Last updated: February 15, 2011 9:06 pm

Apple demands 30% slice of subscriptions

Apple is dictating tougher terms of commerce on its wildly successful mobile devices, demanding a 30 per cent cut of all subscriber content sold directly through its iPads and iPhones.

The new rules, which apply internationally, say that if publishers offer digital subscriptions they must make the same offer through the App Store. Publishers can still offer subscriptions through their own websites, but cannot link to the website from their app.

The change, which publishers expect will send more subscribers through Apple’s digital content store, will probably affect the revenues that content owners earn from the surging tablet and smartphone market, as Apple will take 30 per cent of any payments it processes.

“It offers some opportunities for publishers, but they shouldn’t get too excited too quickly,” said Ned May, lead analyst at Outsell. “Apple wants to make money off of content, not just devices, and publishers are facing a shrinking pool.”

Steve Jobs, Apple’s chief executive, who has remained involved in Apple’s activities in spite of being on medical leave , said that the policy would allow publishers “to expand digital access to their content”.

“Our philosophy is simple: when Apple brings a new subscriber to the app, Apple earns a 30 per cent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 per cent and Apple earns nothing,” Mr Jobs said.

News and magazine publishers had pushed for a subscription service, and for clarity about its rules, but the expansion of the subscription offer to video and music had not been expected. Publishers have been concerned that Apple will end up controlling the billing relationship with their customers, depriving them of valuable data.

On Tuesday, Apple made a partial concession, saying users who subscribe through the App Store could also offer their personal information to publishers

“It is clear some of this has been coming to a head,” said Mr May. “I don’t think this is going to end the tension here.”

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