Wednesday, 2 February 2011

Apple takes a slice in The Daily launch.

Apple takes a slice in The Daily launch.

Rupert Murdoch, News Corp chief executive, will take the stage at the Guggenheim Museum in New York on Wednesday to unveil The Daily, the first newspaper to be published solely on the iPad.

Many will hail The Daily’s launch as evidence that Apple’s tablet computer is transforming publishers’ fortunes, just as the media industry hoped when it was launched last April.

Yet nine months on, many publishers are getting increasingly anxious about how changes in Apple’s approach might upset their economics.

Although details have not been revealed, many expect Apple to take a cut of subscriptions for The Daily, which consumers will buy for $1 per week, or $40 a year. Apple currently takes 30 per cent of revenues from all developers who sell applications through its App Store.

Apple’s subscription model for The Daily is as yet unclear, as is whether it will also apply to other publishers. But the plan will be critical for media companies who have been drawn to the highly successful iPad platform but worry that Apple will move to take a slice of their recurring revenues.

On Tuesday, the company said it would allow book publishers to continue to lead app purchasers to paid content elsewhere, without Apple taking a cut – as long as the app also allows consumers to buy within the app if they choose.

Until now, many booksellers and periodical publishers have found ways around Apple’s fees. Amazon, Barnes & Noble, Borders, and Sony allow users to buy e-books through their web-based stores, and then to read that content via apps on their iPhone or iPad.

 Until now, the fast success of Apple’s iPad has let it essentially dictate terms to publishers. But with many new tablets on the market, and falling e-reader prices, Apple may risk alienating consumers.
"They are on the verge of going too far and making it too difficult for publishers and media companies to work with them,” said Chris Cunningham, a consultant to publishers.

If the deal for periodicals matches that for books, publishers will still have to give up some potential subscription revenue. But the result over the best means for delivering the same content could improve the consumer experience, analysts said.

© Copyright The Financial Times Ltd 2011.


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