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We all know that a digital business practice is totally mainstream when it is covered by the New York Times, simply because of the broad nature of the NYT audience. This weekend, they covered FT’s success in mining customer data from its over 200,000 subscribers as a key to its success – so far uncontroversial, but at the conclusion of the article, finally was raised the role of mobile devices in driving subscription revenue for publishers and the role of Apple in recently attempting to not only tap into the revenue stream, but also deprive publishers of the valuable customer data which enables product improvements, increased advertising yields, and sustains quality journalism.
But the industry will work around practices that stand in the way of long term success. Apple has done a tremendous amount to advance the digital media sector, but the sector will untimely ensure it’s own success with or without Apple. I am increasingly feeling a sense of deja vu. We must assume that they have a plan to ensure they avoid a repeat of the 1990s Mac vs PC era decline of the closed proprietary platform, a lesson most certainly learned over in Cupertino. The question that arises is did they also learn from the mistakes of another once visionary giant – AOL? Clearly the lesson that trying to control consumer behavior within any type of walled garden or proprietary device is be known to anyone who has been in the digital world for the past two decades.
This industry is resilient and the bold ones with a great consumer vision may choose to sacrifice customer data in the short term to achieve scale using Apple’s platform, but they will reach a point where a greater amount of control of their own business outweighs the distribution provided by iTunes. We have seen this model before, in fact, it was adopted by Google in their early days. The device landscape may experience plenty of ‘copycat’ products as Jobs taunted during the iPad 2.0 launch, and no one is disputing that the iPad is a phenomenally transformational device, but for publishers and others pursuing a subscription business model, there will be choice.
The philosophy of working together to increase the size of the pie and then dividing the pie according to value contributed was not invented by the digital industry, though it has been a good predictor of success. What Google has ultimately provided both on and off of google.com is an advertising platform adhering to this very principle. The very long tail of publishers provide audience, context and reach; Google supplies advertisers, the technology to serve relevant advertising across a range of formats, and data about performance – a model they are looking to replicate through their One Pass Subscription Platform. Facebook provides a platform too, but so far offers reach with limited monetization for third parties. Facebook is already moving to make more of the data they collect more available to third parties so they appear to understand the ecosystem build around them. The industry will work around the monetisation challenge while Facebook adapts. In the end, the sharp customer focus that has driven success for the Financial Times in digital will be replicated by other publishers and will allow them to choose how they work with Apple.