Friday, February 18, 2011

The implications of Apple's new subscription model

Author: Riley Alexander, MD, MBA

There have been many articles written recently on this blog about the versatility of the iPad as a media consumption device--including medical textbooks and journal articles. Well, just very recently, Apple has announced some rather large changes that may affect this sector of iPad/iPhone usage in a large way--dictating terms of subscription.

This "term" is essentially that Apple requires all subscriptions based apps, of which many are some of the most popular in the App Store, that they have to at least offer the subscription from within the app--and therefore allow Apple to take a 30% cut of not only the app, but the media subscription--periodicals, journals, texts, music, etc.
Some are already calling this "evil," but most are seeing this as a sign of Apple flexing its muscle in this emerging market.

For those out there like myself who are seriously looking at an iPad 2 to replace some of my ridiculously heavy medical textbooks (among many other uses), I'm watching this carefully. If you have an iPad or iPhone already, you know that Apple's own bookstore is not really up to par with the Kindle Store or even Google's bookstore. Considering margins on books are not even close to 30%, I'm hoping this doesn't cause the removal of the Kindle app from the App Store.

While this surely isn't exciting as the launch of a new product, the impact could be just as great in seeing how established publishers react to this as this could affect the entire mobile landscape. With all the competitors to the iPad being released this year, Apple may have inadvertently given them a bonus selling point, as well.

Google hasn't wasted anytime seizing this opportunity to counter and hopefully gain some ground--they've already announced a 10% margin on their digital content service.

It should be an interesting year seeing how this plays out. 
About the author:
Dr. Riley Alexander is a pathology resident at Indiana University School of Medicine, blog "addict" and avid follower of technology. His primary interests revolve around how technology, especially mobile, will create increased efficiency, enhanced physician education and better delivery of care in the medical field. Dr. Alexander is a graduate of Indiana University School of Medicine with a combined MD/MBA, in partnership with IU's Kelley School of Business. Due to this, he is also very interested in management, healthcare policy and non-clinical aspects of the medical field and enjoys exploring non-clinical opportunities for medical students, residents and physicians. He completed his undergraduate education at IU-Bloomington.

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