The Wall Street Journal‘s approach to charging the iPad has been the smartest of any of the media.
The Journal app is free in the iTunes store, so you can download it and check it out. Even after a trial period is over, some of the stories remain free to read, just like on WSJ.com. But it encourages you to sign up for a subscription through the Journal‘s site itself.
Why?
Because then the Journal gets to keep all of your money. If it sold it to you through iTunes, it would have to cough up a whopping 30 percent cut to Apple (which I should note is far better than the 70 percent Amazon skims off the top on the Kindle). Plus, by going direct with its readers, the Journal gets to collect key demographic information about them and control the relationship with them.
But Peter Kafka of All Things D reports today that Apple is refusing to let Time Inc. use a similar strategy for its apps:
Last month, the publisher was set to launch a subscription version of its Sports Illustrated iPad app, where consumers would download the magazines via Apple’s iTunes, but would pay Time Inc. directly. But Apple rejected the app at the last minute, forcing the Time Warner (TWX) unit to sell single copies, using iTunes as a middleman, multiple sources tell me.
Since then, Time Inc. executives “have been going nuts”, trying to figure out how to get Apple (AAPL) to approve a subscription plan. One of the more desperate suggestions, which apparently didn’t get traction: Pulling the publisher’s apps out of the iTunes store altogether.
This is a bad sign. And it’s one more example of the capriciousness of Apple—behavior that was once part of its quirky charm (I’m a longtime user of its products), but has turned ugly now that it’s a market-dominating goliath, the second biggest corporation in America by market cap—bigger even than the Microsoft monopoly.
Again, this is something for the press to watch closely, and Time is doing the right thing by threatening to yank its apps. Remember the flap over Apple censoring Pulitzer-winning political cartoonist Mark Fiore’s app because it, in Apple’s own words, “ridiculed public figures.” Its terms of service say:
Applications may be rejected if they contain content or materials of any kind (text, graphics, images, photographs, sounds, etc.) that in Apple’s reasonable judgement may be found objectionable, for example, materials that may be considered obscene, pornographic, or defamatory.”
Apple justifies its controlling instincts by saying the iPad (and iPhone) are a “curated platform.” But that has little to do with letting non-pornographic magazines sell subscriptions.
Apple’s behavior is setting it up for some serious antitrust scrutiny down the line. It will be well deserved. Meantime, the media had better get hold of this tiger before it gets hold of them.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.