Today, the media and tech worlds (aren’t those the same these days?) are buzzing with the news of Apple’s new content distribution model for publishers through the App Store. In a nutshell, content publishers can sell subscriptions to their digital magazines, newspapers, video, music, and anything else through the App Store; for any new subscribers coming through the App Store Apple takes a 30% cut, for any existing subscribers Apple gets nothing. Sounds great right? Well…that depends.
The App Store is a phenomenal success – hundreds of thousands of apps available to millions of people with iPhones and iPads in almost 100 countries worldwide. It’s an amazing way to access and distribute your goods to an established and growing audience looking for great apps and content. And that’s the kicker…access and distribution. It’s still up to you to create and amazing app or service people want, Apple simply helps you get it to the masses. So, the App Store is perfect if you need a ready to go distribution platform, but if you already have access to millions of users does the App Store make sense?
1. Big Company (Media/Cable/Tech) with Lots of Existing Users:
- You have: Lots of users so you have a great distribution channel that got you those users (and they’re use to it).
- What To Do: Keep pushing through that proven access channel and keep your revenues! Don’t ignore the App Store, it’s the first place iPhone/iPad users will look so have your goods there as well don’t treat it as destination #1.
- Result: Targeting and promoting through your existing distribution channel means you reach your audience and keep your revenue. You also satisfy get the exclusive iPhone/iPad users that flock to the App Store.
2. Big Company (Media/Cable/Tech) without Existing Users (i.e. you’ve never done this before):
- You have: Lots of users but have never sold and app or digital service before (sorry, but its 2011, wake up!)
- What To Do: Hit the App Store first; it is the single biggest ready-to-go distribution channel there is with an entrenched audience. BUT also start promoting on your web site, literature, offline…and very quickly make sure you have a non-iOS app (that means an app that runs across other phones and devices not just iPhone/iPad)
- Result: You get reach and users for your services…as long as its good and people want it. The 70% you get from App Store sales is worth the instant access to millions of users. You amplify this reach with your massive marketing budget and can start driving sales both on and off the App Store. Welcome to the digital world.
3. Small Company without Lots of Users (or any):
- You have: What you think is a kick ass app that people are going to love. It’s time to sell!
- What To Do: Hit the App Store first….see #2. You don’t have a huge marketing budget so go guerilla! Tweet, blog, attend events, talk about your app and most importantly listen to users and friends. Also, get on other platforms fast (personally I think it’s better to build cross-platform from the outset and use service to get platform specific).
- Result: See #2
Packaged Goods, Fast Food, and Digital…You Buy Here
I’ve long-held the notion that for all the amazing devices Apple has given the world, it is a content company first. Devices make millions (ok, billions) but they are a means to an end. That end is having you get all of your goods through one store and the owner makes a killing for life. Can you imagine if absolutely everyone bought everything they needed only from one store? Sure there will be some specialty shops left hanging around for the stuff the store doesn’t want to sell, but for everything else…and I mean EVERYTHING…people went to one store?
Sounds crazy in the real world but consider this:
- Walmart: You bought everything here (some already do): packaged goods, food, lumber, whatever
- Taco Bell: You bought all your fast food here (hey they won the fast food wars in Demolition Man!)
- Disney: if you go on a vacation you’re visiting a Disney property…they own it all
- Virgin Airlines: they’re the only airline there is. People can sell tickets but they’re all selling through Virgin
Ok, you get the picture and its insane right? I mean that’s why we have monopoly laws. But, let’s add one more to the list…
- The App Store: you buy all of your digital goods here. Music, Magazines, Movies, Newspapers, Apps, whatever
So, guess it’s not that crazy is it? Sure you can get some stuff other places but it’s just so easy to go to one spot and get everything you want.
This is How You Build a Kingdom
Kudos to Apple. Just putting “fair compete” and any ethical concerns aside for a second (and there are many), they continue to build a phenomenal business:
- Release killer devices that people love, building a huge audience and user base
- Provide a way for companies to sell their stuff to this hungry huge audience
- App Store content becomes a one-stop shop for digital
- People buy more devices because they want to shop at the one stop
- Companies feed the shop with more apps and services because that’s where everyone is
- Set the rules that everyone has to play by..and they will because you’re the best and biggest game in town
- Collect all the consumer data you can: credit cards, personal, behaviour, etc.
- Launch another killer product and attack a new market (finance industry here we come!)
Power is with the…Publishers…and the People?
It’s truly amazing what Apple keeps accomplishing however, whether the new distribution abilities ultimately succeed for fail depends on how content publishers and service providers react. Many in the music business fought iTunes until succumbing to it as an evil necessity to their bottom line. But before iTunes there was already rampant demand for online music download…and the labels didn’t already have online distribution. This time around its different. People already get their video content from very established and popular players suck as Netflix, Hulu, or their Cable provider’s on-demand service online. Print publishers are just starting to create the market of digital magazines and there’s no telling if people will want this stuff. Apple recognizes this with the provision that they don’t take a cut on any existing subscribers buying through the App Store, but they also restrict any links from apps to purchase stuff outside the App Store. Basically, send your users here and we’ll do what we can to make sure they stay here.
Unlike Google, which will throw great tech out there to see if it sticks, Apple does things deliberately. Not everything succeeds (at least not right away…Apple TV), but everything is meant to change a market. Whether we’re on the cusp of a massive change in publishing remains to be seen.