SUBSCRIPTION WARS! Everything You Need to Know About Google versus Apple

Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) have been getting a lot more competitive since Google launched an ebook store to rival iBook. Now, the two tech behemoths are racing to offer app creators a better cut when users opt to buy content inside apps.

Here’s the tale of the tape:

Apple’s App Subscription Plan

  • In-app payments: Apple keeps 30% of the sale.
  • Publisher’s website: Publisher keeps 100% of the sale.
  • Current Exceptions: Netflix (NASDAQ:NFLX).

Google-One-Pass Subscription Plan

  • Revenue Split: 90% Publisher, 10% Google
  • Purchase-once, view-anywhere functionality
  • Business model flexibility (e.g., subscriptions, day passes, metered access, pay-per-article, multi-issue packages)

As a publisher, I can attest that giving a 30% cut to Apple is completely outrageous. In fact, it makes content unprofitable for all but the largest content producers who have enough scale to absorb the hit. Even for the goliaths, I think a 30% toll will ultimately create a dilemma between funneling customers to the website as not to lose a massive slice of revenues for the convenience of hitting “Subscribe” in an app.

This isn’t the music business that relies on Apple to gain exposure to customers. Apps are competing with the web, HTML5, etc. IMHO, Apple is making itself vulnerable to Google and others willing to take a more sustainable cut for distribution.

Only time will tell …

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