Google (NASDAQ:GOOG) is planning to unveil the next arm of its digital publishing business — and it may become a new standard bearer.
As The Wall Street Journal recently reported, Google is planning an electronic newsstand to sell editions of newspapers and magazines on tablet PCs and other mobile devices. Given that the company’s Google Editions has distinguished itself in the e-book market by allowing access through any Web browser using a Google account, it’s likely the newsstand won’t be shackled to handhelds with Android App Market access.
Google is said to be in talks with publishers — Time Warner’s (NYSE:TWX) Time Inc., Hearst, and Advance Publications’ Conde Nast imprint are among those already being wooed.
The major selling point for Google’s service over competing storefronts like Apple’s (NASDAQ:AAPL) iTunes, will be its lower take of each sale. Other digital media distributors traditionally take a 30% cut of download sales, including applications, music, e-books, and any other media. Google, however, appears to want less than a 30% take of digital magazine and newspaper sales through its new digital storefront, a policy that should help the company succeed where Apple has failed.
Despite the growing importance of digital sales compared to print, publishers have been reticent to tie themselves to services like Apple’s iTunes because of the high percentage of shared sales. Time Inc., in particular, went through a prolonged battle with Apple last year over the company’s 30% take, as well as conflicts over Apple’s demand for access to subscriber information. When Sports Illustrated and other Time Inc. magazines were released on the iPad in the latter half of 2010, they were only available by the publisher, not through Apple’s App Store or iTunes.
To counter such conflicts, Apple is reportedly going to introduce a new subscription payment model for electronic newspaper and magazine apps purchased through its storefronts. Said to be coming out alongside The Daily, an iPad-only newspaper co-developed by Apple and News Corp. (NYSE: NWS), the new payment model would allow for recurring subscription payments, with Apple presumably only taking a 30% cut of the initial sale of the app and a possible lower percentage cut of each recurring payment.
The digital newsstand business is an arms race at this point, as it’s likely that whichever business establishes the most convenient storefront with the best publisher support (and therefore the widest selection of publications) will be dominant. With Apple historically unwilling to bend its policies on revenue-sharing with partners, the real battle will be between Google, Amazon (NASDAQ:AMZN), and Barnes & Noble (NYSE:BKS).
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
