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Apple unveils apps subscription policy for iPhone, iPad

By Dana Wollman
Associated Press / February 16, 2011

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NEW YORK — Apple Inc. announced a subscription system for buying newspapers and magazines on iPhone and iPad applications yesterday, making it easier for publishers to mine the popular mobile devices for more revenue.

The update enables publishers to sell subscriptions by the week, month, year, or other period of time, instead of asking readers to buy each issue separately.

The added convenience promises to help publishers sell more digital copies as they look to smartphones and tablet computers to replace some of the revenue that has disappeared over the past few years as readers and advertisers migrated from print editions.

But publishers won’t be allowed to collect personal information automatically about people who buy subscriptions through the Apple apps. That data is prized for marketing purposes. Instead, subscribers who sign up through an app on an Apple device will be given the option to share their information with publishers, a choice most people don’t make. If people don’t share their information with publishers, Apple will still hold onto it, though it will not pass it on to third parties.

Apple will also take its standard 30 percent cut from all app and content sales made in its iTunes store, which offers a variety of music, movies, games, and e-books. This new subscription system also applies to video and music services — for instance, the app for Netflix.

Content providers that don’t want to give Apple a slice of the revenue automatically can try to sell subscriptions outside the app, too. One way to do that would be through the Web browser, although that might prove too much of a hassle for people used to buying apps, music, and other things on iTunes.

Apple is insisting the financial terms of the digital subscriptions sold outside the app be no better than those offered in the iTunes store. And people must have the option to buy subscriptions within iTunes, if they want.

“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,’’ Steve Jobs, Apple chief executive, said in a statement. Jobs, a cancer survivor, is on medical leave but continues to serve as chief executive.

Apple’s new subscription policy follows News Corp.’s launch of the first iPad-only newspaper, The Daily, earlier this month. Its subscribers are charged through iTunes, making it the first iPad app to take advantage of this subscription feature.

More newspapers are focusing on digital devices because their biggest source of revenue, print advertising, has plunged during the past four years. Digital advertising has been steadily rising, but those increases have only made up for a fraction of the losses on the print side.

Subscriptions to print editions also have been dropping in recent years as more people turned to the Web to get news and other information for free.

In stark contrast to publishers, Apple has been thriving. The company, based in Cupertino, Calif., generates more than $65 billion in annual revenue and boasts a market value of $330 billion — second only to Exxon Mobil Corp. among US companies.

Apple now sees an opportunity to get even richer from these so-called in-app purchases. As part of its effort to ensure it gets a cut, Apple recently rejected Sony Corp.’s e-book reader app for the iPhone because it doesn’t give people the chance to buy books without leaving the app for a website.