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July 28, 2014

Apple 's Turnaround: There Are Apparently Some Things You Wouldn't Be Able to Do with an iPad

You know those Apple ads, the ones that say, you can’t do that without an iPhone or an iPad? That’s a big, brand promise. Consider, today, that that promise trumped Apple’s want of a new revenue stream and its attempt to gain dominion over digital circulation revenue of newspapers and magazines.

Give the Financial Times credit, of course. Surely, the Apple rethinking — it released new guidelines, reversing course, allowing publishers to offer differing prices and products inside and outside the Apple store — was underway before the FT grandly announced on Tuesday that it was embracing web apps, and downplaying iOS apps, as its product and market strategy. Certainly, though, the FT’s trailblazing move –in part under consideration at other major publishers — tipped the balance. What Apple has been risking with its our-way-or-the-Android-highway stubbornness has been in central place in mobile news and feature reading. With a 80% plus market share in tablets, and proof positive that even a great product, the iPhone, can be surpassed in the marketplace by an almost-as-good Android-powered set of products, it, in Peter Kafka’s words, blinked.

Far more important for Apple to maintain the iPad as the best, most complete way to do our digital reading. Readers don’t care about the tiffs between Apple and publishers; we all just want everything in one orderly place (nothing hurts like an incomplete Newsstand). Yes, Apple will go some potential revenue, by giving up the attempt to choke off 30% of publisher sub revenue ’til the end of time. Its gains, though, may be impressive:

  • It still maintains huge market dominance with the iPad, as the onslaught of Android-, HP-, Microsoft- and RIM-powered products hit the market. With its ahead-of-the-pack product development, it may better retain that lead for the tablet, as it has been unable to do with smartphones.
  • It can still gain substantial subscription revenue shares. As I suggested as this imbroglio began, taking 30% for a brand-new sub isn’t totally unreasonable. With now 225 million iTunes customers (most presumably still alive), it can offer impressive lead generation. What’s unreasonable is to take that 30% forever. As I pointed out in a post last night — and I know that Apple execs have become aware of this crack in their system — publishers can sell through iTunes and then market “All-Access” wider subscriptions directly to the people who are reading their products every day. So better for Apple to take some money up front, work out a fair business development relationship and move on.
  • Still getting too little attention is the potential for Apple to make a huge amount of money with iAds. It controls the ad serving technology, which offers dazzling interactivity. I’ve heard that it has kept its iAds partnerships separate from its subscription store relationships. That makes little sense if Apple wants full-throated business deals with major publishers. It can, uniquely, offer new ad revenue and access to potential subscribers. Major publishers antes up huge, often-affluent target audiences. Why not make better deals?

For now, hubris has taken a short vacation. Let’s celebrate for a day, and then we’ll see what tumbles out of it.

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