The power shifted a bit in favor of publishers last week on Monday when Apple made an unannounced change on its earlier policies. Apple made a huge move when it made a 360 degree turn on the controversial rules it previously made requiring publishers to sell content in iPad and iPhone apps through the iTunes App store, with a 30% mark up going to them. Just recently, that has been revised to allow magazine, newspaper, audio and video publishers to sell directly to users.
Music and video publishers were in assault mode when they complained about the huge cut Apple is asking and threatened to take out all their applications altogether. Although, even with these changes, some major media organizations have already signed agreements to sell subscriptions for Apple.
This subscription method was out in the market as early as February this year; generally iPhone and iPad users were required to purchase magazine and music content only from Apple, and purchase from other vendors that offer lower subscription payment were totally banned.
With the new modified rule that was made, music and video companies can sell to iPad and iPhone users their content at any price they dictate through their own web site. The only requirement made was that, vendors will not be allowed to indicate a buy button directly from their web apps, and that publishers cannot offer direct subscriptions from them, if they do it has to pass the iTunes store where Apple will still get the 30% mark up.
The earlier ruling has sparked serious concerns from publishers, which is the opposite with major media companies where Apple initiated the flexibility to offer these companies their subscriber’s data in exchange for the closed subscription agreement.
Some of the companies who agreed to sell the subscription include: Hearst and Condé Nast, which is the second and third largest American publishers respectively. The New York Times on the other hand, agreed to offer the subscription to their Sports Illustrated, Time and Fortune magazine in exchange for their reader’s access to iPad device.
Other publishers like The Financial Times and the British Daily chose to totally ignore Apple’s offer. In fact, they have offered their own mobile Web app that works like an iPad and iPhone app.
The music company Rhapsody says it will still review the new rules after criticizing Apple earlier. A Condé Nast spokeswoman said that this is a welcome breather, but added they still have to study closely this development with Apple.
Executives at Hearst are still polishing some details on their agreement with Apple before finally selling the subscription for their Esquire, Popular Mechanics and O, The Oprah Magazine.
Analysts said they were surprised with Apple’s previous rules; because they have long wooed companies and publishers for the huge supply of content and apps it provides them, which helps them sell their gadgets.
In fact, Apple said that in the recent quarter of 2011, only $1.6 billion came in from the iTunes store, which is too low compared to their $24.6 billion revenue they got. This revenue came from major labels and not from the iTune store.
James McQuivey, an analyst with Forrester Research said, “The more content there is in their ecosystem, the better their devices sell,” and added. “Why they had decided to tighten the rules on content publishers is hard to explain. I think they overreached.”