The FT versus Apple

"This week the Financial Times introduced a mobile Web application aimed at luring readers away from the iTunes App Store. A number of publishers have expressed their displeasure with Apple’s plan to retain 30 percent of the revenue from subscriptions sold on iTunes, and to keep customer data from such sales, beginning at the end of June. At the same time, mobile applications are a fast-growing source of new readers and revenue, so publishers have been reluctant to pull their applications from the iTunes store." (Source: The New York TImes)

To me this sounds a lot like the old "airline-travel agent" issue all over again. Some background on this business case.

Airlines used to pay a 10% commission (or more) to travel agencies for the sales of airline tickets. At the time, it was difficult and often impossible for airlines to sell tickets directly to the consumer. Travel agencies had access to booking information, flight schedules and ticket stock. These agencies became the primary distribution channel for the airlines and the commission was the cost of the channel to the airlines. Good for all involved.

As the Web opened opportunities for the airlines to sell directly to the public, the airlines rethought their distribution strategies. After all, the consumer was now able to see exactly the same information as the agencies and the airlines were paying hundreds of millions in commissions each year. Slowly the airlines reduced and eventually eliminated commissions as consumers moved from the services of agencies to the convenience and discounts on travel web sites. The cost of travel agency services shifted to the end user for those wanting someone to organize their travel.

I am not sure I can predict the outcome of the newspaper/magazine subscription model with Apple but I seriously doubt publishers will continue to pay 30% to Apple. They will break free and find an alternative. They have to... as no successful and growing company can afford to pay 30% of revenue to a distributor.

I will support FT at their new site and application.