not include a one-click payment platform. If Apple had to use that, it would have to pay MS.

      Those situations cannot be compared.The two OSs are different, paradigms are different.

  • Steven Fisher

    The future of publishing will be owned by whichever publishers figure out that users want content in exchange for money, and it really is that @#$%ing simple, and stop trying to make it more complicated.

  • Petr008

    Having been a magazine publisher, I received only a little more than my cost when distributing through regular channels. The distributor and retailer made most of the money.

    What most people don’t realize is that the money in publishing is not made from distribution, but from the advertising. Distribution is there to create a readership that can then be sold to advertisers.

    So getting 70% of an amount that I used to get only about 20% thereof, is a major bonus!

    And I agree wholly, the Apple solution is a brand new circulation venue for publishers. Compared to the old way, where you print millions of copies, work like hell to get it into distribution networks (who will kick you out in a minute if they don’t sell enough), find shelf space that will actually help your magazine sell, advertise your magazine like crazy so people will actually know about it, and then not get paid for those not sold (into the recycle bin), the Apple solution seems like a dream.

    Current publishers certainly need to get their head out of their butts. If they delivered an electronic version that was well done, I’d read it in a minute – including the ads.

    Just my two cents worth!

    • S.Mulji

      Excellent post. I think many other who peruse other blog sites on this subject seriously need to read this post

  • Reg Rowell

    Thanks. Well said. I still receive daily delivery of my local newspaper. However I do most of my reading on my iPad or computer for news, info, research, etc. My local paper has an ok iPhone app but no iPad app. I would pay for an iPad subscription if available. I don’t think publishers care for their readers in any appreciable manner. Not sure if Apple cares so much about consumers either but as a Mac user since 1986, I do believe they care about user experience precisely because it improves their profitability. Power and control issues operate on the corporate level as much as they don on an individual, pyscho-dynamic level.