Apple’s iPad is likely to attract newspapers with a revenue-sharing model soon.
Apple is planning to lend a subscription-based revenue model to newspapers for iPad, an offer that is bound to make newspaper industry happy to monetize their content.
Roger Fidley, head of digital publishing at Donald W. Reynolds Journalism Institute in Columbia, Mo., told the San Jose Mercury News that Apple would likely take a 30 percent of subscription revenue sold through its Apps Store and 40 percent of the ad revenue.
Fidler said that newspapers are not charmed by the offer as they expected to pay an upfront fee rather than the revenue-sharing model.
Newspaper publishing industry is in a quandary regarding its subscription-based revenue model. It ceded control of the model when it made its content available for free online. Since then the industry has been struggling to wean customers of the free online news feed.
The onslaught of smartphones and tablets as a new medium of delivery has offered some hope to the erstwhile industry. The chief driver will be the development of apps for these devices, as the success of these devices depends largely on the number of apps they support.
The current trend of creating an ecosystem of developers and apps around the content is a new strategy that newspapers may intend to emulate. Recently, USA Today exposed its data via APIs for the developer community to create apps to create new channel of delivery and to give exposure to its content that failed to garner sufficient exposure.
Amazon's strategy to create its eReader Kindle around its offering is a similar example. As integration between the product platform and delivery medium thickens, content providers are moving into non-traditional domains and are transforming into technology companies.
Companies are opening their systems to third-party players to generate competitive advantage. The newspaper industry is sitting on huge proprietary data assets that can be leveraged upon by technology developers.
Currently, prominent newspapers like the New York Times, WSJ and Washington Post offer apps for Apple devices.
The subscription plan offered by Apple has a caveat as it strikes at the heart of newspapers business model, that is, ad revenue but sharing the revenue is something that may not be palatable for the age-old publishing industry. However, with a host of Android phones in the fray, newspapers could haggle over the terms with Apple.
For Apple, the subscription plan adds another product in its offering as it can use the regular news editions to differentiate its iPad from Kindle and Nook.
However, for the news industry, which is in search of a viable revenue and delivery model, Apple could end up as a savior it was looking for.
This article is copyrighted by International Business Times, the business news leader