‘Playboy’ and FT lead the fight to control Apple

The Financial Times’ launch this month of its new FT.com app was a highly significant step in the emerging campaign by publishers against Apple’s brilliant but monopolistic App Store. The launch of the FT’s ‘mobile web app’ followed a similar and inevitably less well-publicised launch by Playboy magazine a few weeks before. These new mobile web apps have all the characteristics of existing Apple-developed apps but are actually mobile links to the web and are easier (and cheaper) for the developer to update. So the new FT app gives readers most of the advantages of its previous Apple-approved app but with the added ‘live’ flexibility of the web site itself: the best of both worlds.

But those are the consumer benefits. For the publisher itself, these new apps are even more important and mark a fundamental shift in the balance of power with Apple.

While the good people of Playboy were driven by the refusal of Apple to permit nudity in its App Store, the FT’s launch represented the first major publisher to kick back at Apple for its strong control of apps sold in the App Store for iphone and ipad. Publishers have been complaining for months about Apple’s:

  • Expensive, time consuming and restrictive development, approval and updating process for apps sold in the App Store
  • Non-negotiable 30% royalty on subscriptions revenue from apps
  • Insistence on owning the subscriptions databases of apps
On ipad but outside Apple’s control

The issue of database ownership is all-important. The Apple policy was described by one publisher as being like the telco owning the details of all business conducted over the phone.

But now the dam has (ever so quietly) burst and increasing number of publishers are preparing to follow the lead of Playboy and the Financial Times. All over the world, especially in the UK and USA, newspaper publishers are planning to develop such mobile web apps and thus develop their vital subscriptions business beyond the clutches of Apple. They will still be producing apps for the iphone and ipad but, this time, they will be operating outside the controls and ownership of the App Store. Apple sees the risk of these developments, especially at a time when there are rising number of challengers for the ipad itself. Having to give up ownership and control of apps will seem preferable, to say the least, to risking ipad’s position as the default piece of hardware in the booming world of touch-screen tablets.

It is, therefore, believed that Apple may soon change tack (and perhaps even completely reverse its position on royalties and subscription databases) – in order to prevent the App Store from losing its lucrative cashflow. But it is also clear that the FT et al move into mobile web apps is just part of a future which will see publishers and other information providers and marketers exploiting diverse channels, and not allow themselves again to become dependent on a single gateway like Apple’s App Store.

Meanwhile, Apple’s “new” relationship with publishers is likely to see its embryonic iads business playing a bigger and bigger role in generating advertising revenue from apps. Not only would this specialist a service generate valuable revenues for publishers but it would also enable them effectively to outsource their online ads (currently for 40% commission) and keep the activity ring-fenced from its own hard copy advertising sales. Perhaps the new equilibrium for publishers could even see Apple eventually scrapping subscriptions royalties and generating its App Store income solely from advertising.

Whatever its future strategy on the App Store, Apple knows that it must tread carefully in order to avoid disrupting the runaway growth of the ipad at a time when any serious rift could allow a competitor to gain ground.

‘No more single-channel dependency’

However, there is no over-estimating the significance of the expected avalanche of mobile web apps and what it tells us about how companies should manage information channels for the future, viz:
  1. They need to adopt multiple channels and avoid exclusive arrangements
  2. They need to retain ownership of ‘intellectual property’ especially customer databases
  3. They must realise there is no ‘destination’ in online marketing. There may be a general path (say, mobile) but there will be many twists and turns, and there will be a continual need to experiment.

Beyond even those points, the development of this next generation of mobile web apps is known to have been strongly encouraged by the other tech giants including Google, Facebook, and Microsoft. Normally fierce competitors have worked together or in parallel to ensure that Apple has not been able to create an online monopoly. That is a precedent of Nato-like proportions in the digital world.

A sobering moment of truth for the so-smart people at Apple.
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