But with 15 million iPads sold last year, Apple still dominates the nascent tablet market - which is why, though many have complained about the terms, some publishers are cautiously embracing iPad subscriptions.
"We had to work with Apple, because at this point, there's really no alternative on the iPad," said Philippe Guelton, chief operating officer of U.S. publisher Hachette Filipacchi Media. The company is offering two of its magazines, Elle and Car & Driver, under Apple's new subscription system. He's optimistic that access to data will evolve for publishers, and says the company is working on ideas for other ways to keep track of its digital readers' demographics and use of the product.
Hachette has also demonstrated something important with its app: Elle print subscribers get free access to the iPad editions, meaning that bundling services for customers could be a possibility. Furthermore, Elle's print price is roughly $10 per year for U.S. subscribers, while the annual subscription for the digital issue alone is $18.99. Hachette seems to have found a way around Apple's rule that publishers can't price products outside the iTunes store more competitively. So far, Apple hasn't stopped the company.
In Canada, Rogers Communications Inc. is also planning on using Apple's subscription model for iPad versions of its magazines, which include Maclean's, L'Actualité and Canadian Business.
"We'll go with the Apple model … Look, nothing's perfect. But it's new, it has some fairness attached to it. It's a good start," said Rogers publishing president Brian Segal. He's also optimistic about the data, saying he believes Apple will share information such as time spent with the apps. Besides that, contests and surveys can give Rogers information about readers.
Mr. Segal said that Rogers won't follow Hachette's example by giving away the digital editions to print subscribers, but he said the company will explore bundled pricing, that offers print subscribers "premium" access if they pay a little bit more.
(The Globe and Mail has taken a cautious view of the Apple system. "We are very excited about the potential that new platforms such as the iPad have for our business - they can bring our journalism to new audiences in new ways and this can certainly help us generate more revenue," said Angus Frame, vice-president of digital media. "We are concerned that Apple's approach to subscriptions will make it challenging to obtain the kind of customer insight and product flexibility that we feel is critical to the future of our business.")
Publishers are also working to centralize the payment process, under their own system. Next Issue Media, a partnership among five of the largest U.S. magazine publishers, including Time Inc. and Hearst, is developing what it calls a "digital storefront," which has been in the works for more than a year.
While the terms of iTunes are dictated by Apple, the storefront is described as a solution developed by publishers, for publishers. It will gather many different titles in one downloadable application - publishers beyond the founding five will be able to join as members - and they can be purchased within that app. It is expected to launch this spring, and will only be available on Android devices at first.
A publisher-centric system would let magazines know more about readers, which is crucial. "In the end, it's needing to understand our customer," said Forrester Research analyst James McQuivey. "Every magazine company I work with is currently in the process of creating a single-view database that tracks their readers … If Apple takes away a chunk of their potential customer, they can't do that."
In defending the move to keep all of the user data for itself, Apple said its intention was to guard the privacy of users. But there's another explanation that's making its way around the publishing and advertising industry: Apple wants to use that data for itself to become a major purveyor of ads on mobile platforms like the iPad.
That could become a very profitable business. In the U.S. alone, spending on mobile advertising and marketing grew from $416-million (U.S.) in 2009 to $743-million in 2010, according to eMarketer.com, a rise of 78 per cent.
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