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Apple to Newspaper Publishers: Drop Dead

Apple (AAPL) CEO Steve Jobs has put his foot down: no free iPad newspaper app access for print subscribers. It's bound to make the publishers wince -- and seek any alternative to the Apple way of doing business.

The desire to provide free app access to existing subscribers is easy to explain: they expect it. Consumers don't like to spend money multiple times to get a single product or service, as a colleague, Rob O'Regan, notes:

Users are proclaiming they won't pay full newsstand price for iPad editions. Existing print subscribers wonder why they have to pay twice for the same content. Still others complain about the bait-and-switch tactics of offering a free app that doesn't offer any real content but serves only as a placeholder for in-app purchases of single editions.
That's why newspapers have wanted to keep print subscribers happy, especially as they've been drifting off without encouragement for years. There have been long-standing rumors about an iPad newspaper subscription plan. Publishers and Apple were still far apart in December, but a subscription service is supposed to debut soon.

The question is critical for publishers because newspaper iPad apps kill paper subscriptions. So the publishers want to make the iPad version free for paper subscribers to keep them.

However, Apple has contacted a number of European newspaper publishers and told them that they can't offer free app access to print customers. Once the subscription service is up and running, consumers will be asked to pay twice.

Why? Probably because Apple doesn't want to give up its 30 percent cut of sales through iTunes. If existing subscribers get a freebie, it's that much revenue that travels outside of Apple's control. Now the publishers are in a tight squeeze. If they forego the iPad, they run the risk of losing subscribers to some other app. If they stick with Apple, they lose 30 percent of that business, lowering their already battered revenues.


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