Google exploring digital newsstand

By Dow Jones Newswires-Wall Street Journal
Posted Jan. 3 at 6:22 a.m.

Google Inc. and Apple Inc. have stepped up their battle to win over publishers, as the two companies vie to become the dominant distributor of newspapers and magazines for tablet computers and other mobile devices.

Google is trying to drum up publishers’ support for a new Google-operated digital newsstand for users of devices that run its Android software. With the effort, it is chasing Apple, which already sells digital versions of many major magazines and newspapers through its iTunes store.

The e-newsstand would include apps from media companies offering versions of their publications for smartphones or tablets running Android, say people familiar with the matter. Google hopes to launch it in part to provide a more consistent experience for consumers who want to read periodicals on Android devices, and to help publishers collect payment for their apps, these people say.

Media executives who have talked to Google say details of the newsstand venture and its timing remain vague. They add that it’s possible the venture won’t materialize.

Google has discussed its intentions with a range of publishers, including Time Warner Inc.’s Time Inc. unit, Conde Nast and Hearst Corp., according to people familiar with the matter. The three publishers declined to comment on any talks.

In recent weeks, these people say, Google has told publishers it would take a smaller slice on any sales they make of Android apps than the 30 percent cut Apple typically takes on iTunes sales. Google has also proposed giving publishers certain personal data about app buyers to help with marketing related products or services.

Inside Google, the e-newsstand initiative is being spearheaded by Stephanie Tilenius, its vice president of e-commerce, according to two people familiar with the matter.

“We’ve consistently said we’re talking with publishers about ways we can work together, including whether we can help them with technology for subscription services. We have nothing specific to announce at this time,” Google said in a statement.

Apple, meanwhile, is readying several changes in iTunes to address publishers’ frustrations with the online store, according to people familiar with the matter. Among the changes, Apple would make it easier for publishers to sell subscriptions on iTunes, in addition to single issues, with Apple keeping 30 percent of the tab.

That would allow publishers to offer discounts for longer-term commitments, as they do in print. And, because each new issue would automatically be sent to a subscriber’s iPad or other device, the publisher wouldn’t have to rely so much on buyers making frequent visits to iTunes.

Apple is planning to share more data about who downloads a publisher’s app, information publishers can use for marketing purposes. According to people familiar with the matter, Apple would ask consumers who subscribe to an iPad version of a magazine or newspaper for permission to share personal information about them, like their name and email address, with the publisher.

Some publishers remain unhappy with this arrangement because they think few customers would opt to share such data, according to these people.

Apple has been discussing the changes with publishers for several months, and some publications are expected to implement them early this year, the people say.

In a statement, a spokeswoman for Apple declined to comment, except to say its app store is “growing rapidly with great publications.”

Google and Apple aren’t the only ones searching for new ways to attract publishers to tablets and e-readers. Inc. recently began allowing customers to read editions of periodicals available for its Kindle e-readers on Kindle apps for Android devices, allowing publications to make those titles available in color. Barnes & Noble Inc. has started selling digital magazine and newspaper subscriptions for its recently released Nook Color e-reader. Hearst, publisher of Good Housekeeping, Cosmopolitan and Esquire, offers subscriptions to all 14 of its titles on the device.

News Corp., which owns The Wall Street Journal, had been trying to sign up publishers for an online newsstand where consumers could pay to access digital publications from a variety of media companies, but it shelved that project this past fall.

The remaining rivalries could speed up the migration of periodicals to tablets, providing publishers with more ways to sell their titles and more control over the sales.

A similar battle between Google, Amazon, Apple and Barnes & Noble has already begun to reshape the burgeoning market for digital books, helping publishers win more flexibility in pricing their titles.

While many media companies have rushed to build apps for iPads and Android tablets, they say their current inability to sell standard subscriptions through iTunes, a shortage of data about app buyers and tough business terms are keeping them from investing more in the effort.

Some publishers say customer data is essential because it allows them to identify app buyers as either existing or new customers and give or sell them access to the same titles in print, online or on other devices.

“We know consumers want an ongoing relationship with our print and digital products, and we are working with all partners to achieve that,” says Monica Ray, executive vice president of consumer marketing at Conde Nast, which has developed iPad editions of magazines including GQ and the New Yorker. “We also need commercial terms that we’re comfortable with.”

“In a subscription environment, we must maintain a direct relationship with the consumer,” says Jack Griffin, chief executive of Time Inc. which sells single issues of Time magazine for the iPad at $4.99 each.

Some companies already offer subscriptions through iTunes, but they have largely cobbled them together. The Economist, for example, sells bundled access to its website and iPad and iPhone apps for $110 a year. Newsweek sells 12- and 24-week subscriptions to the iPad edition, though Apple handles the transaction and Newsweek doesn’t know who the subscribers are.

The Wall Street Journal sells iPad subscriptions for $3.99 a week; existing subscribers to the newspaper get full access to the iPad edition at no extra charge.

As publishers push for Apple to help them sell subscriptions, many are still leery of doing so on the tech company’s terms. Apple has told publishers that it will continue to insist that iPad-only subscriptions be sold through iTunes, according to people familiar with the matter. As a result, some publications say they may choose not to offer an iPad-only subscription, but to bundle access to an iPad app with their own products, so they can use their own billing systems instead.

Others say they are worried that Apple will make it harder to find apps that don’t use its billing system, according to these people.

Apple declined to comment.


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