SiliconFilter

Google Counters Apple's In-App Subscriptions with Cheaper, More Flexible Solution

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Google just announced its new content payment system One Pass that will give publishers a very flexible and affordable option for charging their readers for access to their content. With One Pass, publishers can charge readers on the Web and in mobile apps for subscriptions, metered access, day passes, single articles and “freemium” content. Publishers will also be able to offer free online and mobile subscriptions to existing customers. Payments are handled through Google Checkout, which means Google will take a 2 to 3% cut plus $0.30 from all transactions (percentages depend on monthly sales volume).

Yesterday, I criticized Apple for looking very greedy by charging publishers a flat fee of 30% for all subscriptions. Google  clearly timed its launch as a reaction to this and offers publishers far more flexibility than Apple’s siloed program.

Google’s announcement today feels somewhat rushed given that the One Pass website isn’t fully functional yet. It was clearly in the making for a long time, though. It’s worth noting that while Apple faced strong opposition against its plan from European publishers, Google managed to garner the support of some of Europe’s largest publishers. Among the launch partners are the German Axel Springer AG and publications like Stern (published by Bertelsman subsidiary Gruner + Jahr) and the Burda/MSN cooperation Focus Online. In addition, Google also confirmed Media General (U.S.), NouvelObs (France), Bonnier’s Popular Science (U.S.), Prisa (Spain) and Rust Communications (U.S. regional publisher) as partners.

Google promises that the new system will be “simple to set up, simple to manage and simple for readers.” For now, though, we have to take Google’s word for this, as the system is not live yet. Interestingly, Google also notes that One Pass will allow users to access their content anywhere with just one login. We assume Google forgot to mention that this does not include iOS apps.

p.s. I can only assume Google gets to use the One Pass name because Continental Airline’s frequent flier program will soon be phased out in favor of United’s Mileage Plus program.



9:35 am


Is Apple Getting Too Greedy? Demands 30% Cut of In-App Subscriptions

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After a lot of confusion earlier this year, Apple today finally clarified its rules for in-app subscriptions for magazines, newspapers, video and music. The rules are very straightforward: Publishers can continue to sell digital subscriptions on their own websites and give free access to existing subscribers. Apple will not take a cut from these transactions. Publishers who offer out-of-app subscriptions, though, also have to offer in-app subscriptions and the price has to be the same or lower than for subscriptions processed outside of the app. Apple will take a 30% cut from these in-app transactions.

This is a rather hefty fee for processing a transaction given that most credit card processors just charge around 2.5% and a small transaction fee (generally around $0.25). It’s also worth noting that it looks as if Apple will take this same cut whenever a subscriber renews a subscription, though this isn’t 100% clear yet. This new subscription plan will become mandatory starting June 30.

Steve Jobs: “Our Philosophy is Simple”

Just in case developers think they can just provide a link to their regular web-based subscription service in their apps and circumvent Apple’s system, the rules explicitly state that “publishers may no longer provide links in their apps (to a website, for example) which allow the customer to purchase content or subscriptions outside of the app.”

In the words of Apple CEO Steve Jobs: “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.” That does sound fair, but in reality, chances are that the majority of new customers for subscription services will come from apps and given that developers aren’t allowed to route around the system, this 30% cut become a major issue for some publishers.

Can Publishers Afford This Without Raising Prices?

You can currently buy an annual subscription to Wired on Amazon for $10 and getting National Geographic for a year costs $15 per year. Will these magazines have to offer the same prices for the app-based versions of their products? (Or do these “promotional” prices not count?) If Hulu has to give Apple $2.40 of every $7.99 subscription it sells, can it still make a profit? Or will Apple’s move force them to raise their prices across the board?

It is, of course, a good thing that Apple is making it easier for consumers to buy subscriptions and helps publishers acquire new subscribers. Having to pay a 30% fee for these services does seem quite steep, though, especially given that Apple now owns the customer and not the publishers.



11:37 am