Anyone with any sense in publishing will be watching very carefully what the FT is doing.
They’ve decided to forgo platform-specific apps, sold through app-stores, and instead produce a compelling, HTML5 compliant mobile-oriented website.
OK – they’re not actually dumping their apps. But they are actively trying to persuade their readers to go direct. And for good reason (as their MD explicitly spells out in this Media Guardian piece).
Firstly, if you sell through the market leading app-store – Apple’s app-store – you have to pay a pretty healthy 30% of revenues. And in a subscription based business like newspapers or magazines, that’s a very healthy return to Apple for not much work.
While a newspaper in a shop uses valuable shelf-space, an app in an app-store is but a few megabytes on an infinitely large server. Yes the app-store is a go-to environment for potential customers, but that’s still a hefty chunk of potential profits.
While Apple has just launched Newsstand to allow publications to get into subscriptions, there are lots of problems which many publishers don’t seem to like with Apple’s model. While your local newsagent gets a cut of any paper you buy from them, Apple is getting a serious cut of a digital purchase where the overheads are much lower. It’s not hard see why the FT found this unacceptable.
Then Apple doesn’t provide full details of who your publications’ subscribers are. This is perhaps the single most important piece of information that a publisher can own. It’s the direct link between the publisher and their customers. It allows them lots of opportunities – for upselling; for renewals; for partner-marketing; for selling on to others. Publishers want to know an awful lot of about their customers. In any business, you need to know as much as possible about your customers, and historically the publication industry has been very good at it.
Then there’s the flexibility in pricing models. Apple wants to ensure that the deal offered via their app-store is the best there is. You’re not supposed to undercut it elsewhere. Except that publishers want precisely that kind of freedom. Most service providers do. Sure – there’s the rate they’d love to sell you a subscription. But you’re a lapsed subscriber, so they’re willing to cut you a deal. If you’ve ever been in that position with a print magazine you’ve stopped taking, you’re surely aware of all the offers that get mailed to you to persuade you to resubscribe. My father has a drawer full of cheap Time magazine branded watches that can attest to the power of those offers.
Or think of software upgrades that come through via email if you’ve ever bought something that requires a further payment for the updated version. (My favourite recently came from Nero, keen for me to upgrade to version 10 of their disc-burning software. The email had a subject line that read: “Last chance: Accountant on Vacation means big Savings for You”. Very creative.) It’s absolutely right that your business has the flexibility to slice and dice its subscriber base in any way it wants to, and to fashion appropriate offers to parts of that base if and when they’re required.
You only have to look at how much control a regretful music industry ceded to Apple and continue to cede to them to realise how vital it is that the publishing industry remains in charge of its own destiny. Certainly Apple created a central store where there’d been a void before – due to the general uselessness of the music industry. But then Apple had enough power that it was able to set price points at its own preferred levels rather than levels the music industry might have liked. Even now, with more competitors around, the major music labels still don’t really have a great deal of ability to price their own product in one of their most valuable marketplaces.
Now I’ve not seen the FT’s new product – it’s not optimised for Android devices yet. And to what extent the HTML5 experience is better or worse than a fully cached app is also not clear. I know that the FT’s app does allow offline reading, but we’ll have to wait to learn what, if any, shortcomings it has compared with a more bespoke offering.
But what is clear is that the battle lines have been drawn, and it’ll be really interesting to see how other major publishers deal with Apple, Google, Blackberry or anybody else. From a development angle alone, I can see why this is perhaps a more sustainable model in the medium to long term for the publishing industry.
As I say, this is something worth watching.