On 15th February, Apple announced its new subscription plans for publishers to sell digital content to their customers over Apple iPad, iPhone and iPod. Google also announced its subscription plans soon after. Revenue sharing is but one difference between Apple and Google. Google takes a 10% cut while Apple takes a 30% cut from subscribers who subscribe within the platform.
In the new service announcement of Apple, however, publishers can sell their digital subscriptions on their own for Apple devices and can also keep 100 percent of subscription sales. But, when a customer uses the Apple iTunes Apps store for subscribing to an application, it is only then that Apple will get 30% of the fees. The only condition to be followed in such cases is that such publishers who offer directly to customers over Apple devices must also make the same content available for sale at the Apple App Store and also at the same price.
Although content subscription through the Apple App Store is simpler, this has brought about a lot of discontent amongst publishers, who feel that Apple is funneling users through the Apps Store for buying content. In this way, Apple manages to steer consumers away from making direct transactions in which Apple’s cut is not feasible. In fact, the US Justice Department and Federal Trade Commission, as also the European Commission, are both closely monitoring the situation, as market regulators, towards control of unfair practices.
In the case of Google, their One Pass subscription services, charges the publisher only 10% as against 30% by Apple. This additional 20% is definitely looked at as a much better option by publishers. Secondly, presently Google does not seem to be restricting by any means and making systems which would force customers to use One Pass.
While some analysts feel that even such massive service providers like credit card companies only charge single digit fees, in the range of only 2 to 4 percent, even this 10 percent by Google is still very high. The competition between Apple and Google will definitely benefit everyone in the long term.
In subscriptions, Apple because of its market dominance, with practically no competition over the last six to seven years, has established definitive and effective standards, while Google has in general being mainly promoting open standards. It is high time publishers took swift and effective strategic decisions in the smartphone market.
