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Publishers skeptical of Apple iPad business model


Apple's revenue sharing plan and unwillingness to share consumer information with content providers have proven to be sticking points with the publishers the iPad-maker is attempting to court.

Apple co-founder Steve Jobs himself reached out to publishers in early February, attempting to convince them to provide their content in a digital form on his company's forthcoming iPad. But according to the Financial Times, those talks have "stumbled."

Another report from the publication noted that talks are "friendly and continuing," but said that Apple's business models would be a radical change for the print business. One unnamed newspaper senior media executive said Apple's reluctance to share consumer data beyond sales volume is "pretty damn close" to being a dealbreaker.

"Publishers have spent decades collecting information about subscribers that influence marketing plans and, in some cases, the content of the publication itself," the report said. "Apple's policy would separate them from their most valuable asset, publishing executives said."

Some publishers also said Apple's revenue model, which gives the content provider 70 percent of sales while Apple keeps 30 percent, does not make much sense for subscriptions. Publishers are also reportedly concerned that they will see the same impact iTunes had on the music industry in 2003, when individual song sales from Apple severely impacted consumer purchases of full albums.

The Financial Times noted that some publishers, such as News Corp's Wall Street Journal, have gotten around Apple's revenue sharing model by offering a free application that allows users to log in to the newspaper's Web site with their subscription. But that "complicated" method isn't as simple as the one-click purchasing of iTunes.

Apple's entrance into the e-reader market has already shaken up the industry before the iPad is even available for sale. The introduction of the iPad has driven publishers to force market leader Amazon into higher prices for new hardcover bestsellers. While books are currently priced at $9.99 on the Kindle, that is expected to rise to between $12.99 and $14.99 by the time the iPad launches in March.

Apple will serve books for the iPad through its iBookstore, due to be a part of the iBooks application for iPad. The software features a 3D virtual bookshelf displaying a user's personal collection, and allows the purchase of new content from major publishers. Like the Kindle, it will offer content from the New York Times Bestsellers list.