Posted February 16, 2011 3:19 pm by with 8 comments

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Apple has a brand new system that will allow online content producers to sell subscriptions.

Google has a brand new system that will allow online content producers to sell subscriptions.

Is that a coincidence? Coming only a few days apart, it does seem that Google is trying to one-up Apple especially since Apple is taking nothing but flack from producers in regard to their offer.

Here are Apple’s rules. Any content producer that wishes to sell a subscription can do so through the iTune’s app system which provides one-touching (think impulse) buying. That’s great. If a person clicks and buys, Apple get’s 30%. Not so great for content producers. Where it really gets sticky is in this next bit.

“All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

Which means a consumer must be offered a choice, go out to the website and pay for the item or stay here and pay with one click. Since studies have shown that people prefer apps that don’t take them out to a browser, it’s pretty obvious which choice they’ll pick.

Content producers are crying foul, saying they can’t afford to take a 30% hit. Apple says it’s worth it because more people will see and buy into their subscription packages. 30% is a little steep, but I’ve got to agree with Apple. If I have to go to a browser and fill out all my credit card info, I’m going to think twice. Single button and it comes out of my iTunes account? I’m in.

Google’s counter offer is Google One Pass. Here, customers set up a one pass account and from there they can subscribe to content, manage subscriptions and read the content on PC, iPad, iPhone, mobile skywriting. . . however you want. Cost to the publisher? Around 10%. Quite a difference from Apple and without all of the rules.

The downside? Google has to get people and publishers to sign up for One Pass. Apple already has an audience on iTunes.

So, big, built-in audience for 30% or up and coming network for 10% — if I was a publisher, I’d be looking seriously at Apple.

What do you think? Is it worth giving up 30% of your revenue for a shot at Apple’s audience?

  • Seems like a third company is missing…Amazon?

    • Cynthia Boris

      Well, for the purposes of this piece, it’s about how Google made their big announcement only days after Apple. When it comes to content sellers, there are other options like Murdoch’s The Daily, a new kind of subscription newspaper for the iPad.

  • seanohe

    Is there any reason that a publisher could not do both? Is that one of Apple’s rules?

    30% is a lot, but apple’s audience and reach will generate more money in the short term through higher sales, than Google’s service, which I hadn’t heard of until now.
    In a few months One Pass might make strides forward, or it might go the way of the Wave 🙁

    • Cynthia Boris

      The rules don’t say you can’t do both but Apple announced first so they didn’t know they’d have competition this soon. I think Apple is confident enough in their place in the world that they aren’t going to worry about people being on both sites as long as they get their bite, they’re happy.

      But yes, the concern with One Pass is that it could easily evolve into nothing. It’s happened before.

  • masqu3rade

    This all assumes at content publishers have 30% built into their margins to pay Apple. Netflix runs a 12% profit margin. If they now have to pay Apple 30% that immediately puts them at a 18% loss, this means that they have to raise prices 18% to BREAK EVEN or they opt out of the Apple ecosystem. So in this case your statement would be more accurate if it read, “So, big, built-in audience for [an 18% annual loss] … — if I was a publisher, I’d be looking seriously at [ditching] Apple.”

    The other catch is that Google One Pass isn’t suggesting you have to keep the price the same. The content providers can charge more of the convenience of in-app purchasing. However, Apple knows that the one-click convenience (an Amazon patent, by the way) of purchasing isn’t worth 30% to any consumer who would all be more than happy to brave the dreadful browser opening experience to save 30% per month.

    seahohe: One Pass is just an extension of Google Checkout, so it isn’t really a “new service”. But yes publishers would have to sign up.

    • Cynthia Boris

      Since Google just announced One Pass at a conference in Germany, that says “new” to me, even if it is an offshoot of a current program.

      The difference, as I understand it, is that One Pass will act as a kind of subscription library where all of the news you buy will land, so it’s not like buying magazine subscriptions from all over the web, it’s about consolidating the content in one place. Maybe I’m misunderstanding that?

      Second, I get that 30% is a big chunk, but it goes back to our old friends the porn industry who have made a good living with the concept that 70% of a sale is better than no sale at all. You’re assuming that customers would be willing to take the extra steps to buy an item outside of the app. I say that a large number of people who buy through the app wouldn’t have bought at all if that option wasn’t available, so you just made some money instead of no money.

      Now, if you’re making sweaters and losing 10 bucks on each one, I get where that is a problem, but when you’re generating content online you can’t say you’re losing money on each subscription, you have to look at the bigger cost vs revenue picture. 5 People at 5 dollars each is better than 1 person at 10.

  • here in Brazil it is called sponsored links, which are paid for clicks, Google earns millions from it and is very competitive because it has become the “sole means of disclosure” effective.

  • I think Google is pretty awesome, and it always seems like Apple is only out to make $$. It’ll be interesting to see how this pans out in the future.