The war between Apple and Google heats up as Apple offers subscriptions for apps and alienates many of its partners, Google steps in and offers alternatives.
Earlier this week, Apple announced that it had come up with a plan for companies to be able to sell subscriptions to their services, magazines, newspaper, music and video content on the iPad, iPhone and iPod through iTunes.
The catch is that the new plan is going to cost them. Apple is asking for 30% of the profits from the subscriptions and it will keep ownership of all subscriber data like email addresses and names if the subscription happens through the App Store. This new arrangements is upsetting many of the companies who offer apps for their existing customer base like Netflix and Kindle.
Many companies in the publishing world are also upset by the changes, as they want the option of offering subscription based services along with single issue purchase capabilities. Additionally, they want to know who is buying their content. That information helps them sell advertising, which is the way that most magazines generate revenue.
This new plan will also have a huge impact on other companies who offer Apps for their services. Companies like Amazon, Netflix and Pandora will have to start sharing income with Apple. Up until now, when users added their free Apps, they were able to click a link to visit the company's website to subscribe or log into their existing accounts to access content. Under the new plan, the companies won't be able to redirect users to their websites and any new subscriptions will be made through Apple's App Store, and Apple will collect its 30%. If the subscribers sign up outside of the App Store, Apple wouldn't be entitled to a cut of the profits.
For example, I have a Kindle and a Kindle App on my iPhone. If I were to purchase a book on my iPhone, Apple would be entitled to 30% of the cost of the book and my iTunes account would be charged for the purchase. However, if I were to buy the same book from Amazon using my Kindle, or by visiting Amazon's website, the book purchase would be processed through my Amazon account and Amazon would keep 100% of the money. The book would, of course, still be accessible through the Kindle app on my phone either way.
Apple's CEO Steve Jobs released this statement about the changes:
“Our philosophy is simple — when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.”
The bigger problem is that since Apple will no longer allow Apps that redirect users to their websites, customers will have to either purchase the subscriptions from the App store or find their way to the websites on their own.
Coincidentally, shortly after Apple announced their new changes, Google announced a new service that will allow publisher to have more control over the prices and terms of their digital content. Google One Pass is an e-commerce system that can be embedded into Android apps and websites. The service offers publishers the ability to sell subscriptions, free access to existing subscribers, premium access or just sell individual copies or articles, giving them complete control over how, when and for how much they sell their content. In addition, Google will share subscriber information with publishers.
Although Google didn't disclose what sort of revenue share they would be asking for, the service is expected to be popular among publishers. That being said, it may not be the answer, because Google isn't able to offer the same degree of client base and multi-platform packaging in a moblie app as Apple can. Apple has the client base and the apps that can be used on many more types of devices.
It remains to be see what the fall out of the announcement will be. Some experts are worried that it may be the end of Apps for content providers like Amazon and Netflix.
What do you think of Apple's announcement? Let me know in the comments.
By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for PhillyJobsBlog, along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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