When the app economy becomes the real economy

As the lesson of the FT shows, the App Store isn't quite ready for the economic importance Apple see

When Tim Cook, CEO of Apple, announced the new iPad yesterday, one of his selling points was that the new retina display could print "text sharper than a newspaper". Three years ago, this might have sounded like a threat to publishers, but these days it's closer to a promise.

There is broad agreement that, where the internet disrupted journalism in a way that threatened the ability to make money from content at all, the second generation of digital news presents more hope.   Readers on smartphones, and especially tablets, have shown a willingness to pay for the journalism they read, even when it is available for free elsewhere. In turn this may allow the transition to digital to be -- if not quite painless -- then at least not as painful as it might have been.  

But with new territory has come new conflicts. One of the big promises of digital is the fact that it does away with the printer, the distributer, and the retailer -- and their financial cut. Yet new middlemen have sprung up to take their place. Why go through all the hassle of a switchover just to give Apple -- and it is invariably Apple -- 30 per cent of everything you take, which is what it demands to be stocked in its App Store.  

For the most part, publishers have grumbled, but accepted the company’s terms. After all, there isn’t so much a tablet market as an iPad market; it’s pay to play, or get out.

Last summer, however, the Financial Times took the latter option. It coded an app that ran entirely in the browser, thus skipping Apple altogether.  

At the Press Gazette News on the Move conference yesterday, FT.com managing director, Rob Grimshaw, went into a little more depth as to why his paper made that decision.

As well as avoiding the 30 per cent cut it would have to pass on to Apple, building a web app allowed the FT to consolidate its development process, moving from focusing on multiple platforms (not so much of an issue in the tablet market, but a major concern in smartphones) to just one. But the real issue for Apple was the FT's concern over subscriber data.

When subscribing to a publication through the App Store, readers are given the choice as to whether or not to share their personal details with the publisher, and a significant proportion opt out. This leaves the publisher essentially clueless as to who a lot of their readership are, which affects two major areas: advertising, and retention.

Ad sellers are willing to pay a lot more to deliver targeted campaigns (think how much more Rolex would pay to be certain to advertise to a fund manager than, well, me), and the FT need to encourage renewals -- a big deal when the cheapest subscription is £270 a year.  

Grimshaw estimated that the value to the FT of this information is between 25 to 30 per cent of the value of the subscription. In other words, a user coming through the App Store was worth between £145 and £160 a year less than one subscribing through the FT’s own website.

So the FT has a pretty big motivation to leave. What is interesting is how comprehensively this outweigh’s Apple’s motivation to retain the charges and restrictions.

The App Store is there to make Apple’s products more attractive, not to make huge amounts of money for the company. Seven years of the iTunes store generated just $1bn in profit -- the same amount the iPad made in just one quarter. An iPad with apps is more valuable than an iPad without; and apps with strong customer protection are more valuable still.

And yet, in doing so it has caused a very important developer to bail ship, and create an alternative experience that -- despite being a world-class example of what it is -- is unarguably worse for their customers. We can’t know the value of those restrictions to Apple, but it is unlikely to be anywhere near £150 per user per year.

It's not clear if there is an easy solution to this battle of wills, but it certainly seems like a market inefficiency. And with Apple loudly trumpeting its $4bn app economy, inefficiencies in its market are fast becoming inefficiencies in everyone's market. This isn't a cottage industry anymore, and it needs the scrutiny to ensure that.

The old FT app, before the company was forced to pull it. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Four times Owen Smith has made sexist comments

The Labour MP for Pontypridd and Jeremy Corbyn’s Labour leadership rival has been accused of misogynist remarks. Again.

2016

Wanting to “smash” Theresa May “back on her heels”

During a speech at a campaign event, Owen Smith blithely deployed some aggressive imagery about attacking the new Prime Minister. In doing so, he included the tired sexist trope beloved of the right wing press about Theresa May’s shoes – her “kitten heels” have long been a fascination of certain tabloids:

“I’ll be honest with you, it pained me that we didn’t have the strength and the power and the vitality to smash her back on her heels and argue that these our values, these are our people, this is our language that they are seeking to steal.”

When called out on his comments by Sky’s Sophy Ridge, Smith doubled down:

“They love a bit of rhetoric, don’t they? We need a bit more robust rhetoric in our politics, I’m very much in favour of that. You’ll be getting that from me, and I absolutely stand by those comments. It’s rhetoric, of course. I don’t literally want to smash Theresa May back, just to be clear. I’m not advocating violence in any way, shape or form.”

Your mole dug around to see whether this is a common phrase, but all it could find was “set back on one’s heels”, which simply means to be shocked by something. Nothing to do with “smashing”, and anyway, Smith, or somebody on his team, should be aware that invoking May’s “heels” is lazy sexism at best, and calling on your party to “smash” a woman (particularly when you’ve been in trouble for comments about violence against women before – see below) is more than casual misogyny.

Arguing that misogyny in Labour didn’t exist before Jeremy Corbyn

Smith recently told BBC News that the party’s nastier side only appeared nine months ago:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.”

Luckily for Smith, he had never experienced misogyny in his party until the moment it became politically useful to him… Or perhaps, not being the prime target, he simply wasn’t paying enough attention before then?

2015

Telling Leanne Wood she was only invited on TV because of her “gender”

Before a general election TV debate for ITV Wales last year, Smith was caught on camera telling the Plaid Cymru leader that she only appeared on Question Time because she is a woman:

Wood: “Have you ever done Question Time, Owen?”

Smith: “Nope, they keep putting you on instead.”

Wood: “I think with party balance there’d be other people they’d be putting on instead of you, wouldn’t they, rather than me?”

Smith: “I think it helps. I think your gender helps as well.”

Wood: “Yeah.”

2010

Comparing the Lib Dems’ experience of coalition to domestic violence

In a tasteless analogy, Smith wrote this for WalesHome in the first year of the Tory/Lib Dem coalition:

“The Lib Dem dowry of a maybe-referendum on AV [the alternative vote system] will seem neither adequate reward nor sufficient defence when the Tories confess their taste for domestic violence on our schools, hospitals and welfare provision.

“Surely, the Liberals will file for divorce as soon as the bruises start to show through the make-up?”

But never fear! He did eventually issue a non-apology for his offensive comments, with the classic use of “if”:

“I apologise if anyone has been offended by the metaphorical reference in this article, which I will now be editing. The reference was in a phrase describing today's Tory and Liberal cuts to domestic spending on schools and welfare as metaphorical ‘domestic violence’.”

***

A one-off sexist gaffe is bad enough in a wannabe future Labour leader. But your mole sniffs a worrying pattern in this list that suggests Smith doesn’t have a huge amount of respect for women, when it comes to political rhetoric at least. And it won’t do him any electoral favours either – it makes his condemnation of Corbynite nastiness ring rather hollow.

I'm a mole, innit.