New MacBook Pros are here! Get the lowest prices anywhere: Apple Price Guides updated Aug 23rd (exclusive coupons)
 


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

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


Subscriptions the Google Way

In response, Google has announced a One Pass plan with a discounted 10 percent cut it will charge publishers who use it. However, Google's solution is a "lightweight technology implementation" that works more like a PayPal-powered paywall on the web, covering only the billing aspect of subscription content.

Google isn't offering publishers a listing in a visible marketplace, because it doesn't have an equivalent to iTunes. Android Market, unlike Apple's App Store, only gets traffic from the installed base of Android devices that choose to install it. Google doesn't mandate that all Android licensees include its Market, so there are no reliable metrics on the size of this audience. In contrast, every iOS device (160 million) and every Mac and PC desktop copy of iTunes includes Apple's App Store. That's a vast market.

Google itself is not happy with the low sales of apps in Android Market, a problem it is working to correct with new payment options (including carrier billing for markets where it doesn't accept payments) and a new initiative focused on "weeding out apps that violate Android Market’s terms of service."

Android also lacks an installed base of tablet devices capable of driving subscription sales. The company hopes that new Android 3.0 Honeycomb tablets take off, but at prices like Motorola's $800 Xoom, it will likely be some time before Google can advertise an installed base comparable to Apple's 15 million and counting iPad users. An estimate on the tablet market by Forrester in January says that while tablet sales are expected to double, "the lion's share will be iPads, and despite many would-be competitors that will be released at CES, we see Apple commanding the vast majority of the tablet market through 2012."

So Google is really positioning One Pass at the web, while noting that it also works "in instances where the mobile OS terms permit transactions to take place outside of the app market," which is code for saying it works everywhere WebM does: most of the web, probably its own Android platform, but certainly not on iOS devices. Also like WebM, Google is pushing One Pass as a cheaper alternative for publishers.

The commission was just a red herring

Google isn't just offering a discounted commission to woo subscription content providers, however. The main attraction Google is offering is full access to One Pass users' personal data, with only an opt out option for those who don't want to participate. Just as Apple's subscription model is similar to existing sales in iTunes, Google's new model is based upon its legacy as a web advertiser.

The company has demonstrated little real interest in selling Android apps, preferring instead to have developers use its AdMob mobile ad network to support their work. That's why the developer of Angry Birds called exclusive ad-supported distribution of its app on Android "the Google Way."

The problem for users, apart from privacy concerns, is the the Google Way doesn't really encourage quality content. As is evident both in Android Market and on the web in pages monetized by Google, there's an awful lot of low quality content and a fairly low signal to noise ratio that results when anyone can publish without any limits, but there's little opportunity to actually make any money.

While Apple has frustrated its iOS developers with delays in accordance with its strict app approvals policy, Google frustrates users who are looking for quality content, because it's simply very hard to find in Android Market. That's the main reason why Google's Android Market isn't just behind the App Store in total numbers, but really doesn't even function as a viable market for mobile software outside of a few ported games with the popularity to make money on high volume ad revenue.

Battle of the models

The most troublesome aspect of Google's strategy is that it has already been tried before, unsuccessfully. One Pass is very similar to efforts by publishers themselves, such as Journalism Online Press+, a program led by a former Wall Street Journal executive that's been marketed toward newspapers and magazines over the last year without seeing much interest. Conceptually, users are supposed to fall in line and start paying fees to browse the web that they've been browsing for free all this time. The public does not seem interested in this idea.

If that sounds like Microsoft's attempts to sell PlaysForSure's heavily restricted DRM music to people who were already used to trading MP3s around for free, it's because it is. Apple's plan for subscriptions is much like its original strategy for music: it pairs content with desirable hardware and a market that adds a premium value to the core content. Amazon followed the same model in creating Kindle.

Apple didn't just erect a paywall across music access on the web; it created a real market that offered a differentiated, more attractive music experience that its users were willing to pay nominal fees to use. That's also why Apple is selling access to apps that essentially serve the same purpose as free websites, but don't involve intrusive ads and popups or allow spyware or location tracking, and do meet the minimum standards Apple has set, making them attractive to users willing to pay for premium content. This model has been proven to work in music, TV, movies, apps, and now Apple's banking on it working for subscription-based periodicals, too.

On page 3 of 3: Amazon's third door: the Kindle