Apple's subscription levy spells trouble for consumers
Imagine a world where every newspaper and magazine sold hands money not just to the creator of that content but to the company that built the platform on which it is being delivered. As boring as it sounds, this is what Apple is hatching with...
As boring as it sounds, this is what Apple is hatching with news of its plan to take an astonishing 30 percent cut of all subscriptions delivered to iPads, iPhones and Touch devices, and it’s not alone. Amazon wants a similar cut for magazines delivered via its Kindle and even Google has published details of One Pass, mostly a levy for content shifted through its Market to the teeming throng of Android devices.
Publishers are desperate for any revenues to offset falling physical sales and these guys all have mobile device platforms that are a half-practical way of delivering it to the users who are buying mobile gadgets at a furious rate.
You could argue that publishing has always had intermediaries - middlemen - and they have always been well paid. But in the physical world such a function is essential - someone has to physically distribute, stock and restock shelves for consumers to buy newspapers, magazines and DVDs.
The Internet has always held out the illusion of direct publishing, but that has turned out to have the big flaw called fragmentation. Readers want newspapers, magazines, music and movies in digital form but content companies have failed to come up with industry standards and investment necessary to make this happen, which is why iTunes is famous and the half-arsed industry stores aren’t.
This isn’t inherently bad but there is cause for concern. First, the size of the cut being asked for by Apple is high and will either be passed on to consumers or will cut the investment in content as publishers adjust their business models, possibly both. Second, Apple, Amazon and Google aren’t building web systems consumers can take or leave but fully-fledged hardware platforms that have varying levels of lock in.
You buy your content on an Apple device, but what happens if your next phone is an Android or Windows Phone 7, or some device not yet invented? Can it be migrated? The chances are that it can’t or if it can, doing so will be complex.
The iTunes example is instructive in that it built a world tying a music store to a device, the iPod, in ways that were as proprietary as they could be made at the time.
So we end up with important content being sold to people as islands of ease and simplicity that remain utopian as long as you don’t think about leaving.
Google gets a bad press sometimes but its approach is the most considered of the three, not only because it is charging a more reasonable 10 percent overhead, but because Android is more open. The latter's future direction depends not only on what Google does but on its hardware partners and third-party developers. Learning the lesson of Microsoft’s slow ossification, Google has a better record on adopting open standards.
Mobile platforms are, for now, more competitive, but consumers and the publishers that want to reach them will not be well served by a world in which a bunch of self-important neo-middlemen are making all the serious money.