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Thursday, February 17, 2011, 07:20 pm PT (10:20 pm ET)

Inside subscription content: Apple iPad vs Google One Pass vs Amazon Kindle

Apple's iOS App Store isn't the only game in town for subscribed digital content. Here's a look at how the plans to court publishers' subscription content by Apple, Amazon's Kindle and Google's One Pass compare.

Apple's iOS subscription Plan

As previously announced, Apple will charge publishers a 30 percent cut of subscription revenue that is sold through iTunes or in app purchases made on iOS devices. The company takes no cut of subscription revenue the publisher lines up on its own, outside of Apple's platform (such as through the publisher's online or direct sales to its established subscribers).

Apple also mandates that publishers must make in app purchases of subscription content an option for their iOS users, and stipulates that they can't charge more for content within iTunes than they do elsewhere to make that option less attractive.

The most difficult hurdle for most publishers, however, isn't the size of the fees Apple charges, as iTunes' highly visible merchandizing is known to provide large volumes of new sales that will more than offset any cut Apple takes.

Instead, most publishers are concerned about Apple's privacy policy, which leaves it up to the customer to decide if he or she wants to forward contact information, including an email address, to the publisher. Publishers are afraid most people won't opt in, depriving them of valuable marketing data and verified subscriber distribution numbers they currently use to sell ad placement to marketers.

Shifting from ads to content

Apple is essentially turning the publishing industry from an ad-centric medium it has long been into a content market identical to the ones it has already set up within iTunes for music, TV, movies and apps. Apple has never supported an ad-based music subscription model, or free TV or movies supported by ads, and has only recently began monetizing free apps with iAd.

While music, movies and apps have a history of being sold directly, newspapers and magazines have long relied upon ads more than subscription or newsstand revenues. In most cases, the newsstand or subscription costs of periodicals has largely only ever served to help pay for distribution, with publishers making most of their revenues from advertising.

That makes Apple's 30 percent cut almost immaterial to publishers, because their iTunes subscription distribution and fulfillment costs are being largely borne by Apple anyway. The problem isn't that Apple is also taking away publishers' ad revenues, because there are no limits or revenue sharing fees placed upon the ads publishers run themselves, just as Apple makes no cut of apps that include ads from Google's AdMob, Millennial Media, or other networks.

The real issue is that publishers are increasingly feeling the heat from advertisers to quantify and enhance the results of their ads. Publishers already have far more information on their subscribers via iPad than they do in the world of printed paper. Just as on the web, iPad publishers (and their ad networks) see users' ad views and clicks, and can record where and when users respond to them.

What publishers are going to be missing under Apple's new plan is the personal data of subscribers who choose not to let the publisher directly market to them in an effort to earn revenues beyond trackable web-like ads and the old print ads before them. Apple has previously established limits on what personal information (including GPS location data) app developers can access and for what reason, in an effort to keep aggressive marketers from unscrupulously "stealing data."

Some publishers are framing this issue as a loss in their ability to tailor content to readers, but it's really about expanding publishers' opportunities to profit from their content by learning more about their customers. Apple is insisting that the customers it brings to publishers via iTunes should not be forced to give up their personal data to the publisher. Essentially, Apple is siding with its customers to ensure the iTunes experience is both unique and satisfactory, because it is the users who will be paying to keep iTunes open.



On page 2 of 3: Subscriptions the Google Way.