The Content Subscription Wars

by Ian Rosenwach on 2.16.2011

This week both Apple and Google announced new Content Subscription Platforms for Publishers.  Google calls their One Pass while Apple’s runs within the App Store.   Google Checkout powers the payment component of One Pass.

This will be an uphill fight for Google, for at least two big reasons:

  1. I don’t know exact numbers, but expect that iTunes has exponentially more customers than Google Checkout
  2. Challenges at Google due to resistance from internal Advertising groups

In short, the iTunes + iPhone ecosystem has created network effects and huge barriers to entry.   These obstacles are certainly not impossible to overcome though!

What “owning the Customer” means

MG Siegler makes some great points in his TechCrunch article.  Google One Pass is far more generous in sharing customer data with Publishers.  I’m sure Google realizes the two big challenges I mention above.  Sharing data is one way they could be more Publisher-friendly and try to overcome these hurdles.

But it also hurts Google.  If a Publisher has the consumer information, they can market directly to that consumer and build that relationship.  Once that publisher-customer relationships gets strong enough, or if Google One Pass doesn’t pick up steam, they could easily remove that from the Google ecosystem and simply have a separate, direct relationship with the customer.   Of course publishers like this, but it poses risks for Google.

Second, I don’t know if it’s as simple as “publishers are getting the shaft” in Apple’s solution.   If Apple can bring new customers to publishers because of the convenience of their subscription plan, that’s a good thing for Publishers.  This is a key question – will Apple bring new subscribers to publishers that launch the subscription plan?

Steve Jobs clearly thinks so, from the Apple post –

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

The Future of Content

Consumers are spoiled today.  There’s worlds of content available for free on the web, supported by Advertisements that consumers don’t even have to look at.   This is what Google is trying to do by making information “universally acceptable”.  One has to consider this Apple vs. Google showdown in the context of the broader Content ecosystem.

Apple believes that content creators should be financially rewarded for their creative efforts.  I’m sure Google does as well, but they also believe customers should have unrestricted access to content.

Or at least they have until now.  One Pass signals a significant shift in Google’s approach towards Content.  No longer should everything be ad-supported by AdSense and DoubleClick.

The real question is – when does the subscription model come to iTunes!  I use Rdio – it would be hard to build a better subscription-based streaming service.

Further Reading: Subscribing to Apps on the Apple TV

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