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Apple Caves & Publishers Rave

Ten years ago several dozen people held a protest outside an Apple iPad event. They wore depression-era newsie outfits (scally caps, suspenders, etc.) and distributed fake cardboard iPads yelling “Extra, extra, read all about it!” The headlines on the iPads read: “STEVE JOBS TO FREE PRESS — SUCK IT! WE WIN!”

Here’s what Business Insider wrote about the event:

“Who were those protesters handing out pamphlets outside Apple’s iPad 2 announcement yesterday and what do they want? The protest…is the brainchild of a company called Zuora, which helps publishers and software companies build and manage subscription services. Zuora CEO Tien Tzuo is on a crusade to get Apple to revise its new rules for subscriptions in iPad and iPhone apps.”

We were obviously having fun with the protest idea, but the issue itself was deadly serious for the media industry. By not allowing readers to subscribe directly to digital publications, Apple was taking away their ability to build direct reader relationships. But guess what? After ten long years of struggle, the publishers have won.

And it’s not just the publishers who have triumphed. It’s app developers of all kinds! On Friday, a judge ruled that Apple can no longer force developers to use its payment in apps. This might sound like a small detail to the average user, but it’s a huge deal for any app developer who wants to truly participate in the Subscription Economy.

Again, here’s what Business Insider said about me back then: “His main objection isn’t the 30% cut that Apple takes of all subscription revenue sold through apps. Rather, he thinks it’s unfair that Apple requires publishers to sell subscriptions from within their apps — or else abandon the App Store (or abandon subscriptions) altogether.”

I still feel the same way, of course, and the media industry’s rush to subscriptions over the last decade has only proved my point. Today Apple News has hundreds of millions of readers, but so far publishers have been profoundly underwhelmed by its ability to drive new subscriptions and revenue. They helped Apple sell a lot of iPads, but didn’t get much in return.

In fact, last year The New York Times decided to opt-out of the service entirely, citing that it instead hoped to drive readers directly to its own website in order to fund quality journalism:

“Core to a healthy model between The Times and the platforms is a direct path for sending those readers back into our environments, where we control the presentation of our report, the relationships with our readers and the nature of our business rules,” said COO Meredith Kopit Levien. “Our relationship with Apple News does not fit within these parameters.”

That’s putting it diplomatically. If you’re a publisher who’s hoping to build direct relationships with your readers, then Apple News is effectively a strip mine operation. You give Apple News a slice of your content in return for an even tinier slice of the overall revenue generated by their service. Cupertino is happy to give you pennies in return the real gold: the billing information.

That’s what Levien was referring to when she talked about “the relationships with our readers and the nature of our business rules.” Being able to bill your readers directly isn’t just about avoiding the Apple Tax, it’s about having the data you need to drive authentic subscriber relationships. It gives you the information you need to fight churn, target up-sells, and build a sustainable content operation.

But of course, the Subscription Economy was never just about media and software. Friday’s ruling only proves that point. Now gaming companies, business developers, education providers and app developers of all kinds have the freedom to develop their own subscriber bases.

These companies now have the freedom to learn more about their customers so they can make their services better and more personalized. They now have the freedom to control how they price and package, whether through monthly or annual fees, consumption models, in-app purchases. In short, they now have the freedom to own the billing relationship with their subscribers.

And guess what? More and more and more countries are waking up to this fact. South Korea just passed a similar law that will ban major app store operators like Apple and Google from requiring that developers only use their payment systems to process the sale of digital products and services.

What did Apple have to say about that law? It’s going to “put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases and features like ‘Ask to Buy’ and Parental Controls will become less effective.”

The entitlement in that statement is staggering. As if developers can’t be responsible for their subscribers. The truth is that Apple didn’t allow developers to create truly great services for their subscribers. Well, now they can.

Hooray for the newsies.

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