Apple’s Digital Newsstand Just Disrupted The Publishing Industry

How much pricing power exactly does Apple have over publishers desperate to figure out a digital strategy that results in paying subscribers? A hell of a lot—at least that is what Apple is betting with its new subscription billing service. Apple is taking a 30 percent cut of all digital subscription revenues. Just take a moment to think about that for a second.

Up until now, Apple took a 30 percent cut of one-time purchases in iTunes. So the 30 percent number doesn’t seem strange, at least not to consumers. What do we care how the money is split up as long as we all of these digital goodies are affordable? But publishers and other media companies with subscription businesses (cough, Netflix, cough) care very much. Apple is saying if we deliver a paying customer, we will take 30 percent of their subscription dollars in perpetuity as long as they consume your media on our devices.

You could argue that iTunes is the new digital newsstand, and so it deserves a cut. True, it does deserve something, but let’s compare what Apple wants to take with what a real newsstand collects. Typically, magazine companies take as much as 75 percent of the cover price of a magazine sold at a newsstand, which shows who has the pricing power in that relationship. But that is on a per-issue basis. The newsstands are merely lead generators which get people to sample magazines and newspapers before a portion of those people convert to paying subscribers. The newsstands don’t get anything extra for helping to bring in a new subscriber, forget about an ongoing cut of the subscription fee. Of course there are services that deliver subscribers to publishers, but even they don’t get an ongoing cut of the subscription. It’s more of a lead-gen type deal.

Apple is now telling media companies to forget about the way they’ve been doing business for decades. There are new rules in its digital newsstand. And, while some big publishers like might try to hold the line or go over to Android, in the end if consumers decide they want to read digital magazines on their iPads, they may have no choice but to do what Steve tells them to do.

And that could kill their business. Not only would they be handing over a substantial portion of their revenues to Apple, but they get virtually no data in return—data about customers. It’s that credit card data they use to do their consumer marketing and sell those readers to advertisers. So yeah, there’s going to be lots of resistance to Apple’s subscription scheme. No wonder the antitrust knives are already out. In the end, the old guard will fight it as long s they can, while new entrants with nothing to lose will build readerships on the iPad. It’s probably never been a better time to start a digital magazine.

Correction: An earlier version of this post reported that magazine publishers collect 95 percent of newsstand sales, which came from a source at a magazine publisher. After this figure was questioned in comments, I went back to my source who admitted he was wrong and suggested that for a large publisher with clout 70 to 75 percent was a better figure. Some commenters say it is closer to 50 percent, which may be true for smaller publishers. Nevertheless, these only apply to single issue sales—the equivalent of a paid download in the App Store—not ongoing subscription fees.

Photo credit: Susan NYC

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Constant Contact Buys Social CRM Startup Bantam Live For $15 Million In Cash

Online marketing company Constant Contact has acquired social CRM startup Bantam Live for $15 million in cash, subject to certain post-closing adjustments.

Bantam Live, which has raised $1.7 million in funding, provides an online workspace for business teams that has “social CRM” features, which include a real-time dashboard stream of messaging and workflow activity along with a native CRM application. Members can share information, track activity, and manage contact and company relationships both inside and outside the organization via a real-time activity stream.

Bantam extends a company’s sales outreach and customer relationships out to the social Web. For instance, with Bantam, a user can search Twitter, import a new contact with one click, initiate task workflows with team members to engage this new contact, and then converse with the new contact for lead generation. Bantam also integrates with Facebook as well.

The company debuted its product at TechCrunch’s RealTime Stream CrunchUp two years ago and exited beta early last year.

Bantam’s CEO and founder John Rourke told us that he was pursued by a couple of public companies to be acquired but chose Constant Contact because it was the best fit.

Bantam Live’s technology will help offer a communciations and social CRM product to Constant Contact’s more than 400,000 small business customers, helping them better track, measure and increase customer engagement. Social CRM functionality will eventually be built into all of the
company’s products, including a paid social media marketing offering, which the company
expects to release in the second half of 2011.

Last year Constant Contact acquired social email and messaging manager Nutshell Mail.

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Apple Keelhauls Music Streaming Services

Lots of hullabaloo about Apple’s iOS subscription product. The basics – everyone pays 30%, you can’t charge more on the iPhone for the product than you do on other platforms, and you can’t link out from the app to the browser to handle subscriptions without Apple being in the middle. It’s not even clear that apps will be able to just post a message telling people to create an account from their computer and then come back to their iPhone and use the app.

That’s all well and good for apps that have zero marginal costs. But for some content providers, specifically the music streaming services like MOG, Rhapsody, Rdio, etc., this is crushing. It effectively pushes them off the iPhone, iPad and other iOS devices. They’ve been keelhauled.

That’s because they don’t have 30% margins to begin with, the labels and publishers take somewhere around $8 of the $10 subscription fee. We saw Rhapsody balk at Apple earlier today. On Wednesday morning, we hear, most of the online music streaming services will be issuing a joint statement condemning the policy.

Does Apple’s move violate antitrust laws? The Wall Street Journal seems to think probably not. Of course, if Apple now launches their own music streaming service, that may change. Apple will be the only company that doesn’t have to pay Apple’s 30% subscription fee, so they’ll be the only company that can offer a $10/month music streaming service without losing money on every user.

How does this all play out? We hear the music labels are torn between waging an all out legal war against Apple and just capitulating and lowering their fees enough to keep the streaming services in business.

The problem isn’t that Apple is asking for 30%. It’s that the apps can’t charge more to cover those costs. In the end Apple may get what they’re asking for, but if they do it will only be because the labels cave and because Android has gained so much market share that Apple may be able to effectively beat an antitrust action.

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Did Intel Just Leak The New MacBook Pros?

Could his beautiful, svelte, and decidedly black laptop be the new Macbook Pro that should land in stores on or around the ides of March or early April?
Probably not, but a girl can dream. Why does it look fairly convincing? Well, as 9to5mac points out, Intel has leaked future MacBooks before and there is some evidence of new MacBooks in the pipe for Best Buy and others.

However, from the pixels and having seen a few Photoshops in my day, I suspect this is a placeholder laptop. The Air-like styling and black case are two huge red flags for me – they probably wouldn’t dump the styling during a routine update – and Intel couldn’t be that stupid, could they?

via 9to5

CashStar Raises $5 Million To Send You Gift Cards On Facebook

Digital gifting platform CashStar has raised $5 million today in a Series B round lead by Passport Capital and Allen and Company. In the same space as BlackHawk, First Data, Gift Tango and Swag, CashStar offers SaaS and white-label solutions for big brands who want to implement digital gifting systems.

With “ten times” as many customers as anybody else and partnerships with hundreds of retail brands including Starbucks, Coach, Williams Sonoma, Staples, Cheesecake Factory and The Gap, CashStar helps partners sell tens of millions in giftcards annually. It also offers an extensive range of gift card deployment options, including eGift cards, via Facebook and through your mobile phone.

Companies that partner up with CashStar on digital gifting end up seeing huge returns, for example on Christmas Eve partner Coach saw that gift cards made up 28% of total online sales. Starbucks, which just launched their CashStar eGift program, has yet to implement their deeper Facebook integration, but when it does you’ll be able to complete actions as simple as posting a cup of coffee to a friend’s wall. Home Depot is now experimenting with video gifting.

CEO David Douglas Stone holds that buying a gift is a personal expression, so the format you receive it in also has to be personal and reflective of the times, “Most of the companies that compete in the card market are still living off plastic.”

Stone plans on using the funding to increase the strength of CashStar’s retail network, explore other digital gifting options, increase the mobile CashStar experience as well as to hire more talent. “We’re going to continue to build the market from plastic to digital,” he says.

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