Commentary

Publishers Are Right To Seek Better Deal From Apple

The New York Times and The Wall Street Journalare among the publishers that last week joined software developers in seeking a bigger cut of revenue from Apple's App Store, a key link to millions of subscribers.

Publishers are right to demand better terms from the tech giant, since their content helps to make Apple's devices more valuable to customers.

News publishers are among the companies that pay a 30% commission to Apple on subscription orders placed through iOS apps. That fee drops to 15% after the first year, which is still a hefty price for publishers to pay after spending money on renewal marketing efforts.

Those high fees compelled Digital Content Next, a trade group that represents news publishers, to send a letter to Apple CEO Tim Cook asking for a bigger cut of revenue made through the App Store, as reported by Publishers Daily.

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“The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment, particularly in competition with other larger firms,” Jason Kint, CEO of the trade group, said in the letter.

He also cited a deal an Apple executive offered Amazon CEO Jeff Bezos that included a 15% revenue-sharing arrangement for people who subscribed to Amazon Prime Video through the App Store. The deal was cited in a House Judiciary Committee hearing about the possibly anti-competitive business practices of companies, including Apple, Amazon, Facebook and Google.

Apple hadn’t responded to the letter at press time, but the company has pushed back against the idea of reducing its commissions when other companies have requested them. It claims the fees are necessary to keep the App Store running.

I don't doubt the App Store is expensive to maintain and requires constant spending on quality assurance. Apple claims it reviews100,000 apps a week with automated systems and hundreds of employees — and rejects 40% of apps due to minor bugs and privacy concerns. Apple also provides the technological infrastructure to distribute apps.

The challenge for publishers asking for better terms on App Store subscription fees is a lack of leverage — all they can do is request the same terms offered to Amazon. News apps likely don't generate much revenue for Apple, while gaming apps tend to be the biggest moneymakers. Games basically subsidize App Storeservices for everybody else.

However, publishers provide valuable news and information that give people another reason to own an Apple device. In the interest of fairness, they should be granted more favorable terms on app revenue.

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