iPad 2's Biggest Enemy May Be Apple's Subscription Plan

28.02.2011

"Apple has the industry over a barrel in this regard, and you can't fault the company for exploiting its advantage for economic gain," writes McQuivey, adding, "However, you can fault the company for choosing not to anticipate that seeking a 30 percent toll would bring any subscription model of any type to its knees."

Unlike book publishers that make their money on a best-seller, subscription services vie for repeat business by offering a cheap price (think: smaller margins). This means that Apple's 30 percent cut is too much for many subscription services to handle in the long run.

"There is not a subscription business alive that can bear that additional cost without passing the cost along to subscribers," writes McQuivey, calling Apple's service "short-sighted."

McQuivey figures a tablet-based subscription fee will eventually settle at less than 10 percent, perhaps in a couple of years. In the meantime, Apple has given Google a great starting point with One Pass, and publishers a much needed alternative.

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