The Media Industry's Biggest Fear: How Do We Know Next Year Apple Won't Be Taking 50%?

At the risk of going on and on about Apple’s controversial new subscription billing rules, let me just add one more thing. Yes, these new rules may affect music streaming apps and movie streaming apps, but first and foremost they are aimed at print publishers who were hoping to port their existing subscription business models over to the iPad.

The big publishers and other media companies with substantial subscription businesses don’t like the prospect of handing over 30 percent of their revenues in perpetuity to Apple. What they like even less is losing the direct relationship with their customers, and all the data that comes along with that. (Whoever owns the billing relationship owns the customer, after all). But the one thing they fear most of all is Apple’s pricing power. The refrain I’ve heard from a couple of publishing industry insiders is: “How do we know next year Apple won’t be taking 50%?”

In other words, they are scared that they and their readers will get hooked on the iPad, which in three short quarters has already propelled Apple to become the top mobile computer company in the world. Right now they can still stand firm, and threaten to stick with Google and Its new, more favorable, One Pass subscription billing or Amazon’s Kindle. But if they give in without a fight, and Appel brings millions of new subscribers to their digital publications, then Apple can take an even bigger bite of the revenues down the line.

Apple could allay these fears by pledging not to change the economics for a set number of years. Locking in the 30 percent fee for three years, for instance, would take some of the uncertainty out of the process.

Photo credit: Yat Fai Ooi