Apple Impasse With Magazines Over Subscriber Data

Pickens writes "Peter Kafka reports at All Things Digital that Apple and the publishing industry haven't been able to come to terms over magazine app subscriptions. Publishers want the ability to sell the subscriptions themselves, or at least the opportunity to hang on to subscribers' personal data, and Steve Jobs won't let them. Publishers also don't like the 30 percent cut that Apple wants to take in the iTunes store, but their real hang-up is lack of access to credit card and personal data. It's valuable to them for marketing because the demographic data helps magazines sell advertising, and without it they can't offer print/digital bundles. All Apple is willing to offer is an opt-in form for subscribers that would ask them for a limited amount of information: name, mailing address, email address."

Comments

Credit Card data?

[Yvan256]

They want access to the personnal and credit card data? If I buy a magazine at a kiosk, the guy takes my money, period. Apple is just a digital kiosk.

If their business model requires both to sell me the magazine AND have access to my data to be able to get money from ads on top of that, too bad for them.

Re:Credit Card data?

[Stregano]

Well Apple already has all of that data, so to get anti-corporation about your personal data is a little silly.

Also, besides porn, who goes to magazine kiosks anyway? Even mentioning going to a kiosk here in /. is like telling me I have to put on pants to program: "It's not happening"

Re:Credit Card data?

[bmo]

People like you don't matter to the magazine publishers. Indeed, magazine publishers could do just fine without the newsstand vending because that's not where the bulk of their subscribers come from. The only thing newsstand vending does for them, really, is get new subscribers to sell ads for.

Indeed, the vast bulk of the money they make is from advertisers, not from the subscriptions. The subscriptions are gravy.

So yes, this is a very big deal for them to not get demographics. Without it, you'd see Newsweek, Time, etc., at 8 bucks/week to make up for the advertising loss.

--
BMO

Re:Credit Card data?

[dfm3]

They want access to the personnal and credit card data? If I buy a magazine at a kiosk, the guy takes my money, period.

Well then you wouldn't exactly be a subscriber, would you?

Ever wonder why most magazines cost $5-9 at a newsstand, but you can often get a year's subscription to the same magazine for $2-4 per issue? Hint: they're not just making money off of the subscription. The types of magazines a person is interested in can tell marketers quite a bit about their interests, and there's good money to be made in consumer profiling.

Re:Credit Card data?

[wiggles]

"If I buy a magazine at a kiosk, the guy takes my money, period." ...but if you get a subscription, you pay around 10% of the cost of purchasing each edition individually because the magazine gets your personal data (name, address, telephone number, personal interests) that they then sell to advertisers. That's been their business model for eons. How do you think they produce telemarketing lists?

Re:Credit Card data?

[M. Baranczak]

Well Apple already has all of that data

Apple has a legitimate need for the data; how are they gonna charge you if you don't give them your CC?

telling me I have to put on pants to program: "It's not happening"

Amen, brother Stregano.

Re:Credit Card data?

[puto]

If you buy a magazine at a kiosk there is a trail of what distributor sold it to what kiosk. The magazinse knows how many of their copies sell where, and can pull demographic data by location. They can target local advertising then.

Re:Credit Card data?

[Tharsman]

Well Apple already has all of that data, so to get anti-corporation about your personal data is a little silly.

Here is the deal, though: most (sensible) anti-corporation people that complain about personal data do so precisely because they dislike their data being shared afterwards. Apple is doing precisely what I want any company I entrust with my data to do: refuse sharing it.

Re:Credit Card data?

[sexconker]

Ever wonder why most magazines cost $5-9 at a newsstand, but you can often get a year's subscription to the same magazine for $2-4 per issue? Hint: they're not just making money off of the subscription. The types of magazines a person is interested in can tell marketers quite a bit about their interests, and there's good money to be made in consumer profiling.

No. It's because 12 * 3 > 4 * 5 .
Someone who buys at a newsstand will, on average, NOT buy anywhere near the full year's worth of issues. They'll buy, on average, 3 or 4 issues over the entire year.

And when you buy from a newsstand, the newsstand makes a profit (shocking, I know!). And if you think that's a razor-thin profit, think again. At one point the Sunday Los Angeles Times cost me 37.5 cents a paper, while I turned around and sold it for the newsstand price of $1.50.

And by "me" I mean "me". That is to say, I've done this before and I know what I'm talking about.

Re:Credit Card data?

[IsaacD]

I (might?) live in Atlanta, but each month I hire nineteen different homeless people in nineteen different cities and give them each enough money to hire another homeless person that buys one random magazine and an envelope for it. I also give them nineteen different addresses that I have in a one time pad, but only one of those addresses is my neighbor's. When a magazine arrives, I steal it from my neighbor's mailbox, but only after disguising myself as the neighbor's sister. The bulge is hard to hide in a dress, the bums sometimes steal my money, and I never know what magazine I'll get - but damnit if I am going to let anyone target me in an advertisement!! Oh, and I chose nineteen because it's a prime number, but the government is working to fix that.

Re:Credit Card data?

[mcmonkey]

I'm going to make the same argument, but in the opposite direction.

If I call the magazine to purchase a subscription and have the magazine delivered by USPS, neither the phone company nor the post office needs my credit card data.

The phone lines and postage need to be paid for, but those parties need no access to the particulars of my transaction with the magazine company.

Likewise, Apple is just connecting one entity to another. If I've paid Apple for the iPad and paid AT&T for the bandwidth, why does either need to know which credit card I used for the magazine subscription?

If Apple's business model depends on selling me the hardware and software and getting a kick back on all data passing through the device, too bad for them.

Re:Credit Card data?

[Capt.DrumkenBum]

Just because you can't work at home doesn't mean you have to wear pants.

Re:Credit Card data?

[hymie!]

Consumer Reports is non-profit on purpose.

Re:Credit Card data?

[Lordrashmi]

In fact, not wearing pants in the office will most likely lead to you spending more time at home.

Of course if you will continue to be paid is a different matter

Re:Credit Card data?

[Lilith's Heart-shape]

Well Apple already has all of that data, so to get anti-corporation about your personal data is a little silly.

If I want $PUBLISHER to have my personal data, then I will buy directly from $PUBLISHER. If they're going to misuse my personal data to generate additional profits, then they can go fuck themselves. I think Apple's doing the right thing.

Re:Credit Card data?

[Anonymous Coward]

This is why went droid, google is the best advertiser, they make sure companies get access to my data

Re:Credit Card data?

[natehoy]

And while I agree, I think the whole argument slams smack-dab into the walls around the walled garden. If you want to have your software on an iPod, iPhone, iPad, etc, that software has to be sold through Apple (barring jailbreaking, which does not a viable business model make).

What if I wanted to buy a subscription to Android Magazine for my iPad so I could read up on it? Apple can deny the publishers the right to sell their magazine for use on my device, and (without jailbreaking) there's no way I can buy it. And if selling an app requires jailbreaking, most publishers know their subscription numbers hardly justify building out an app for it.

More to the point, what if I wanted to buy software and didn't want to use my Apple account for it? What if I wanted to use a different credit card, or wanted to go to a brick-and-mortar and pay cash to install something? Nope, Apple purchases go through the Apple store, and that's that.

I'm not saying that the model is inherently wrong - it's got its advantages and disadvantages that have been discussed to death already. But it does mean that you can't buy any software for your iOS-based device except exclusively from Apple, and they get to decide who they do business with.

The walls can protect you, and they can restrict your motion. You have to choose whether you accept the restrictions that go with the protections. If you can't, don't get locked into a multi-year contract with the thing.

I have an older iPod Touch, and for the most part if I had a choice, I'd PREFER software that is available in the Apple Store. It's been vetted out to an extent, I'm only giving payment information to one vendor (decreasing the likelihood of credit card breaches), and all that. But I think it would be nice (in a "I'm not going to be able to get this anyway, so I might as well dream" sort of way) to have a competitive marketplace for applications on the platform so I can stray from the path if I want.

It's not a deal-killer for the iPod because I won it in a contest, and I really only use it to listen to music (via my already-purchased library and imported CDs, not iTunes) and run a few free apps. It's not my phone or anything terribly important to me, and when the battery finally dies it'll get installed permanently in a music player docking station and I won't lament the loss of the other features too much.

But the point is, it's Apple's playground, and Steve hands out the marbles. There are other playgrounds if you don't like Steve's rules, but the point of these stories is to make those rules clear to people about to make a buying decision. Many people are very comfortable with the walled garden, and that's fine, just understand that the top of the walls have razor wire on them, and you aren't getting out.

Re:Credit Card data?

[aristotle-dude]

>how are they gonna charge you if you don't give them your CC?

iTunes gift card?

That is another payment methods but I prefer to pay for the exact amount rather than having a prepaid card that I cannot even use fully since I will likely be left with a balance that is too small to make another 99 cent purchase once the taxes are added on.

I hate the Xbox "points" and the PSN store charging me in 5 dollar increments instead of just charging me for the actual purchase price.

Re:Credit Card data?

[snspdaarf]

It does here. Our dress code is long pants or skirt, and if I am going to wear a kilt to the office, the dirk is going too, and they don't want that either.

Re:Credit Card data?

[PCM2]

You're an idiot.
Low circulation = no one will buy ads in your rag.
Circulation numbers and demographic data are the entire business model for magazines.

And where do you think those circulations numbers come from?

Here's a news flash for ya: The majority of magazines that are sold on newsstands are sold on a returnable basis. That is, you ship the retailer a certain number of copies, and if the retailer doesn't sell the copies, it can return them for a refund (or without paying for them in the first place).

Furthermore, because most magazine content is timely, magazine publishers don't really want those unsold copies back (what are they going, to do, sell them three months from now?). So usually how you "return" magazines is you tear the covers off, throw the rest of the magazines in the trash, and just send the covers back to prove that you've returned them (saving some postage). So overall, figuring out how many copies are sold from newsstand sales takes some time, and even then is highly vulnerable to fraud. So most magazines don't really do it -- at least, not with any accuracy.

Circulation numbers are usually calculated from how many magazines the publisher printed, with some adjustments for how many copies are returned, but by and large the most accurate portion of the figure comes from subscription sales -- not newsstand sales.

Furthermore, circulation numbers and demographic data are closely related. Circulation costs money. For some magazines, it occasionally makes sense to reduce circulation -- that's right, out of the blue the magazine says "we used to sell 210,000 copies, now we sell 175,000" -- but to push the demographics as a way to increase ad rates. So the magazine says, "yes, we only sell 175,000 copies, but all of those 175,000 subscribers are exactly the people you want to reach as an advertiser." In other words, the magazine sells fewer copies but charges more for advertising than a competing magazine that sells more copies.

Bottom line: For Apple to refuse to share demographic information with magazine publishers pretty much cuts the business model off at the knees. The actual sales, as "from a kiosk," are far less important than building the demographic relationship with the buyer.

Re:Credit Card data?

[Tharsman]

This is what I call an epic derail.

Re:Credit Card data?

[Yvan256]

He posts a lot on Slashdot. Does that count?

Re:Credit Card data?

[Red Flayer]

People like you don't matter to the magazine publishers. Indeed, magazine publishers could do just fine without the newsstand vending because that's not where the bulk of their subscribers come from. The only thing newsstand vending does for them, really, is get new subscribers to sell ads for.

You obviously don't know the magazine business very well -- it could be your knowledge is only of the bigger magazines.

Newsstand sales are vital to magazines, because it affects their advertising sales and the rates they can charge. Relative newsstand sales indicate a couple things to advertisers -- does your magazine entice people who buy on impulse? Will your subscribers also be enticed by your magazine, and thus be more likely to view the ad buys? Also, newsstand sales are full-price sales; the revenue is disproportionate to the sales volume.

Indeed, the vast bulk of the money they make is from advertisers, not from the subscriptions. The subscriptions are gravy.

There are a mix of business models for magazines; while most major magazines have the majority of their revenue coming from advertising, circulation revenue is also important. And for niche or small magazines, subscriptions can easily outweigh advertising for revenue. These are the magazines that tend to have the best content, IMO.

All that said, demographics are key to ad sales. It IS a big deal, as you say, for them not to have the demographics. Which is humorous, IMO, since I've never audited a publishing company that didn't play a little fast-and-loose with circulation demographics. Subscriber surveys, etc. This makes me think there's another reason besides demographics that the magazines want that info. And I think that reason is subscriber renewals. A couple circulation studies I've seen showed that third-party subscriptions had renewal rates far, far lower than direct subs. When a publisher can use direct mail to contact those lost renewals, the conversion rate is much higher than related-interest (non-former-subscriber) DM campaigns. So really, I think it's about being able to get renewals.

Also, it's important for cross-marketing of other titles by the same publisher.

Re:Credit Card data?

[PopeRatzo]

The walls can protect you

I didn't realize that Apple's walled garden was there for MY benefit.

I suppose that as long as I have nothing to hide, there's no reason I should care if Apple collects my personal information. Especially since we all know that Apple has only our best interest at heart.

I feel a lot better now.

Re:Credit Card data?

[Tharsman]

Apple has been rather vocal about privacy. Or at least Steve Jobs has. I admit I am not confident of this staying so forever, but I feel safe as long as Steve Jobs is in charge.

Re:Credit Card data?

[natehoy]

I don't think so - I think that your original post is missing the point of view of the publishers and the argument they are trying to make.

First, Apple is being admirable at not selling your personal data to others for purchases made at the Apple Store, and I'll give them serious cool points for that. They would be in serious shit if they ever started selling off that information, because you are their customer.

But that's not the core of the argument.

The publishers are claiming that Apple should not be the sole people allowed to sell software for the platform.

Agree or disagree, but that's the crux of the issue. We as consumers can't decide whether this is something Apple should do, only whether we're comfortable with it.

Apple don't allow me to do business with anyone other than them for iOS app purchases. I have to include their store in everything I do with my iPod except importing music.

Only one entity (Apple) gets access to the things I do with my device, and that has its advantages. But they get a complete view of everything I do, and I can't do anything they don't approve of. To me, that's a disadvantage.

Whether that outweighs the advantages (one central vendor, less chance of credit card breaches, fewer people with personal data, etc) is a matter of personal preference.

The publishers raise a valid point - they can't have you as a customer on iOS. No one can, other than Apple. The only people who can have customers who are buying iOS applications is Apple, because all software comes through one store, the Apple Store.

You can only buy software for your iOS device using a payment instrument that Apple accepts, and Apple has a comprehensive list of everything you've bought.

You can only buy software for your iOS device that Apple has approved, and that's good when the thing you want is unsafe, but Apple has a history of denying things they don't like that are perfectly safe for you to use.

Re:Credit Card data?

[hrieke]

Bullshit. Apple is "saying" that they're doing it for personal data reasons, but the real reason is that they want to OWN the relationship between the consumer (you) and them (the company).

Re:Credit Card data?

[M. Baranczak]

No, I don't. Next question?

Re:Credit Card data?

[Chyeld]

I don't want to ever pay for the privilege of being someone elses product. And when I can't avoid it, I do not buy into bullshit like "this information is going to be used to help us make the magazine focused more on you" because I'm self aware enough to know that for every inclination I have, there is an Anti-Chyeld out to cancel that out.

Re:Credit Card data?

[Tharsman]

The publishers are claiming that Apple should not be the sole people allowed to sell software for the platform.

...

The publishers raise a valid point - they can't have you as a customer on iOS. No one can, other than Apple. The only people who can have customers who are buying iOS applications is Apple, because all software comes through one store, the Apple Store.

And again you derail. You may have missed it, but the story in question is a rumor on magazine publishers wanting more from apple for their upcoming magazine subscription service than Apple is willing to give.

We don't know much from this, as far as we know it may be an app like iBooks (or even just iBooks) with a Subscribe button.

No publisher is complaining about anything in the context of this discussion, all we know is that supposedly they are holding back on the venue because Apple is not willing to spill out consumer data.

Right now any magazine publisher can make magazines for the iOS devices and sell individual issues, as far as I know they can even sell "subscriptions" this way, this is what leads me to believe the service in question is just going to be a iMagazine app or something like that, a centralized hub exclusively for magazines where publishers wont have to fight over attention with other apps.

Oh and at the end of the day, there ARE third party magazine apps for the iPhone. I think the sector is "dominated" by Zino, a free downloaded app that sells magazine subscriptions.

It is true that Apple controls app distribution to the device, but they have no lockdown in books/magazine distributions. The presence off Kindle and Nook stores (not to mention other comic book stores) on top of the iBooks one are testament to that. Existence of apps like Netflix and Hulu+ also prove that Apple wont lock down competing video services or force their billing to go through Apple's billing.

Apple is [preparing] offering a service, and Apple will be entrusted by it's consumers with their data and Apple refuses to share that data. If the magazine publishers refuse to move on without this data, well, they have options like Zinio. Magazines like National Geographic, Rolling Stone and The Economist already sell there.

So, as I stated before: your post is a derail as it's a rant on Apple's app market and makes no sense in the context of magazine publications.

Re:Credit Card data?

[Tharsman]

Hmm, I don't think Apple is saying anything. This was not a press release by Apple, you know.

Re:Credit Card data?

[Tharsman]

I respectfully disagree and think you are missing the core issue, that the fact that publishers may ONLY sell subscriptions under Apple's specific terms is the real issue.

I'll make this easy for you, with fewer words so you cant blame missing it in a wall of text:

I give my credit card information to Zinio and they feed my little iPad application with said magazines, in a subscription model.

That is: magazine subscriptions. With the iPad (or iPod or iPhone.) Not managed by Apple.

Same holds true for Netflix and Hulu+, btw, between others, mainly newspaper publications that grant "free" access to their digital releases if you subscribe to the paper version.

In the risk of making this post too long and making the previous points too hidden (for a second time) I also want to let you know that Single Magazine Apps that rely on newsstand per-issue sales are doing so because that's what they choose. They can just as easily sell you, in one click, a full year of issues.

But you would need to have a clue what is being talked about to realize all this, by now your ignorance have proven you don't own any of these devices and are riding the "must hate that thing called Apple even if i have never seen one" train of thought.

Re:Credit Card data?

[Reaperducer]

If you believe all of the world's content worth reading is also contained on the internet, then you live in a very very small world.

Re:Credit Card data?

[m50d]

But Apple won't let you buy directly from $PUBLISHER

Music Industry

[Enderandrew]

Apple wanted lock-in and total control with the music industry and got it. Now they're an industry leader and have all the leverage while the magazine industry is going in the toilet.

Re:Music Industry

[bluefoxlucid]

Yeah, they should totally sell your personal information for profit.

Good for Apple

[Anonymous Coward]

I cancelled my subscriptions to Make Magazine and Utne Reader for exactly that reason - the asshats couldn't stop themselves from selling my personal data to advertisers. Within two months, I was getting both paper and email spam from all over the place because of them. I know it was them because I always use custom email addresses and custom misspellings of my name to track how companies use my data.

It's simple really...

[Itesh]

We had problems like this at VeriSign, back before PayPal bought out Payment Services. So, what we did is provide access to the data in aggregate so that they could see what the demographics were without revealing the individuals behind the data. If all they are looking for is the ability to sell advertising based on demographics, aggregate data should suffice.

bummer

[bigmo]

I feel so dirty when I agree with Steve Jobs.

Re:Apple gets a cut of subscriptions?

[ceejayoz]

Yes, they get a cut of subscription revenue. Apple is handling the platform, billing, and content delivery, so they get paid for doing what would be printing, billing, and postage in a paper subscription. It's using Apple's merchant account and bandwidth, so that seems fair.

The apps will probably be free or include a "free" month's subscription to offset the purchase price.

Re:My advice, don't develop for the iphone.

[Tharsman]

You heard the man! If you don't like Apple protecting user data, go to a platform that does not!

Deal with the devil

[Solandri]

The publishing industry, being the sole supplier of many popular magazines and newspapers, refused to release those magazines and newspapers in ebook format until a hardware manufacturer agreed to all their onerous DRM requirements. Apple was the only one who took them up on the offer, and the iPad was the result. Now they're finding out some of the problems that come with having to deal with a sole supplier (in this case, for the hardware platform on which your electronic publications are distributed). Serves them right I say. Pot, meet kettle.

dead due to cost

[fermion]

To me the subscription model is dead due to cost and quality. I have one subscription through an app on the iOS, and that is pretty much a donation sort of thing. I would not mind having a subscription to a Linux magazine, but they want a huge amount of money. Ditto for Financial Times, WSJ, and most other subscriptions.

To me the whole thing is silly. These people have been complaining for years that paper and distribution costs are killing them, and that circulation is in the decline. Here is a model in which they can keep the ads but increase the number of adds as there is no incremental costs for ads in terms of delivery and paper costs, while increasing distribution. While I get annoyed that Architectural Digest has the first third of the magazine as ads, it is still a deal at less than $2 an issue. OTOH, They could have many more ads on iOS, linked to the advertiser, sell it for a dollar, and I would not be annoyed.

It seems this is second opportunity to traditional media to monetize on the web. Offer digital products, mostly supported by advertising, reduct traditional ineffecient infrastructure, and offer a product at a price that attracts new consumers.

Apple might be a driver in the process, like they were with music. Or the media companies could resist, as they did with movies which lead to distribution companies like Netflix making the profits at the expense of the media companies. At this point it can go either way.