Tuesday, February 1, 2011

Apple's Subscription Experiment

The iPad was supposed to be a boon for magazines and newspapers - sort of a way to bring them back from the dead, so to speak. It was a way for them to jump into the future. Not only would publishers be able to deliver their publications in electronic form, but also include embedded audio and video as well.

There was only one problem. Apple refused to allow subscriptions and subscription pricing, forcing these publications to charge full retail for every published issue, which drove the price up, and the online sales down. This was good for Apple because they controlled the customer (who bought the newspaper or magazine from Apple), but bad for the consumer and the publisher.

Now it appears that Apple is finally ready to allow publications to employ a more familiar subscription model that should increase both sales and consumer satisfaction.

Apple will soon dip its subscription toe in the water with the publication of  the new iPad newspaper The Daily, which is a joint venture between Rupert Murdoch and Apple. You can be sure that publishers will look at this closely, but many are still dubious because the subscription is with iTunes and not directly with the publisher.

But this news subscription model may be a test case for music subscription as well. Although much of the music industry has dreamed about a sub model for the last few years, there's a lot of fear about just what might happen when its finally a reality (sort of like the Egypt situation). The customer will be Apple's, not the record labels, which scares the crap out of them (it should). And just how does the money get divided anyway? And how much will funnel back to the artist and songwriter in the end?

No one knows the answers to these questions, but this first media subscription could tell us a lot about the music business model for years to come. Stayed tuned as the media world gets ever more interesting.

You can read more about Apple's subscription model here in an article on readwriteweb.com.

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