Apple rolls out digital subscription service

By Reuters
Posted Feb. 15 at 8:55 a.m.

Apple 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.

Apple will process all payments and keep 30 percent of the revenue, it said on Tuesday. But it will also allow publishers to sell digital subscriptions on their websites — at prices equal to those offered through the App Store. In those instances, Apple will not share in any revenue.

“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,” Apple Chief Executive Steve Jobs said in a statement. Jobs is currently on leave.

What to do with customer data has been one of the main sticking points in agreements for a subscription service. The current plan will allow customers to decide how much information to supply publishers when they sign up for subscriptions.

How that information is be used will then be decided by the publishers — who are particularly protective of subscriber data such as names, addresses and credit cars because it helps them court advertisers and market new products to existing readers.

The decision to broadly introduce a subscription service comes just weeks after Apple teamed up with News Corp to launch The Daily, which was the first subscription product available through Apple’s iTunes store.

At the launch of The Daily earlier this month, Apple hinted that the company would soon make an announcement on subscription services for other publishers.

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