Apple Time Inc. seems to have resolved its dispute with Apple over magazine subscription apps on the iPad, according to an item in Time-owned Fortune Thursday. Starting with this week’s issue of People, subscribers to Time Inc. mags will be able to access the digital editions on the iPad at no cost, via a subscriber-authentication process. Up to now, subscribers paid the same $4.99 per issue for People, Fortune, Sports Illustrated and Time as everyone else because Apple had refused to provide the publisher with the tools needed to create free-to-subscriber apps.
Some major publishers, like Condé Nast, have said they have no intention of letting subscribers access iPad apps for free. But plenty of subscription service providers do have such plans, including a growing number of pay-TV and other video service providers that are currently developing iPad apps. Thus, figuring out what the relationship is going to be going forward among Apple, service providers and the subscriber is going to be critical to a lot of business plans.
Neither Apple nor Time have said what the hold up was, or how the impasse was broken. But it’s a fair bet it had to do in part with Apple’s policy of taking a 30% cut of all sales through the iPad App Store. Allowing subscribers to access apps for free would cut Apple out of the deal. The other part of what it had to do with was no doubt Apple’s parsimonious ways with iPad user data.
In an apparent compromise, existing Time Inc. subscribers will now get free access but Time cannot sell new subscriptions through its iPad apps. Any new commerce generated by the iPad, in other words, has to go through Apple.
Some publishers and subscription service providers have been able to sidestep the issue, but those were probably non-recurring exceptions. The Wall Street Journal and Netflix apps have been free to subscribers since day one, for instance, but those are essentially must-have apps for connected devices at this point. Amazon’s Kindle app and Barnes & Noble’s Nook are free to registered users, but any other arrangement would certainly have raised anti-trust questions for Apple, given its interest in the iBooks store.
For everyone else, though, there could be some tough negotiations ahead over just whose customer it is that is subscribing to a service on the iPad. As I’ve noted before, Apple has a long-term strategy not just of selling more iPads but of establishing the App Store as a significant content distribution and publishing platform in its own right. Existing content distributors looking to leverage the iPad may be about to learn what that really means.