Description: Paying for your morning coffee and newspaper by swiping your mobile phone instead of fumbling for cash or debit card could be just around the corner.
Source: Globeandmail.com
Date: Feb 15 , 2011
Apple Inc. is launching a long-awaited subscription service for magazines, newspapers, videos and music bought through its iTunes App Store.
The plan calls for publishers to set the price and length of subscription, marking a break from the previous practice of “newsstand sales” under which each issue of a magazine, for instance, would be bought separately. Click here for rest of story
Questions for discussion:
- The revenue model of subscriptions on the internet is not a new concept. Why has this business model not been met with great success in the e-commerce world.
- Do you think that apple can make this businesss model succeed when so many others have failed? Why or Why not?
- Does this business model appeal to you personally?
John
This is a very interesting turn for Apple. Again they seem to be showing off how integrated their products are. I personally believe Apple will be able to make this business model successful. They have an infrastructure that no other company has and have successfully integrated their products into one spectrum. No two products created by Apple cannot be linked together. The fact that this subscription service is fed through the itunes / Apple store is the ideal situation for Apple. There are very few people who do not own an itunes account. There are even fewer people who don’t own or use some sort of Apple software or hardware. Apple has done an amazing job of taking a product that was originally used for something simple, such as organizing music, and turned it into a service that can do so much more. With this large distribution channel already in place Apple should have no trouble setting the standard for magazine subscriptions, however, they may be a little high on their take from the magazine publishers. If 30% is too high for magazine publishers they may resort to their next best option, being an Android app.
Brett Quinton
The first obstacle for Apple is trying to lead people to believe that they need to pay for these services. I personally have been using the internet since the days of dial-up connections and have never paid for a subscription service. This is due to the fact that most of the content can be found elsewhere for free. A news story used to be something that people were willing to pay for, now it isn’t.
The second and equally large obstacle is that Apple does not have a monopoly as they once did. 30% is very high, and Google has seen that and the day after Apple announces this Google says that they are going to do a very similar thing and only charge 10%. Google has a larger reach and many, many more customers than Apple.
Although an intriguing idea, this will not make much money for Apple.
Oloff Dreyer
I think Apple will be able to succeed in this model. The only problem that might arise is the fact that subsriptions online seem to be quite fresh still as many sites offer information for free. The fact that Apple is trying to get subscription fees seems to be a good one if they can convince their customer base that this is something that they will in fact use on a daily basis. I think the time that it will take to make this model succeed will be quite a long one. I can see them chasing more revenue but I don’t know if this is the right way to go about the whole thing. I think personally this model does not appeal to me that much as I have not really subscribed to many sites and am not comfortable in this field.
Corey Bedard
Apple, being the high powered technology frontrunner that it is, will be able to succeed in this model that so many have failed in based on their large numbered market share. A person would be hard pressed to find a household in North America that doesn’t own anything Apple created, and if all of these households are going to be informed of a thing such as magazine and newspaper subscription service, you can bet that the response is going to be huge. I would venture to say that some Apple lovers, who already have a subscription to Netflix, or other online services might cancel those subscriptions and re-subscribe with Apple just because they are Apple. If you keep giving money to a high-technology company they will just keep coming out with good things right? I for one will continue to pinch my pennies and use the free online sites until the government manages to track and shutdown all of them (it’s taking them a long time).
Warren
I think if any company can pull off the business model of subscriptions it would likely be Apple. Specifically, the iPad is a great medium to read through the news without squinting on a small phone screen. The way they have been able to be a pioneer of their tablet gives them a large stake in their niche. Certainly forty dollars per year is better than buying a newspaper everyday for a dollar coming out to three hundred and sixty-five dollars. There is potential benefit to the newspaper companies that can send digital costing them less than a printing press. Personally I would probably enjoy a subscription if I was an iPad user. It would be very convenient. It would be interesting if the digitized copy would expire or if the material could be saved for later reference. However, I do not sit down and read a whole newspaper very often. For that very reason a paper copy is all I need.
Caley Sinclair
I have found that once Apple sets a price, they will not budge off of it. If they set their minimun sercice cost at 30%, another company can come in and take over. The android marketplace could come in and give consumers a better deal with a lower service cost. The mark up the apple is placing on its subscriptions will not be paid by apple, it will be paid by the consumers like us students. Apple uses itunes as a revenue maker, while other companies like google and rim use the marketplace and appworld to market their product. Soon apple will see the they are reaching the top of the curve, other companies are seeing they way that apple can manipulate consumers and are looking for ways to help consumers.
AS
I think that Apple can make this business model succeed. Apple is a highly recognizable name that has its foot in many doors. If you look at any household, I can almost guarantee that each owns at least one Apple product and well as have an Itunes account. Having the subscriptions available for purchase on the itunes application will allow for this business model to succeed. Having the subscriptions on the internet will also adapt to the increased reliance on the digital world. This business model does apply to me personally. I don’t think that I would subscribe on my Iphone because of the small screen, but I do think that if I had an Ipad it would be ideal. I think that apple still have a lot of marketing left to do on this new business project but it is definitely something that could generate high revenues for them as well as dominating another market share.
Rob C
Apple`s move to make a push for additional apps that require subscription service paid to Apple is a bold move from Steve Jobs. This move not only boasts Apple`s value and significance in the market today, it also backs up its tough talk with its agreement with Netflix to have a portion of the subscription fees due to
Apple if subscriptions are made on iPad or iPhone apps.
Today, Apple`s market share is too large to deny as they are the forerunners and innovators in the look of modern and sleek technological gadgets and ideas. It is no wonder that they continue to grow and cover such large territory with their promotions and advertisements.
Its tough to implement the revenue model in the e-commerce world because there are so much competitors that offer services that are free, therefore earning profitable good revenue becomes difficult. I believe that Apple can make this model succeed because in today’s day and age Apple is the primary product used or thought of in terms of technological tools, especially amongst the younger generation.
Personally this model does not appeal to me because it’s just the major corporations such as Apple making even more extra profits, as the rich get richer.
Kendra
Apple can most definitely make this business model succeed in the current market. The reason being: by getting people to subscribe to (e.g.) netflix through applications, they are losing nothing. Apple is capitalizing on the trend towards a mobile world, and by using applications this only helps the company because they get a share of the profit by getting a cut of the subscription fee. The companies running applications through Apple are the ones exposing themselves to possible risk; the risk of selling subscriptions cheaper, and having to share profit can lead to lowered revenue and shrinking the bottom line is rarely a good thing.
From Apples perspective, this business model appeals to me because it sounds as though it will bring forward extra income with little effort or expense on Apples part. If I were looking for a company to invest in, this business model would entice me to buy stocks with Apple, as it appears to be an obvious money maker.
Wendy Rivers
Apple products are becoming more popular these days, which is causing more companies to produce an app to increase users/viewers. It is understandable for Apple to ask for a 30% subscription service fee because these companies such as Netflix or newspapers are using Apple’s success as a means to increase their popularity. These companies are piggybacking the success as well as advertising their app on iTunes or on Apple devices. Apple is marketing these apps to their customers which entitles them to some sort of compensation. Apple is also being fair about who is being charged. The article mentioned that Apple will not get 30% if the other company brings in a new subscriber; however they get 30% if the subscriber goes through the Apple products to subscribe to these companies.
Travis Sedrovic
Will Apple’s new service be profitable for them? Yes. Why? Because people love Apple. If they came out with an “Apple” line of stationary supplies, it would sell out before “bic”. People’s obsession with Apple is what determines whether or not it will be profitable, not if it is a good product. Is a subscription service the way to go? As we discussed in class, people are reluctant to jump on a subscription in this technology-based era. If you can find the article using google for free, why not do that? Although I don’t consider myself an “apple” guy, I do own an Ipod. Who doesn’t own something Apple these days? Although I will not be jumping all over this opportunity, I do forsee Apple making huge profits. I would google around to see if there is a free version of the subscription, but my parents wouldn’t (and that’s who has all the money!)
Katelynne Swenson
If any company can make this model succeed, it would have to be apple. Apple has taken over many of its marketing areas, and this is just another one. This business model may be one of Apple’s more challenging, but nevertheless they probably will still succeed. If it wasn’t for the iPad, I would have a little less faith in this plan. The iPad is hugely successfully, and I would bet that nearly everyone that has bought into the iPad will buy into the new subscription services offered by Apple. If this plan works, the company will be that much more successful and that much more of a titan in the industry. As mentioned before, subscription services can be a hard sell, but if the right companies buy into this plan, I think that it can be successful for apple.
Dylan B
I love this idea. Moving to university took me away from my poor-quality small town newspaper. In all fairness i miss its silly propoganda. With the simplicity of the itunes store i hope that all small through large newspapers will be able to bring their services to the 21st century. The largest setback for these newspapers is that they have had no simple way of charging for an online newspaper, but with the ipad and an itunes subscription service any startup costs would be paid back in due time. This is an opportunity for apple to make money, but also to open the online marketplace up to many different news services that have only ever been offered in print.
JJ
I have wondered when a service like this would be implemented. I would have to agree with almost every person on the list above in the sense that most households today have at least one apple product, ranging from computers to something as small as the new ipod nano. If you think about it, Netflix will loose 30% of revenue for everyone who signs up with apple, yet their cost of services won’t be much if any lower for these customers. So for all those people that have netflix through their site, like myself, will see the rates raise over time to where netflix might not be in business anymore, or especially in Canada as we do not have the rights to many tv shows or movies. I beleive if this is implemented correctly apple will crush all competition once again and stay ahead of the game with there innovative thinking and technological advancements.
Megan
I feel that if anyone could take on the challenge of coming up with the “online subscription service that could”, it would be Apple. They constantly set themselves apart with their ingenious ideas and never-fail software/hardware updates that seem to blow the general population’s mind. However, I feel that Apple could be pushing itself too far into a corner by forcing its partners to comply with its ever-changing policies. Apple DOES like to flex its muscles and prove to everyone that it will be their way or no way at all. Service providers and other Apple partners may start to change where their loyalties lie if they are forced to change their own business plan too much so that it suits Apple’s standards. I think Apple’s idea of the subscription service is a good one, but it does seem pushy and I could see it backfiring for them. Having said that, there is also a good chance that Apple has more loyalty than I can see, that they will succeed because people love them, and that they will continue to be the top dog of the technology world for the foreseeable future. Unfortunately, we won’t know until it happens, so I hope that Apple has an excellent execution plan ready to go for this project.
M.lee
Although very interesting I don’t believe that this move will be as profitable as they expect. By entering this market, Apple would be competing in markets that have been developed over 100 years. I believe that Apple is making this move to other industries to try and gain bot market share and brand power. As Apple is currently growing very rapidly, they feel that the attraction of the brand can differentiate themselves from the established companies. I am not quite sure how they are going to achieve this as a profitable move. But as the information can be provided for free at other websites it begins to question if apple will limit the specific sites, such as no access to CNN to force customers to purchase the appropriate application. This might also force other companies to jump on the Apple bandwagon.