With the launch of the iPad, the value of content is being reconsidered once again. It’s clear that free (the way of Google) isn’t the goal of the publishing industry. As a result, many new iPad owners are faced with the question of whether the book or magazine they own or consume should be purchased again on the iPad.
Similarly, developers are faced with a set of decision on how to appropriately extract payment from consumers. In this post, we’ll take a look at the solution offered by Apple and a host of solutions that exist on the web that are available to the iPad as applications or web sites that charge for views.
To App, or not to App, That is a Question
For content providers that have websites, or an existing relationship with Amazon, the question of whether to push content to Apple’s book store, or to build an app is more complicated than first meets the eye.
On one hand, getting paid through multiple channels makes a ton of sense.
Apple, being very wise is working to find balance in the closed and open ecosystem. Its breakthrough product, iPad, supports web sites, applications like Kindle, and its own book store simultaneously.
On the other hand, it can be a pain to track customer relationships and inventory across multiple channels.
If your content is recurring (weekly, monthly), it is even more complicated. And, if you already have subscribers on your web site behind a paywall, it can be even more challenging to rationalize how to merge these customer populations and price points. In a way, we’re all learning together and competition across channels is going to make it harder in the short term to figure out the right mix.
Distribution Matters
Apple’s StoreKIt Framework is the tookit for developers to enable payments in iPhone and iPad applications.
Apple has evolved its own rules and technology in the last several years to do this, and in 3.0 released last summer offered the Store Kit API. When first launched, only paid apps were able to offer recurring payments through Store Kit. However, in one of the more recent updates offered by Apple, the company changed the terms of Store Kit to allow developers to set the price of their application for “Free” and then to offer updates or subscriptions as additional payments.
In the release of iPad this week, we saw veterans of the industry release amazing reader applications, but as reported in The Huffington Post, price does matter, and parity across offerings is still a question to be answered.
Amazon offers its books and other goods via the iPhone in its Kindle for iPhone applicaiton, in this free application, Amazon is the back-end for payment and Apple is the distributor of the application.
Amazon, like Apple has a direct relationship with publishers to offer their inventory in its stores. In recent weeks, it has been reported that intense negotiations have been underway between the publishers and Amazon on pricing and margin. As reported by AP, Amazon has seemingly conceded a new level of pricing control to publishers.
Amazon and Apple are setting the pace for the future of computing. Both are engaged with content providers to work out all the kinks of pricing in this new world. We wonder if there is a way that both can win, as certainly they are both extremely well positioned and successful in payments, computing, and content distribution.
Getting Paid is Hard – However Recurring Billing is a Real Pain
In contrast to these end-to-end platforms for distribution, we took a look at companies that focus on the process of payment itself as offered as a platform to content and application developers.
Aria Systems announced a new release of its PCI compliant platform to support iPad today.
The company’s core vision is to “Simplify Your Billing”. To do that, the company is making a bet that content providers will want to extend their relationships with consumers via the iPad and integrate their web applications by announcing a future integration with Safari.
Aria Systems brings a plug-and-play solution to integrating with back-end systems that a company may be running, including QuickBooks and SalesForce.com. It also specializes in dealing with the process of recurring billing transactions, which can be a difficult thing to work out in the context of subscription revenue recognition. The platform is described as being PCI complicant, which can be a huge benefit for content and application owners that don’t want to take on the burden and liability of all of the controls of handling credit cards and personal privacy.
Chargify is another software-as-a-service application that suggests its core value being “Build Your Business, Not Your Billing System”. We think this is the value-add that both Chargify and Aria bring to companies that want to offer recurring payments. Many do not have the time to also become experts in the hard word of accounting and compliance.
The Chargify solution is offered as a set of APIs to integrate into an existing application and offers an iPhone application to peer into the payments processes in play.
Here’s a quick view of how it works.
Content Distribution Enters Into a New Chapter
We are left wondering whether Apple or Amazon will extend their reach further beyond their current distribution.
Will they grow their payment solutions to become the center of gravity for all payments for content on the web?
Or, will solutions like Aria Systems and Chargify get closer to the distribution channel and offer app developers and content owners they can have a deeper relationship to consumers when they remove distribution as the driver of payments? We expect that in the next years content providers will require the best of both worlds will require both great distribution and simple billing.
Perhaps we’re asking the wrong question by focusing on what Rupert Murdoch is doing.
Maybe we should ask what Wolverine would do.
After all, content is king.
Are you looking at recurring payments for your content or application? In 2010, is it possible to choose a single solution?
