Apple Finally Offers Subscriptions Through App Store

Publishers can rejoice a bit, but Apple is taking 30 percent cut and still won't give up customer data

The moment magazine and newspaper publishers have been waiting for is here. Sort of.

Apple launched its long-awaited subscription service on Tuesday, allowing publishers to sell subscriptions to their iPad apps through the iTunes for the first time. Up until now, publishers (with the exception of News Corp.’s “Daily”) were forced to sell issue-by-issue downloads of their iPad versions for close-to-newsstand cover prices.

Customers will now be able to buy subscriptions within the App Store using the billing information that’s already stored for their song, TV and movie downloads. Apple will get a 30 percent cut of each transaction for those customers, and users can “review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription.”

Magazine publishers in particular have been reportedly sparring with Apple over that last point — access and control over subscriber data — and it’s unclear if today’s announcement is progress or a plateau.

Via Apple's release:

Customers purchasing a subscription through the App Store will be given the option of providing the publisher with their name, email address and zip code when they subscribe. The use of such information will be governed by the publisher’s privacy policy rather than Apple’s. Publishers may seek additional information from App Store customers provided those customers are given a clear choice, and are informed that any additional information will be handled under the publisher’s privacy policy rather than Apple’s.

The financial part is pretty straightforward, as far as these things go.

According to Steve Jobs, Apple’s “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.” In other words, Apple waives its fee for publishers who direct subscribers to iTunes through their own websites.

“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,” Jobs continued. “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.”

Apple's move was expected. Earlier this month, at the launch event for Rupert Murdoch’s “Daily” publication, Apple announced its intention to open up subscriptions to all publishers.

And those publishers had been getting antsy. Just last week, Sports Illustrated announced a pact with Google that would allow them to sell subscriptions to tablet and mobile versions through the Android Market, Google’s answer to Apple’s App Store. On Monday, Condé Nast  on Monday the launch of digital editions of its magazines for Google’s Android.

“We’re confident that at some point we’ll be able to sell subscriptions appropriately in the iTunes store,” Time Inc.'s chief digital officer Randall Rothenberg told Forbes last week. “Those stores that lock us out — well, it just means the other stores are going to get more traffic, more buyers.”

The reason magazine publishers are so hot on subscriptions is this: despite booming sales of iPads, sales of magazine apps have fallen off a cliff after a promising start. And for that, they blame Apple, and issue-by-issue pricing.

“It bums us out when we get reviewed as being a sh–ty application,” Sports Illustrated editor Terry McDonell said at the launch event, “simply because it costs too much.”

Now, it would seem, publishers won’t have that excuse anymore.