Financial Times Won't Give Apple A Cut, Drops iOS for Web App

[Meandmunch]

Don't you give that 30% or more up when you sell your publication at a retail outlet to begin with. You sell your stock to a store at a price the retailer can then sell at the cover price to the consumer.

How is this any different? Apples online store is a retail outlet for digital products. The last time I checked you could not walk into a book store and get a subscription for anything.

The distribution channel Apple has created is a boon for print producers. Like it or not they have become the Walmart of the online world, they are the biggest and can instantly reach the most potential customers. You may not like the specifics of the terms but good luck doing any better without them.

 

[iLunar]

Looks like we're going full circle: when the iPhone was first released, the only apps available were web apps. These were widely derided and Apple buckled under pressure and added native apps. Now it looks like more companies such as FT will revert to Web Apps to avoid paying Apple "their" 30% cut for subscriptions...

Yes, exactly. I remember when Apple pushed Web Apps and developers balked at it cause they want to make money off Apple's back. Now when Apple provides the App store market for a fee and protects consumer privacy, they all jump back to Web Apps. It's pretty amusing.

 

[ratzzo]

I highly doubt that Apple can provide that much value. The FT, the WSJ, the NYT, The Economist, etc. have built up massive reputations over many, many years. The target customer is self-identifying and knows how to find the product. Do you actually believe Apple can increase the target base by a factor of 10 for these publications?

Now, Apple might be helpful to smaller publications that are just getting started. In that case, Apple might deserve their 30%; but the 30% should be capped at some number, for example, $100K per year.

Why should it be capped? 30% is 30 out of 100, whether it scales to 100k or not and should it become unprofitable to the company is up to said company to study. After all, they are winning 70%, be it 1000, 100000 or 100000.

 

[dashiel]

I am a big believer in HTML5/CSS3 and JS as an umbrella term HTML5 has made tremendous progress in the last 18 months. As a technology though is not as yet ready to replace native apps in the majority of instances. A lack of GPU acceleration standard across devices, the nightmare of doing anything for Android – ironically fragmentation is a far greater problem when dealing with the all the permutations of WebKit on Android. We’re not far off, but we’re not there yet.

I suspect the amount of time/effort/money the FToL will invest in creating elements that are otherwise baked in to native iOS/Android development will be greater than the 30% of revenue they would have to share.

 

[lifeinhd]

The only problem, for which I am not sure and is important to me, is if webapp offers offline reading.

Perhaps what FT could do is make Web browsers that only view their site. The Web browsers could be designed to not reload content upon opening, unlike Safari.

Or maybe they could somehow cache it in Safari, and still display content even if Safari tries to refresh the page?

Don't you give that 30% or more up when you sell your publication at a retail outlet to begin with. You sell your stock to a store at a price the retailer can then sell at the cover price to the consumer.

How is this any different? Apples online store is a retail outlet for digital products. The last time I checked you could not walk into a book store and get a subscription for anything.

Problem is, for companies like Amazon or Netflix, Apple has just become a middleman. Many of these companies would rather just sell directly to customers. Obviously that's not the case for the FT, but anything that's not normally sold as a hard copy now has to deal with a middleman demanding a cut.

 

[prhammer]

If you sell e-books, you have to give 70% (or more) of the sales price to the author... if Apple keeps the other 30%, you wind up with zero. See http://www.macstories.net/news/apples-in-app-purchase-policy-forces-iflowreader-to-shut-down/ for example.

I'm waiting to hear what Kindle and Nook are going to do. I think that this is one of the more interesting battle grounds for the inapp purchasing because the margins don't make this a sustainable model for businesses. Apple has driven up the costs of ebooks across the board and now they are minimizing the options on IOS so that they end up the only ebook option. I'm a Kindle and Android user and this is one of the major issues that I am waiting to see resolved before I decide if I'm going to move to iPhone in November when my contract is up.

 

[inkhead]

What 30% buys you:

• Unlimited Hosting (5%),
• Subscription billing system (expensive to provide customer support),
• Payment Gateway (they take between 5-10% of every payment transaction)
• Technical Support
• Advertisement of Your App in High Yield CPM

For companies that don't already have an online billing system iTunes
provides extremely lost cost system.

Cost of developing our billing platform ($10,000)
Cost to our payment gateway on every transaction under $1 (10% 20¢ fee)
Cost to our payment gate on every transaction OVER $1 (5% 10¢ fee)
Monthly Hosting Costs $1500.00 (monthly)
Staff to answer support emails and fix trouble tickets ($3000.00 /month)

iTunes is a great deal!

 

[newagemac]

Exactly.

App is faster (if done right), can take offline. And there are more potential customers through the app store / itunes.

Would you want 100% fee of 1000 customers or 70% fee of 10000 customers?

You don't get 100% if you take your app out of the app store. You have to perform all of the same functions the App store provided using other services which of course eats into your profit as well.

But really what's more important is the hit in sales you're going to take by not being in the App Store. That's VERY significant. I think the FT is going to learn this the hard way.

 

[Gasu E.]

As a current FT subscriber, I say DON'T DO IT. The native iOS app is MILES ahead of this makeshift HTML5 effort, which obviously can't even keep offline content available for reading.

I really hope they stop this BS bickering and keep the app, which has received many design awards since the debut of the iPad...no web-based initiative can replace it.

Although the FT has the rare privilege of NOT needing to run after subscribers, given its high-end audience and quality articles, they'd better not risk losing any because of such an arrogant approach.

You really need to provide your valuable feedback to FT! Let them know that you are willing to pay a 50% surcharge over the regular subscription price for the app-- I'm sure they assumed they would have to absorb the Apple charge themselves, not readers such as yourself. It's important for them to know that some readers are willing to pay for this.

 

[macnisse]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; sv-se) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)

Strategic move indeed, web apps make sense, will be interesting to see the corporate reactions and who will follow...

 

[Rodimus Prime]

Exactly.

App is faster (if done right), can take offline. And there are more potential customers through the app store / itunes.

Would you want 100% fee of 1000 customers or 70% fee of 10000 customers?

sounds great in theory unless your cost per customer is in the 80-90% range already in terms of revenue brought in because then an increase in customers just means a larger increases in losses.

People like you argue that but forget that that the 30% gross revenue demand from Apple is often times greater than the the profit margin is any how.

 

[gkarris]

Actually, I prefer Web Apps.

If the App requires a network connection anyway, easier to make updates to the host rather than to release code and try to distribute it, making sure everyone has the latest version.

It also allows a bunch of other platforms to use the App, especially is the App is smart enough to reformat the info depending on how you are accessing it...

 

[iCrizzo]

Apple really should think about lowering that 30%. Web apps are nice, but native apps trump if I can download the content and read it offline!!!

 

[Yamcha]

I think 30% is a lot, so it makes sense for them to just make a HTML5 web app..

 

[Stella]

deleted.

 

[lifeinhd]

You really need to provide your valuable feedback to FT! Let them know that you are willing to pay a 50% surcharge over the regular subscription price for the app-- I'm sure they assumed they would have to absorb the Apple charge themselves, not readers such as yourself. It's important for them to know that some readers are willing to pay for this.

Awesome comment.

 

[logandzwon]

LOL, a few year ago Apple says, "html5 Web Apps are really cool, guys make stuff."

Community, "no we want native apps. Web Apps suck. Come-on we'll pay for them!"

Apple, "OK, we built this awesome platform for native apps. Here is the bill."

Community, "Gready Apple. We are going to build web app instead!"

 

[jlgolson]

As a current FT subscriber, I say DON'T DO IT. The native iOS app is MILES ahead of this makeshift HTML5 effort, which obviously can't even keep offline content available for reading.

I really hope they stop this BS bickering and keep the app, which has received many design awards since the debut of the iPad...no web-based initiative can replace it.

Although the FT has the rare privilege of NOT needing to run after subscribers, given its high-end audience and quality articles, they'd better not risk losing any because of such an arrogant approach.

You think so? I'm a FT subscriber too and I honestly couldn't tell THAT much of a difference between the two. Yeah, it's a little bit slower and I much prefer the iOS app, but it isn't that bad.

 

[firestarter]

Big fail.

There's no 3G signal on the London tube - so noone is going to be able to read it on their way to work.

Dumb move.

 

[redkamel]

I would be curious to see the math.

So by using itunes, FT loses 30%. The App store would need to boost the amount of purchases by 1/3 for FT to break even. Counting the cost of maintaining a server, download management, customers who leave beacause its "too hard" to download, decreased visibility, etc etc (because Apple DOES give you something for that 30%), I would guess (completely guess since I don't do this for a living) Apple would maybe really only have to boost your business by a 25% or maybe even 20% or 15%.

Personally I think the App store would boost apps by at least enough to make it worth it, but maybe not. I'd love to have nerdy number talk from both sides...I have no idea about how cost of running a download service, HTML 5 website, transaction processing, customer service for said downloads, server space and all that junk compares to profit

 

[jntdigital]

I think you will see more publishers go with the web app approach with platforms like Onswipe on the horizon.

 

[iDemiurge]

30% may make sense for common apps, whose value is in their functionality and not in the content they provide. With magazine subscriptions the app is developed once not for its own sake, but for the sake of the content being delivered. Most of the value is added by the journalists and the rest of the editorial team, and for them a 30% cut on the price of a subscription is a he'll of a lot, especially if they are barred from offering the subscription cheaper outside of the app store. Down vote me as much as you will, I think the stance adopted by the FT is great and other publications should join the resistance. Apple makes great products, but they didn't invent the press, and they're not doing anything to make it any freer.

 

[scott911]

apple: I respect the new ecosystem you're creating, but 30% is too much, especially for this subscription model.

Best of luck Financial Times... keep your writers employed, and fed.

 

[Gasu E.]

Why should it be capped? 30% is 30 out of 100, whether it scales to 100k or not and should it become unprofitable to the company is up to said company to study. After all, they are winning 70%, be it 1000, 100000 or 100000.

Apple provides some infrastructure (billing, hosting) value and some marketing value to publications that use their service. For a small publication, the marketing value may be large compared to revenues. For a publication which already has a huge readership base, the marketing value is going to be much smaller relative to the companies revenues.

Let's take two examples. Publication A is new and has zero circulation. Through an app, they can gain 10,000 readers at $50 per year. That's 10,000 readers and $500,000 more than they would have without the app.

Publication B is, say the FT. I don't know their circulation/rates, but just for sake of argument let's say their current circulation is 200,000 per year at $100/year= $20M. If they add an app, they could gain maybe 10,000 more subscribers. However, of their current 200,000 perhaps 50,000 already have iPads (they have an affluent readership) and will use the app as well. So, unless there is an additional surcharge for the app subscription BEYOND the regular subscription,

they gain 10,000 new readers X $100 X 70%= +$700K

they lose the Apple surcharge for 50,000 app converts X $100 X 30% = -$1.5M.

The above isn't meant to be accurate in the specific numbers. I'm just trying to demonstrate how an established publication can lose from having an app with a 30% blanket surcharge. You can create other scenarios and assumptions where this is true as well.

 

[spazzcat]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3 like Mac OS X; en-us) AppleWebKit/534.32 (KHTML, like Gecko) Version/5.0.2 Mobile/8F190 Safari/6533.18.5)

People seem to forget the 30% is for new subscribers that come through the app store only...