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CNNTech: Apple vs. publishers: Why the tech firm already won

 

CNNTech  - Feb 17, 2011 By Pete Cashmore, Special to CNN

CNN) — Apple this week announced a planto levy a 30 percent fee on publishers who charge subscriptions through its App Store on the iPhone, iPad and iPod touch. The fee applies to newspapers, magazines and digital books (not to mention music and videos).

What’s more, Apple’s rules dictate that publications can’t offer these same subscriptions at a lower price outside the App Store. And in another blow to publishers, customers will have the option not to share their details — name, e-mail address and ZIP code — with the publisher.

Some publishing industry analysts are aghast at the proposal, claiming that the rate is much too steep and the terms too strict. I don’t disagree: There’s no doubt that Apple is using its dominant position in digital distribution to strong-arm publishers.

But the fact that the tech giant can propose such onerous terms without blinking points to the fact that the battle is already lost: The balance of power has permanently, irreversibly shifted from the media companies to the tech firms.

Is it possible that Google’s Android operating system and freshly announced “One Pass” subscriptions service could challenge Apple’s leadership in digital distribution?

Android is notoriously poor at persuading users to pay for apps, and the Google Checkout payments service has received a lukewarm response.

But let’s imagine that Google is one day able to exert some pricing pressure on Apple that forces the latter to negotiate friendlier terms with publishers — then we’d still have a situation in which the tech companies get to dictate pricing over the publishers, albeit with Apple taking a slightly smaller share than it might like.

Perhaps a better way to phrase this epiphany is not so much that Apple has already won but that publishers already lost — if not to Apple, then to whichever tech company dominates digital distribution in the long term. To repeat our mantra: The balance of power has permanently, irreversibly shifted from the media companies to the tech firms.

Let’s imagine some bolder moves from the publishing industry. Perhaps multiple publishers could band together in opposition, starving the App Store of content until better terms can be negotiated. Or maybe they could seek to challenge Apple on antitrust grounds. Either might prove effective in leading to slightly better terms for publishers.

But unless a media company is able to build a better tablet or a better phone or convince customers to return to paper magazines and newspapers, nothing changes the fact that the publishing industry has lost control of its most valuable asset: distribution.

It was always the printing presses and the delivery trucks, not the words themselves, that were the seat of the publishing industry’s power. The audience has moved elsewhere, and this emigration has birthed a new gatekeeper.

Thanks!

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