Apple Continues to Vallidate 2011 as the Year of the App Subscription

Earlier this year, we predicted 2011 would be the Year of the App Subscription.

By that we meant that publishers are going to need to figure out the mechanics of charging for app-based subscriptions. Regardless of whether or not they actually develop an app specifically for the iPad or a competing tablet platform, and whether or not they actually roll out a subscription fee for app-based access, what's clear is that 2011 will a make-or-break year in terms of how publishers and readers approach app-based access to magazines.

Since then, we've seen Apple make a significant change in its subscription policies, as reported in the New York Times -- a breakthrough we had said would be necessary for magazine publishers and subscription platforms: "Apple Offers Subscriptions for All iPad Publications."

The latest validation of our prediction comes from the Wall St. Journal, which reported today that Kobo would not be allowed to sell digital books directly from its apps -- due to pressure from Apple. At the same time, the Journal announced that it will stop "circumventing Apple's payment system by providing links to its website from inside the iPad app, (and) will soon remove ll purchasing option in the app in response to Apple's new rules." Instead, people "will have to either call customer service or visit wsj.com."

While both announcements represent a step backwards for consumers, it shows that Apple is taking a strong stance in protecting app subscriptions.  Making things more complicated is not a win-win for content developers, consumers or, ultimately, Apple, I think, because consumers will be frustrated with both the content developers and Apple. In an interesting article about Hulu, the New York Times reported about consumer frustration with the lack of availability of some TV programs via Hulu -- for example, some programs are available on any platform, some limited to only your laptop.

For app subscriptions and video content to continue to be pervasive, they must make it easy for consumers to purchase. Setting obstacles is the wrong policy. I expect that ultimately consumers will get what they want, but that may turn 2012 into the Year of the App Subscription, Part II -- while things sort themselves out.

You can read more about the issue at Technologizer by Harry McCracken.

Time Magazine Validates the Year of the App Subscription

We predicted that 2011 would be the year of the app-based subscription -- and in just a few weeks, we're seeing evidence that validates our prediction published in "Birnbach Communications' Top Predictions for 2011, Part I."

The New York Times reported "Time Inc. has begun selling subscription bundles that include apps that run on the Android tablet software from Google." Time still wants to sell subscriptions through iTunes, too, but negotiations have been slow.

Meanwhile, the Times reported online today a breakthrough we've said is necessary for magazine publishers and subscription platforms: "Apple Offers Subscriptions for All iPad Publications."

Here are key points about the new service, according to the Times:

• Revenue from subscriptions sold through the App Store will be shared. Apple will keep 30 percent, and publishers will keep 70 percent. That is the same revenue-sharing split that applies when apps of single-copy publications are sold through the App Store.
• Apple said it would not restrict publishers to selling their apps solely through Apple. And when publishers do sell apps outside Apple’s store, they will keep 100 percent of the revenue.

Also check out Forbes' coverage, "Apple Introduces Subscriptions — But There’s a Catch."

Clarifying What We Mean That 2011 is the Year of App-based Subscriptions

We've gotten some interesting and positive responses to our predictions. One theme, however, is about whether app-based subscriptions will work because people are used to accessing news content without having to pay for it.

On that basis, a VC friend of ours specifically questioned whether we were right to call 2011 the year of the app-based magazine subscription.

So let me clarify.

When we say it will be the year of app-based magazine subscriptions, we mean that this year, publishers are going to need to figure out the mechanics of charging for app-based subscriptions. Regardless of whether or not they actually develop an app specifically for the iPad or a competing tablet platform, and whether or not they actually roll out a subscription fee for app-based access, what's clear is that 2011 will a make-or-break year in terms of how publishers and readers approach app-based access to magazines.

There's a cost involved in developing an app that provides a consistent look-and-feel that's similar to the print edition while providing additional value with content that takes advantage of the tablet's multimedia platform. But that all costs money, and somehow publishers have got to have this effort payoff.

That's the real challenge facing publishers as they roll-out and embrace tablet access. They've got to find a way to convince people to pay for app access. They're pretty much doomed if they don't.

As a journalism fan, I think I'm a bit more optimistic that users will be willing to pay for content customized for their tablets -- even as they're used to accessing free content off the web. The key will be how publishers package content on a tablet that's more impressive than what you can get online.

Meanwhile, although we listed a dozen story angles we think the business media will cover, we have missed two topics that unexpectedly are generating a lot of attention:

1. The medical leave from Apple by Steve Jobs. Since that news hit after our predictions were posted, I think it's okay to let us off the hook on that one. We wish him well, and a quick recovery, but in the meantime, expect that to be a theme, and that reporters, analysts and bloggers alike will question the role of celebrity CEO, the nature of a senior management team, the role of the board, etc., in managing and running companies. Also expect that questions about disclosure and succession planning will be important topics.
2. Tiger Mother. Amy Chua is a Yale law professor who wrote a book, “Battle Hymn of the Tiger Mother,”which the New York Times described as "a memoir about strict Chinese parenting (that) reads as criticism of Western practices. Since a Wall St. Journal excerpt from her book was published Jan. 14 (after our list of trends was first posted on Jan. 10), it's been difficult to avoid the controversy about Tiger Mothers, which even reached People Magazine. I'm not sure of Tiger Mothers (a very different species from Mama Grizzlies) will be a hot topic once the initial furor has passed over the next few weeks. However, I do think the role of parents, particularly women, could continue to be a top topic for two reasons that are changing family dynamics: the lingering impact of the jobless recovery, in which women may be working while their husbands may still be unemployed; the new way of working, in which people don't have one full-time job but have a number of part-time jobs, which might make traditional family dinners a thing of the past as parents no longer work nine-to-five jobs.

Let us know if you have other comments to our predictions or to our clarification of our predictions.

New York Times Validates Our Prediction: The year of the app-based subscription

Last week, the Wall St. Journal validated our prediction: The year of the app-based subscription.

This week, the New York Times provides validation. Check out "For Magazines, a Bitter Pill in iPad," which describes the importance of shifting from a single-issue access to an annual subscription approach.

The Times even reiterates a key point we made: that the cost of single-issue access is often equal to or greater than the cost of a single issue of the paper edition, and that an annual app-based subscription on that basis can cost substantially more than an annual print subscription.

Our point with the prediction is that 2011 is the year that publishers will recognize the need to focus app-based subscriptions, find reasonable price points that work for them and subscribers and find a way to make it easy for subscribers to be notified and to want to reach each new issue.

The Times reports that the emergence of new tablets provides publishers will some leverage in negotiations with Apple, and we think that's true.

The article also says that right now, publishers have to develop apps across different platforms. That's true, too, but publishers must find a way to offer similar value at similar price points -- or risk disenfranchising subscribers using non-iPad tablets.

This raises a real issue for publishers and PR functions: how many tablet and smartphone formats do you need to support? At some point, in the next few years, the feature sets and format issues will become commodities, following the path blazed by TVs and PCs, where differences among them have been reduced to marketing decisions, like available colors. The reason: the balkinization of technology just doesn't work as a mass-market approach.

Clearly publishers and tablet manufacturers have to find a model that will be a win-win-win, making them happy and providing value to subscribers. This will require flexibility and experimentation -- something Apple and its App Store and iTunes model are not know for. Therefore, a key to success here will ride on the publisher's negotiations with competitors to Apple's App Store.

No matter how it turns out, look for continued interest and concerns from readers who want an easy way to access magazines via their new tablets in 2011.

Do you have a solution? Let me know.

Wall St. Journal Validates Our Prediction: The year of the app-based subscription

In our first set of predictions for 2011, issued on Jan. 10 and available here, we predicted that 2011 would be the year of app-based media subscriptions, noting that a critical factor would be the establishment of a common approach to subscriptions.

Currently, access to content via apps is often purchased on a single-issue basis. To succeed in terms of generating consistent revenue, we've said that publishers need to offer annual subscriptions and a consistent way to purchase them -- something that currently does not exist.

Today's Wall St. Journal points to a potential change. Check out: "Selling Magazine Subscriptions on the iPad." The platform, developed by Urban Airship, Inc., will sell app-based media subscriptions for Newsweek, the Atlantic and the UK’s Daily Mail newspaper.

That's good news for publishers. Good news for people who want to access content on tablets. And that's good news for us, because that's a pretty quick validation of our one of our 12 predictions for 2011.