The Real Victims In Apple's Subscription Model: Middlemen

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The inimitable John Gruber takes a cold, hard look at Apple’s 70/30 split when it comes to iOS subscriptions and comes away unimpressed by the whiners who claim the fee is onerous.

The fact is, the App Store is an all-or-nothing affair. You play by Apple’s rules or you stick to web apps through Mobile Safari. This alternative is no different for periodical publishers than it was (and remains) for app developers in general. A lot of these demands boil down to a desire for more autonomy for native iOS app developers. Apple has never shown any interest in that.

What really irks publishers is that Apple can say “You can’t sell for what you want to whom you want.” Publishers have long been able to nearly give away subscriptions just to get circulation up and then sell ads based on that circulation. Now, however, magazines like the New Yorker will have to sell at a sane price and survive on that resulting pittance that may or may not flow in from subscribers.

I think what really needs to change in electronic subscriptions in general is the perception that magazines are best read in physical form and, sadly, I don’t think that perception will change in the next five years. It’s almost impossible to read a magazine regularly online, The Daily included, and I’m still not happy with the newspaper experience. However, if anyone can pull of esubscriptions, it’s Apple. Quoth Gruber:

The idea with Apple’s 70-30 revenue split is that developers and publishers can make it up in volume — that people aren’t just somewhat more willing to pay for content through iTunes than other online content stores, they are far more willing. The idea is that Apple has cracked a nut no one else has — they’ve created an ecosystem where hundreds of millions of people are willing to pay for digital content.

If you want to play on Apple’s lawn, you have to play by their rules. That’s the long and the short of it. Obviously not everyone is happy about that, especially the middlemen who have long gamed the system when it comes to circulation and ad sales. However, those same middlemen aren’t supplying the content people want and Apple knows it. The big guys will pay to play on Apple’s turf.